Working time - how to settle it at the end of the year?
At the end of the year, the entrepreneur has a lot to do. One of them is the settlement of the working time of its employees. The biggest challenge awaits those who accepted the annual accounting period. You can read about how to settle working time at the end of the year in the article.
In order to know how to account for employees' working time, first you need to know its definition. This is the time when the employee remains at the employer's disposal in the workplace or other place designated for work (Article 128 § 1 of the Labor Code). It follows that the time of work is not only to actually provide it, but also to be ready to perform.
How the working time is settled depends on the agreed settlement period, i.e. the period that determines the maximum average working time standards. As a rule, the billing period is 1 month and it is the easiest to settle. Extending the settlement period makes the settlement of working time more complicated, especially if employees work overtime.
When assuming a specific settlement period, it is worth considering what is the demand for work during the year. The best solution is to start the settlement period during increased work and end when the demand for work is lower, because then employees can collect overtime. Another solution is to donate time off in the next settlement period, but this can only be done at the employee's request.
The billing period can be up to 12 months.
The settlement periods are determined in the collective labor agreement or in the work regulations or in a notice, if the employer is not covered by the collective labor agreement or is not obliged to establish the work regulations (Article 150 § 1 of the Labor Code).
Standards - working time
As part of the working time, we can talk about the daily and average weekly working time standard. The daily standard is usually 8 hours and must not be exceeded. On the other hand, the average weekly standard, which cannot be exceeded, amounts to an average of 40 hours in an average five-day working week in the adopted settlement period, which does not exceed 4 months (Article 129 § 1 of the Labor Code).
Exceeding the norms of working time as well as the extended daily working time results in overtime (Article 151 § 1 of the Labor Code). We can deal with daily and weekly overtime. While the daily norms may be exceeded, the average weekly norms may be exceeded only after the end of the billing period. Then the number of hours worked is compared with those applicable in a given settlement period. Importantly, when determining possible excesses of the average weekly standards, the daily overtime that has already been compensated should not be taken into account.
There is an annual limit of overtime that cannot be exceeded. It is 150 hours, unless a different limit is set in the work regulations.
Importantly, part-time employees should determine the permissible number of working hours in excess of the amount of working time they are entitled to, the excess of which entitles them to receive an additional remuneration. The arrangements should be included in the employment contract (Art. 151 § 5 of the Labor Code).
Settlement of working time at the end of the year
When settling the working time at the end of the year, it is necessary to determine and possibly settle any excess of working time standards, in particular the average weekly excess. The settlement can be made in two ways.
According to the first, more favorable for the employee, method presented by the National Labor Inspectorate:
Subtract the number of overtime hours from the number of hours worked in a given settlement period.
Then, the number of hours to be worked in a given settlement period should be subtracted from the obtained number, in accordance with the working time applicable to the employee.
Ms Monika is employed in company X as part of the basic working time system. The company has a three-month billing period. In October 2017, Ms. Monika actually worked 184 hours, in November - 176 hours, and in December - 184 hours. In total, in the fourth settlement period of 2017, she worked 544 hours, including 488 hours resulting from the working time. 32 hours of these overtime hours were daily overtime, which was compensated by granting free time. How to determine the average weekly exceedances?
544 (hours actually worked) - 32 (daily overtime) = 512 hours
512 - 488 (hours to be worked in a given settlement period) = 24 hours
The remaining 24 hours are overtime hours resulting from exceeding the average weekly standard, for which an additional payment of 100% is due.
The second way, presented by the Ministry of Labor:
First, subtract the number of overtime hours from the number of hours worked in a given settlement period.
From the obtained number, the product of 8 hours and the number of days extending beyond the full weeks of the billing period should be subtracted.
Finally, the result obtained should be divided by the number of full weeks of the billing period. If the result is higher than 40 - the result is average weekly overtime.
From October to December 2017, Ms. Monika worked 544 hours, of which 32 were daily overtime.
544 - 32 = 512 hours
512: 13 weeks ~ 39.39
The result is less than 40, so when using the second method of calculation, the average weekly overtime did not come out, which proves that this method is less favorable for the employee.
Overtime hours can be compensated:
an addition to the salary of 50 or 100% (in addition to the normal salary)
or granting free time (Articles 1511 and 1512 of the Labor Code).
Salary supplement in the amount of:
100% is paid for overtime:
falling out at night,
falling on Sundays and public holidays that are not working days for a given employee,
falling on non-working days granted for work on Sunday or a holiday,
resulting from exceeding the average weekly standard;
50% paid in other cases (Article 1511 §1 and § 2 of the Labor Code).
Overtime supplements are paid on an ongoing basis along with the remuneration. In turn, as mentioned earlier, exceeding the average weekly standard is determined only after the end of the reference period. Then, an allowance is paid in the amount of 100% of remuneration or, if possible, free time is granted in the next settlement period. In such a case, time off may only be granted at the employee's request.