UNDERLYING CONCEPTS

NOMINAL DEFINITION

Actual hours worked

Actual hours worked refer to time spent at work during a specified reference period, e.g. a week, by all employed persons. According to the ICLS resolution on the measurement of working time, actual hours worked as measured within the System of National Accounts production boundary includes all time spent directly on, and in relation to, the performance of activities that contribute to the production of goods and services. Hours actually worked are the combined time that may be described as direct hours, related hours, in-between hours, down time, and short resting time.

This standard includes:

• hours actually worked during normal periods of work;
• time spent in addition to hours worked during normal periods of work (including overtime);
• time spent at the place of work on activities such as the preparation and cleaning of the workplace, thinking about and discussing work processes and methods, putting on work clothing, repairs and maintenance, preparation and cleaning of tools and materials, and the preparation of receipts, time sheets and reports;
• time spent at the place of work waiting or standing by due to machinery or process breakdown, accident, lack of supplies, power or internet access, etc;
• time corresponding to short rest periods (resting time) including tea and coffee breaks or prayer breaks;
• travel time connected to work (excluding commuting time); and
• training and skills enhancement related to the job or employer.

This standard excludes:

• hours paid for but not worked such as paid annual leave, public holidays or paid sick leave;
• meal breaks (e.g. lunch breaks);
• paid and unpaid time 'on call';
• time spent on travel to and from work when no productive activity for the job is performed, e.g. commuting time; and
• time off during working hours to attend outside educational activities, even if it is authorised, e.g. those not connected to the job or employer.

Actual hours worked includes hours worked in all jobs for multiple job holders. For multiple job holders the LFS collects a separate measure of actual hours worked in main job and all jobs.

Measures of actual hours worked are available from a number of ABS household surveys: the LFS, labour-related supplementary topics to the LFS, the Multi-purpose Household Survey; and the Census of Population and Housing. Measures of actual hours worked are not available from ABS business surveys.

Usual hours worked

Usual hours worked refers to the hours worked in a typical period, rather than the hours worked in a specified reference period. According to the ICLS resolution, "weekly hours usually worked relate generally to the weekly hours most commonly or typically worked by persons during a reference period" such as an observation period of a month, quarter, season or year. The concept of usual hours applies both to persons at work and to persons temporarily absent from work.

Consideration must be taken when analysing usual hours worked due to the different interpretations respondents may have when considering the typical hours they work. The ILO recommends that the hours usually worked be determined as the modal (most frequently occurring) number of actually worked for a short reference period (e.g. per week) over a longer observation period (e.g. one month or a number of months), where meaningful. This allows for the representation of any overtime hours that are regularly carried out and also accounts for any absences that are only irregular in nature so they do not unduly conceal the typical schedule. Usual hours refers to the normal working pattern over a three month period. Overtime is included if it has been a regular part of the person's working arrangements over a three month period.

Work arrangements where the number of hours worked vary from week to week (for example, casual workers, people on rotating shifts, etc) are becoming more prevalent. The ILO recommends that when the modal value is not particularly meaningful, the median or mean should be used to determine the hours usually worked. If the mean or median number of hours actually worked is computed over a long period, then the weeks of unemployment or inactivity are to be excluded. 'Inactivity' includes periods when the person is employed but did not work during the week (e.g. on leave, rostered out).

Measures of usual hours worked are available from the LFS, labour-related supplementary surveys, Multipurpose Household Survey, and most Special Social Surveys. Measures of usual hours worked are not available from ABS business surveys, nor the Census of Population and Housing.

Hours paid for

Hours paid for applies to persons working as employees or receiving remuneration in the form of wage and salary. Hours paid for is the time for which persons have received wage and salary payments from their employer (in cash or in kind) or from their business during a specified short or long reference period, regardless of whether the hours were actually worked or not. Hours paid for:

• Includes time paid but not worked such as paid annual leave, paid public holidays and certain absences such as paid sick leave; and
• Excludes time worked but not paid by the employer, such as unpaid overtime, and absences that are not paid by the employer, such as unpaid educational leave or maternity leave that may be paid through transfers by government from social security systems.

Measures of average (mean) and median hours paid for (and average hourly earnings) are available from the ABS business survey Employee Earnings and Hours, and the ABS Labour Force supplementary survey Employee Earnings, Benefits and Trade Union Membership (up to August 2013) and Characteristics of Employment (from August 2014 onwards).

Aggregate monthly hours worked

Aggregate monthly hours worked estimates the total number of hours worked by employed persons in a calendar month. It is a derived measure that expresses the aggregate number of hours actually worked by all persons in all jobs. Although derived from hours actually worked in a reference week, the aggregate monthly hours worked estimates are a more representative monthly measure, as it takes into account the number of business days and holidays in the month.

Aggregate monthly hours worked provides seasonally adjusted and trend measures of hours worked. Estimates may be aggregated across time to produce quarterly and annual estimates. Aggregate monthly hours worked allow direct comparison of hours worked across time. In contrast, actual and usual hours worked in the standard relate to hours worked in the survey reference week, that is the week prior to the survey interview. These actual and usual hours worked cannot be aggregated across time, e.g. to produce quarterly or annual estimates, as they relate to only a single week rather than the entire month.

