New 2012 Overtime Regulations in force

On January 31 the Ministry of Justice, Dialogue and the Family published Legal No­tice 46 of 2012 entitled “Overtime Regulations 2012” which entered into force on the same day.

This law introduces a new system within our employment framework which is commonly known as Annualised Hours. This system provides for employers and their employees the opportunity to agree on an annual total of hours which are worked in variable quantities over the year. It is often used in industries that have peaks and trough of demand. Some employees may see it as a way of eroding overtime opportunities. Others, who need it, may benefit from its flexibility to dovetail with other aspirations in life.

The new law allows employers to introduce schemes whereby full-time employees may be required to bank a maximum of 376 of their normal working hours in each calendar year. This allows employees to work extra hours over and above their normal weekly working hours to be worked during periods of higher work, activity which they would then be able to redeem during periods of lower activity by working hours below their normal weekly working hours. However, the employee shall not be asked to work more than 48 hours a week, unless the employee concerned has given his consent in writing.

In order to curb abuse and also monitor this new system, the legislator has provided a number of safeguards within the law. These include:

The hours of work which may be banked shall be limited to those which attract the normal hourly rate of payment. Similarly, any hours of work which have been banked may only be utilised on a weekly day of work where the hours of work are paid at the normal rate. Hence, any hours worked on Sundays or public holidays would not fall into the scheme if they attract special rates of pay and would be paid for in accordance with normal practice unless the parties agree otherwise.

The employee should be given prior written notice of the number of hours and roster to be worked in the following four weeks under the banking of hours’ scheme. However, the employer may change the weekly hours as long as he gives the employee one week’s written notice in advance.

The weekly basic wage shall remain constant throughout the year.

Where any employee is required to work in excess of the scheduled hours of work referred to above, he/she shall be paid at the applicable overtime rates.

Any outstanding banked hours which have not been redeemed at the end of a calendar year shall be paid at the applicable overtime rates unless the employer and employee agree in writing to transfer them to the next calendar year. However, not more than 160 banked hours may be carried forward. Such banked hours should be utilised first and cannot be carried forward again.

Part-time and full-time employees with reduced hours shall not be obliged to participate in the scheme and shall not suffer any detriment for failing to agree to participate in such a scheme.

In cases where the contract of employment is terminated for any reason before the employee has redeemed his/her banked hours, such employee would be entitled to the payment of all outstanding banked hours at the applicable overtime rate in force on the date of termination. Moreover, where the contract of employment is terminated for any reason and the employee has worked fewer hours than the yearly average, the employer shall not be entitled to claim a refund in respect of the hours not actually worked.

All employers should obtain the authorisation of the Director responsible for Employment and Industrial Relations before introducing a banking hours’ scheme. The Director may impose any conditions deemed necessary.

No scheme shall in any way prejudice the provisions of any collective agreement in force at the workplace unless the parties to such an agreement otherwise agree.

The regulations also make provision for the manner in which annual leave, sick leave, maternity leave and unpaid leave are to be calculated. As for annual leave or sick leave entitlements, when these are availed of by the employee, the employer should deduct from such entitlement the number of hours which have been scheduled to be worked by the employer in accordance with the schedule of work and which such employee would have worked had he not availed himself/herself of such entitlement.

With regards to maternity leave, when an employee participating in the scheme for banking of hours takes maternity leave or any other paid leave, that employee would be entitled to the normal wages which may be due. Throughout the duration of such leave or even in the case of unpaid leave, the employee will be considered to have worked the same number of hours scheduled to be worked by virtue of the scheme, whether these are above or below the normal hours usually worked outside the scheme, and such banked hours will be considered to have been credited or debited, as the case may be. These will be considered in the same way as would apply to similar hours credited and debited by other employees participating in the same scheme.

Dr Mifsud is a senior associate at Fenech Farrugia Fiott Legal.