Every second counts: using technology to monitor employee working time and the true cost of absence.

Transcription

1 Every second counts: using technology to monitor employee working time and the true cost of absence. Let Unity ripple through your business

2 Every second counts: using technology to monitor employee working time and the true cost of absence. Copyright Carval Computing Limited 2008 All rights reserved. No part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise) without prior written permission of the publishers. 2

3 Summary The purpose of this document is to look at the reasons why people implement a computerised time and attendance system and to try to understand the benefits that can be gained. The document has been compiled by Carval Computing Limited to help anybody who is looking at keeping records on working time. Introduction There are a number of reasons why people monitor working time and these include the following 1 Legislative Reasons Working Time Directive Health & Safety 2 Absence Management Sickness Holidays Other types 3 To Calculate Payroll Paid Hours Sick Pay Holiday Pay The use of a computerised system to automate this process provides the following benefits - Automated Time and Attendance Calculations will free up your time The analysis of the variable data generates key information to help you control your business. Correctly analysed clocked inputs, leave you time to investigate the real exceptions and take appropriate action. A comprehensive shift database means that you can tailor the system to cope with the most complex working patterns, giving you time to analyse attendance and absence. This means that your skilled professionals are free from the time consuming manual effort required for this process It also removes the probability of overpaying / underpaying your staff. 1. What is the Legislation? Regulations covering working hours apply to almost every business. Working time regulations aim to improve health and safety by controlling the hour s employee s work. 1.1 Working Time Regulations The Working Time Regulations came into force in October The Regulations were amended, with effect from 1 August 2003, to extend working time measures in full to all non mobile workers in road, sea, inland waterways and lake transport, to all workers in the railway and offshore sectors, and to all workers in aviation who are not covered by the sectoral Aviation Directive. The Regulations were also amended, with effect from 6 April 2003, to provide enhanced rights for adolescent workers. The Regulations applied to junior doctors from 1 August The basic rights and protections that the Regulations provide are: 3

4 a limit of an average of 48 hours a week which a worker can be required to work (though workers can choose to work more if they want to). a limit of an average of 8 hours work in 24 which nightworkers can be required to work. a right for night workers to receive free health assessments. a right to 11 hours rest a day. a right to a day off each week. a right to an in-work rest break if the working day is longer than 6 hours. a right to 4 weeks paid leave per year. 1.2 What is the current position on the opt-out in the UK? As the opt out is going through a negotiating process in Europe, UK law remains unchanged and workers are still able to opt-out of the weekly working time limits. Member States have discussed a revised proposal from the European Commission however there was no agreement on the proposals. 1.3 How is the legislation enforced? Enforcement is split between different authorities. The limits and health assessments are enforced by the Health and Safety Executive, local authority environmental health departments, the Civil Aviation Authority (CAA),the Vehicle and Operator Services Agency (VOSA) and Office of Rail Regulation (ORR).The entitlements to rest and leave are enforced through employment tribunals. 1.4 How are working hours calculated? Hours worked are averaged out over a 17-week 'reference period'. If the workers agree, the average can be calculated over successive 17-week periods, rather than on a rolling basis. The reference period may be extended to up to 52 weeks by agreement (eg where work fluctuates over the year). The average must be calculated in a way which takes into account periods of leave, sickness and so on. For example, a worker who has been on holiday for half of a 17-week period cannot be forced to work 96 hours a week for the remainder. For workers who have been employed for less than 17 weeks, the average is calculated from the time the worker started employment. Working hours include any time when the worker is at the employer's disposal and is expected to carry out activities for the employer. Work-related training is counted as part of the working week. Travel time to and from work is not counted as working hours (but travel as part of the employee's duties is). Lunch breaks are not working hours (but a working lunch is). Being on standby to be called out, if the employee is at the place of work, is counted as working hours. If the employee is on call and free to pursue leisure activities, it is not. For transport workers 'periods of availability' known in advance do not count as working time. Workers (at the moment) can voluntarily agree to disapply the 48-hour limit. To do this there must be a suitable written agreement. Workers can be offered overtime which takes them over the limit, but cannot be forced to work the overtime. Workers who regularly work overtime which takes them over the limit must have signed an opt out agreement. Employers may consult on and agree a system of annualised hours whereby the total number of hours worked do not exceed an average of 48 hours per week over a period of one year. This means that employees have to work their annual quota first before becoming entitled to overtime. 1.5 Penalties Penalties for breaches of the regulations can be high. Breaches of working time limits can lead to improvement notices being issued. Subsequent failure to comply can lead to unlimited fines and imprisonment. 4