Measures of Aggregate Monthly Hours Worked are only available from the ABS LFS. For details on the methodology used to compile the estimates, refer to Information Paper: Expansions of Hours Worked Estimates from the Labour Force Survey, 2009 (cat. no. 6290.0.55.001).

OPERATIONAL DEFINITION

Actual hours worked

Actual hours worked is measured by counting the total number of completed hours actually worked (including any paid or unpaid overtime less any time off) in the week preceding the survey in a person's job(s). All extra hours worked are included, whether officially called 'overtime' or not. Hours actually worked in main job, and in all jobs, are collected for multiple job holders. In the LFS, hours actually worked in the reference week are only asked of those who had a job and were at work in the reference week.

Usual hours worked

Usual hours worked are measured by counting the total number of completed hours usually worked (including any regular paid or unpaid overtime) per week. Usual hours worked are collected for all employed persons. For persons who had a job but were not at work during the reference week, only usual hours worked are collected.

Measurement of usual hours worked is straightforward for persons with relatively regular or steady work patterns from week to week. However, for persons where the number of working hours varies from week to week, consideration must be taken to ensure the most representative and appropriate measure of usual hours worked is recorded.

Based on the ILO guidelines, usual hours worked is determined as the modal (most frequently occurring) number of hours worked per week, where meaningful. For example, over the last three months if an employed person only rarely worked a varying number of hours, then the usual hours worked is the number of hours most frequently worked. However, the measurement of usual hours worked becomes more complex when people work different patterns of irregular numbers of hours. As recommended by the ILO, when the modal value is not particularly meaningful, the median (middle value) or mean (average) hours worked per week should be used to determine the hours usually worked. In practice, however, where the number of working hours varies from week to week over a longer period, the method to determine the usual number of hours worked needs careful consideration. The ILO further recommends that if the mean number of weekly hours worked is computed over a long period, then any weeks of unemployment or inactivity are to be excluded.

	Example 1	Example 2	Example 3	Example 4
	Hours	Hours	Hours	Hours
Wk1	40	60	30	30
Wk2	0	40	20	35
Wk3	40	8	25	33
Wk4	0	60	22	38
Wk5	40	40	33	100
Wk6	0	8	27	30
Wk7	40	60	22	35
Wk8	0	40	30	33
Wk9	40	8	29	38
Wk10	0	60	25	30
Modal	40	60	22	30
Median	20	40	26	34
Mean	20	36	26	40
preferred	modal	mean or median	mean or median	median

In Example 1 above, an employee has an arrangement to work only one week per fortnight. The usual hours worked is 40 hours per week since the hours worked is considered only when the person is at work, rather than 20 hours per week (i.e. the average of 40 and 0). In example 2, an employed person works long shifts for two in every three weeks, and works substantially less hours in the third week. In this situation, the modal rule cannot be used. Therefore the mean (36 hours) or median (40 hours) should be used, and in this case are similar. In Example 3, a worker works a slightly varied number of hours every week. The modal rule would result in usual hours worked being 22, but this is clearly not representative since it is the lowest value of the wide distribution of hours. Thus, the mean or median of 26 hours is more meaningful than the mode. On the other hand in example 4, where the mode is not representative and where the mean may not be a good representation due to a one-off extreme value, the median of 34 hours is most meaningful.

In all situations, it is recommended that careful judgement be applied in order to arrive at values that are the most representative possible, consistent with the ILO's recommendation. There are circumstances that require consideration on which measurement best reflects the pattern of hours worked.

Hours paid for

Hours paid for refers to all the hours for which payment is received. This includes payment for time worked and for time not worked. Measures of hours paid for are generally collected from business payroll records. As well as total hours paid for, components of hours paid for can be collected:

• ordinary time hours paid for - defined as the award, standard or agreed hours of work paid for at the ordinary rate. Ordinary hours paid for include: stand-by or reporting time hours which are part of standard hours of work, and hours of paid annual leave, paid sick leave and long service leave taken during the reference period. Ordinary time hours paid for at penalty rates (e.g. for shift work) are not converted to their ordinary time equivalent; and
• overtime hours paid for - defined as hours paid for in excess of award, standard or agreed hours of work, at both standard and penalty rates.

Hours paid for (in main job and all jobs) can also be collected in household surveys.

Aggregate monthly hours worked

Aggregate monthly hours worked is a derived measure (i.e. a synthetic estimate) that expresses the aggregate number of hours worked by all persons in all jobs for each month of the calendar year. It differs from the actual hours worked estimates (and the usual hours worked estimates) since these refer only to the hours worked in the reference week. This measure is consistent with ILO's recommendation in its report 'Report II: Measurement of working time', as a preferred measure for labour market analysis.

For information on the methodology to produce aggregate monthly hours worked estimates refer to Information Paper: Expansions of Hours Worked Estimates from the Labour Force Survey, 2009 (cat. no. 6290.0.55.001).

DISCUSSION OF ISSUES

It must first be established that the person is 'Employed' (see Labour Force Status - Collection Methods). 'Actual hours worked' and 'Usual hours worked' are then determined for employed people.

'Hours paid for' can be collected for all employee jobs in business surveys, including both ordinary time hours paid and overtime hours paid. 'Hours paid for' (in main job and/or all jobs) can also be collected for all employed people in household surveys.