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Section 1 of the Employment Rights Act 1996 (ERA) requires employees to be given a written "statement of employment particulars" within 8 weeks of starting a new job. Included in that statement must be details of "any terms and conditions relating to hours of work (including any terms and conditions relating to normal working hours". If an employment has "normal working hours", they must be defined in the "contract" - as most employees call their written statement of employment particulars.
An employee's "normal working hours" are a vital piece of information when it comes to determining the value of payments due under the various employment rights set out in the ERA. This article is about statutory redundancy pay, but identifying an employee's "normal working hours" is equally necessary when calculating guarantee payments, statutory holiday pay, pay during periods of notice and the various "time off with pay" rights, such as time off to look for work or arrange training in the event of redundancy, time off for ante-natal care, time off for employee representatives, time off for young person for study or training.
In calculating the value of "a week's pay" for any of these rights, the starting point is the employee's normal working hours. If an employee is entitled to overtime pay when employed for more than a defined number of hours, the defined number of hours are the employee's "normal working hours". In this context, "overtime pay" is not necessarily pay at a premium rate.
- Example: An employee's "contract" requires the employee to work 12 hours per week. If the employee works more than 12 hours, the additional hours are paid at "plain time". However, any hours worked in excess of 38 hours are paid at "time and a half". The employee's "normal working hours" are 12, as overtime at plain time is paid for any extra hours worked.
Exceptionally, if the employee's contract fixes a number of hours of employment that exceeds the defined number of hours after which overtime is paid, the higher, fixed number of hours are the "normal working hours". This second provision ensures that guaranteed overtime, extra hours of work that the employer is obliged to provide and the employee to work, is included in the employee's "normal working hours".
- Example: An employee's "contract" requires the employee to work 35 hours per week, plus 5 hours guaranteed overtime. The employer is bound by the contract to provide the extra hours and the employee is bound to work them. The employee's "normal working hours" are 40.
These rules can be illustrated by the decision of the Employment Appeal Tribunal (EAT) in the case Refrigeration Norwest (Chester) Ltd v R M Unwin, in 2004. Mrs. Unwin's written statement of employment particulars defined her normal working hours as 20 and stated that overtime was voluntary. However, in seven years working for the employer, there were only 15 weeks in which she worked less than 35 hours. When she was made redundant, should her statutory redundancy pay have been based on 20 hours, her "normal working hours", or on 35 hours, her "regular working hours"?
Section 221 of the ERA states
"if the employee's remuneration for employment in normal working hours (whether by the hour or week or other period) does not vary with the amount of work done in the period, the amount of a week's pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week."
In other words, if Mrs. Unwin's pay for working 20 hours per week would always be the same, her "week's pay" is the pay she would receive if she works the 20 hours. As the extra 15 hours overtime that Mrs. Unwin worked regularly were not guaranteed, the hours on which her redundancy pay was based are her "normal working hours" of 20, not on her "regular working hours" of 35.
The Court of Appeal, in the 1973 case Tarmac Roadstone Ltd v Peacock, held that "normal working hours" means hours which are fixed and obligatory on both sides. The only circumstances where overtime is included in "normal working hours" is where overtime is a contractual requirement, i.e. the employer is obliged under the contract to provide it, and the employee is required under the contract to work it.
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