Contracted hours, overtime and time off in lieu
Contracted hours, additional hours, overtime and time off in lieu are often treated as one calculation. That causes problems because they may use different reference periods and different rules.
Start with the employee's contract, collective agreement and any local agreement. Those sources determine when additional hours count as overtime and how they are compensated. The Danish working-time rules guide covers related rules on rest, breaks and weekly working time.
What are contracted hours?
Contracted hours are the agreed working hours for the reference period used by the business. That period may be a week, a month or another period defined by the applicable agreement.
An employee does not therefore always need to reach the same number in every calendar week. Review the full reference period before deciding what a difference means.
Keep four values separate
- Contracted hours: the agreed working time for the reference period.
- Scheduled hours: the shifts saved by the business.
- Recorded hours: the employee's clock-in, clock-out and break records.
- Approved hours: the result accepted by a manager after review.
If Sara has 37 contracted hours for the week, is scheduled for 35 and records 36.5, there are two differences to review. The schedule is two hours below the reference, while recorded time is 1.5 hours above the schedule. None of those values alone proves that overtime is due.
When are additional hours overtime?
Hours above the reference do not automatically receive one particular overtime treatment. They may be additional hours, overtime, a difference within the reference period or an error that needs correction. The answer depends on the agreement that applies to the employee.
Do not apply one blanket rule to everyone. Record the relevant agreement and reference period, then let a responsible manager classify the difference before payroll.
How can time off in lieu be handled?
Time off in lieu is leave granted under the agreement followed by the business. Before maintaining a balance, define which approved hours add to it, how they are converted and who may add or correct the balance. The rules on ratios, timing, sickness and leaving are covered in the guide to time off in lieu in Denmark.
In Monoplan, time off in lieu can be handled as a configured absence type with a balance. Accrual from additional hours follows the business's setup and review; one extra recorded hour should not automatically become one hour of leave.
A clear process states which approved hours may affect a balance, who reviews and adds the balance, how the employee requests leave, who approves it, and how staffing is affected.
Explore leave, absence and balances in Monoplan and the complete review from schedule to payroll data.
Check the period before closing it
Before closing the period:
- confirm the employee's reference period;
- compare contracted, scheduled, recorded and approved time;
- resolve missing records and significant differences;
- classify additional hours under the contract and collective agreement;
- update any time-off-in-lieu balance;
- record corrections and approve the result.
Employees and managers can then see how the figures were reached before they enter payroll data.
