Hours bank arrangement: what it is, with a free balance calculator
An hours bank arrangement lets hours worked above or below the contracted week accumulate as a running balance, instead of being settled every week. Positive means the business owes the employee; negative means the reverse. Here is the balance for one person, in thirty seconds.
Result
- Expected hours over period (contract)160 h
- Worked hours + leave175 h
- Hour bank balance+15 h
Employee is in credit
Default basis: a 40 hour week. Change it to match the contract. In the US, overtime past 40 hours in a workweek has to be paid in that pay period, so a positive balance on a non-exempt employee is not something a private employer can carry forward.
Who is it for
For managers who settle up monthly or quarterly rather than week by week. Note that the arrangement itself is not available everywhere: in the US, overtime beyond 40 hours in a workweek has to be paid under the FLSA and cannot be banked by a private employer. Check what applies where you operate.
Hours bank arrangement: the questions people ask
- What is an hours bank arrangement?
- An agreement where the difference between contracted hours and hours actually worked is carried forward as a running balance, instead of being paid or deducted every pay period. Work 42 hours on a 40-hour contract and the bank holds 2 hours in your favour; work 38 and it holds 2 hours against you. The balance is settled later, as time off or as pay, on the terms written in the agreement.
- Is an hours bank arrangement legal?
- It depends where you are. In the UK it is common and lawful when the contract sets it out, and the 48-hour average week of the Working Time Regulations still applies. In Canada most provinces allow it under a written averaging or banked overtime agreement. In the United States a private employer cannot bank overtime: the FLSA requires hours beyond 40 in a workweek to be paid at one and a half times the regular rate, and paid time off in lieu (comp time) is reserved for public agencies. Banked hours and comp time in the US: what an employer can and cannot do.
- How is the balance calculated?
- Each period: hours actually worked minus contracted hours, breaks deducted. Add the result to the previous balance. The calculator above does it for one person; keeping it for a whole team over months is what scheduling software with time tracking does for you.
Go further: Hours bank arrangement: what it is, and how the balance is calculated.