5 Employment tribunals can order appropriate compensation payments (limited to 56,800 where there has been a dismissal). CONCLUSION Keeping on top of the legislation is a full time job in its own right. Penalties for breaches can be severe. A computerised system will take the headache out of having to remember the legislation in detail. It will also report on average hours worked and warn of breaches to working time legislation before they happen. 2. Absence Management 2.1 Absenteeism what is the real cost? According to the CBI: 166 million working days are lost to ill health per year. There is an 11.6 billion bill to cover salaries of absent staff, overtime and temporary cover. This is an average of 476 per worker It is also estimated that 1 in 6 sick days were caused by skiving cost 1.75 billion The CBI also concluded that absence rates are falling as firms find ways to combat it. Too many people happily spend the day off at the expense of Hard Working colleagues. CBI Director General John Cridland One million people take sick leave every week, 3,000 of these will not return within six months, and 2,500 will still be on incapacity benefit five years later. Lord McKenzie, Minister - The Department for Work and Pensions The Department for Work and Pensions (DWP) has created a task group to address the 175 million working days and 13bn a year lost due to sickness absence each year. 2.2 How does it affect your company? Most companies are aware that poor attendance is a problem, which reduces company profits, jeopardizes work deadlines and affects company morale. No employer can ignore this, especially as the wage bill is often the largest cost companies have to consider. The national average of for the cost of absence is 3.97% of the total payroll. i.e.: for a company employing 100 people with an average wage of 326 per week there is an annual cost of absence of around 135,000 when employers payroll and overhead costs are included. Absence is lower where Senior & HR Managers assume primary responsibility for managing absence. HR practitioners agree that the most effective tools in the management of long term absence are maintaining regular contact with the absent employee and referring the individual to the occupational health departments. 2.3 The legislation relating to taking time off Daily rest - A worker is entitled to a rest period of 11 uninterrupted hours between each working day. 5

6 Weekly rest - A worker is entitled to one whole day off a week. Days off can be averaged over a two-week period, meaning workers can take two days off a fortnight. Days off are taken in addition to paid annual leave. Employers must make sure that workers can take their rest. Mobile workers are excluded from the usual rest break entitlements under the Working Time Regulations. Instead, these workers are entitled to 'adequate rest'. 'Adequate rest' means that workers have regular rest periods. These should be sufficiently long and continuous to ensure that fatigue or other irregular working patterns do not cause workers to injure themselves, fellow workers or others, and that they do not damage their health, either in the short term or in the longer term. 2.4 Rest breaks at work If a worker is required to work for more than six hours at a stretch, he or she is entitled to a rest break of 20 minutes. The break should be taken during the six-hour period and not at the beginning or end of it. The exact time the breaks are taken is up to the employer to decide. Employers must make sure that workers can take their rest. 2.5 The rules about paid annual leave Every worker whether part-time or full-time covered by the regulations is entitled to four weeks paid annual leave. A week s leave should allow workers to be away from work for a week. It should be the same amount of time as the working week: if a worker does a 5-day week, he or she is entitled to 20 days leave; if he or she does a 3-day week, the entitlement is 12 days leave. The leave entitlement under the regulations is not additional to bank holidays. There is no statutory right to take bank holidays off. Therefore a worker who is not otherwise paid in respect of bank holidays may take bank holidays as part of his or her annual leave entitlement in order to receive payment for these holidays. Workers must give the employer notice that they want to take leave. Employers can set the times that workers take their leave, for example for a Christmas shutdown. If a worker s employment ends, he or she has a right to be paid for the leave time due and not taken. 2.6 Managing holidays The whole area of holidays is a potential source of problems if not managed correctly. There are a number of factors to consider when deciding how effective your holiday scheme management is. 2.7 Entitlements Normally holiday rules are documented within Contracts of Employment but where length of service increments and other changes take place it is easy for an employee to lose track. Listed below are just a few suggestions of how employees can be aware not just of their entitlement but also of holiday remaining to be booked: Print on the payslip: Depending on the Pay Frequency and duration of the Pay Cycle this is one way of communicating the information. Display on a clocking terminal: Where a Time and Attendance System is used it is usually possible for employees to query Holiday Balance on a clocking terminal. Allow employees access to the holiday records: Where an HR, Payroll or Time and Attendance System is used it should be possible to grant employees limited access to holiday information. Where employees have no access to a computer then many companies use a kiosk computer for this purpose. 2.8 How is holiday booked and managed? The next factor to consider is the booking and authorisation process. Questions to be asked to determine effectiveness are How are requests made? How many people s hands does a typical request have to pass through before authorisation? 6

7 Where do requests get logged and recorded? How many people who handle the request actually have any input into authorisation? Are existing booked holidays looked at before authorisation? Are declined requests monitored to see if the employee takes the time off any way? How is the final decision communicated back to the employee? An effective system should involve as few people as possible with information generally recorded once and authorised as necessary. CONCLUSIONS Sickness and Absenteeism costs your company money that comes straight off bottom-line profit. This needs to be measured and managed through appropriate company procedures such as Return to work Interviews. A computerised system can produce the reports you need to show who is off and why so that trends and patterns can be dealt with before they become established Managing Holidays and Holiday Entitlements can be a time-consuming process. Done correctly it can enhance the employee feeling of belonging to the company. Poorly managed it can lead to poor morale and an associated drop in production. Computerised systems can not only make the whole management procedure easier but can also provide employees with access to the information as well making them feel they have a greater part in the whole process. 7

