When a company measures the productivity and performance of employees, the gross & effective hours play a very crucial role. Gross and effective hours are two different time estimations for calculating productive work.
Most companies calculate the attendance of their employees based on the number of hours spent in the office. Some measure actual time worked, while others count only gross hours. In some companies, the take-home salary mentioned in Cost to company (CTC) also fluctuates due to gross & effective hours.
Gross hours: It is the total time an employee spends from logging in the morning to leaving the premises, including lunchtime and breaks.
Effective hours: It is the time an employee spends to complete the work, excluding lunchtime and breaks. It includes only the tasks related to the projects.
While gross hours are the total number of hours an employee is supposed to work including breaks, effective hours are the work hours of an employee, excluding the breaks.
Some companies estimate that less than 30% of the time their employees work is spent on a given project—the rest is spent on tasks such as checking email, making phone calls, and performing other administrative duties.
This value may differ among companies; however, to ensure an accurate completion date for a project, it is important to calculate what percentage of a company’s employees’ time is spent on actual work versus administrative duties.
Gross hours of an employee can be calculated by adding up the hours from an employee’s punch-in to his punch out. For example, if an employee punched in at 09 AM and logs out at 6 PM then they have worked for 9 gross hours.
The net hours are also known as effective hours. So, the net hours are the total number of hours an employee has worked while the gross hours are the number of hours the employee has stayed in the office, including breaks.
Employees who work on salaries are usually paid for gross hours, but companies have set net hours that they should work for the decided salary. But employees who work on an hourly basis can calculate their gross pay hours by multiplying hours worked that day X the hourly pay.
Yes, effective hours are different for every employee. For example, there are two employees: employee A and B. Both punch in at 9AM and are out at 6 PM. But while employee A takes an hour-long break, employee B takes only 20 minutes of break. So, employee A has 8 effective work hours, but employee B has 8 hours 40 minutes of effective work hours. Which means the gross hours of both employees are the same, but the effective hours are different.
Let’s Recruit, Reward, and Retain
Your Workforce Together!