8 3. Calculating Payroll In an ideal world a calculation for paid hours would be as simple as working out the number of hours between an employee s start and finish times. In practice Payroll Calculations are a lot more difficult than this when Unpaid Breaks, lateness penalties, shift allowances and other factors are taken into consideration. Below is an example of how employee clock ins/outs on a daily basis, including tea and lunch breaks, can be interpreted. The Conventional view for justifying investment in a Computerised Time and Attendance is that you will save time spent analysing clock cards. This is true, and not only the time but the boredom from this repetitive task. If this time is then re-invested refining your reporting and managing the information it gives you the real cost saving and justification you will achieve come from reducing absenteeism and payroll errors. In a multi shift, multi pay rate environment with various other rules such as grace periods, pre and post shift overtime etc, it has been estimated that errors from manual clock card analysis alone costs a company 0.5 to 1% of its total wage bill. i.e. around 20,000 per year for an employer of 100 people on average rates of pay. Using a time and Attendance System to calculate payable hours will virtually eradicate this. CONCLUSIONS Calculations for Payroll purposes are not always straight forward and quite often can involve complicated rules. A computerised system can remove the burden of calculating hours and also reduce the likelihood of errors and incorrect payments. A good system will also provide detailed analysis of hours worked so trends in areas such as overtime can be identified and dealt with as necessary. 8

9 4. What Benefit can I get from an effective system? BENEFIT # 1 - Reducing the paperwork burden and improving your reporting efficiency. The volume of paperwork generated during the administration of holidays by both Payroll and Human Resources is phenomenal - both for the employer and the employee. For instance, if 300 employees work multi-shifts and at variable pay rates, then the associated time card administration will require hours of linear calculations absorbing hours of your HR department s time particularly in relation to holiday pay. The additional pressure of possible resultant human errors, from either the employee or the administrator will inevitably lead to disgruntled employees. How much time and effort will be required to identify and correct the single incorrect calculation or input? And don t underestimate the possible financial impact that a disgruntled workforce could have on your bottom line. A really good Human Resource Management System (HRMS) should virtually take users by the hand and guide them through the creation of a Holiday / Holiday Pay Reconciliation Report. This report should calculate what your company s payroll costs should be, and easily identifies discrepancies between the company s records and the employees. BENEFIT # 2 - Reducing your levels of exposed liability Managing compliance issues becomes more and more complex every year. With the Government constantly changing and updating legislation, you need to make sure that you are up to date and compliant with legislation such as the working time directive (WTD). With a myriad of compliance issues, be aware that any errors / omissions or oversights can expose your company to significant liability. BENEFIT # 3 - Improving the morale of employees and increasing efficiency Taking care of the above two issues will also go a long way to improving the morale and efficiency of your employees and your company. Taking it from the vantage point of one of your employees, accurate and timely remuneration for Holiday entitlement is very important to their level of job satisfaction. As an employee, it is also very important that your personal information is correct and up-to-date so your remuneration and holiday requests can be processed uncontested. BENEFIT # 4 - Empowering all levels of management to maximise the return on your HR Department More often than not, the HR professional employed by your company is a highly trained individual with expertise in many areas such as recruiting, employee satisfaction, retention, training, and education. However, most of these professionals frequently spend up to 70% of their working day answering simple employee questions and solving problems related to benefits, instead of concentrating their efforts on more strategic issues. Providing line managers with easy access to accurate reports and information such as holiday data, makes for a much more efficient management process. Offering advantages such as self-service, speedy response, and accurate and always available information will differentiate your organization from other potential employers, ultimately improving employee opinion of the organisation as a whole. 9

10 5. Some Useful Contacts 5.1 Booklets & Guidance Working time regulations free booklet 'Changing patterns of work' is available from Acas on or visit For more guidance on the working time regulations, visit Professional Organisations Advisory, Conciliation and Arbitration Service (Acas) National helpline on Employment Tribunals Service enquiry line on If you want to find out more about tribunals, read the Understanding Employment Tribunals series of booklets which are available from local Jobcentre Plus offices or Citizens Advice Bureaux. Health and Safety Executive (HSE) Infoline on HSE Infoline Caerphilly Business Park Caerphilly CF83 3GG 5.3 Time and Attendance System Suppliers Carval Computing Limited The Clock Tower Suite Wrest Park Silsoe Bedford MK45 4HR Tel: Web: About Carval Computing Limited Carval Computing Limited is one of the longest standing HR Software suppliers in the UK. Our fully-integrated and uniquely effective solutions for Human Resources, Payroll, Time and Attendance, Self-Service and Access Control are all designed to provide high quality systems that benefit your core business functions and offer superb functionality at reasonable cost. Our Payroll products are HMRC accredited. To find out more visit 10