Annualised Working Time: Agreement, Pay Smoothing and Overtime

You run a business with strong seasonality: a caterer overwhelmed from May to September, a shop saturated in December, an events agency lurching from peak to peak. The rest of the year, activity slows. Paying overtime during peaks, then keeping underused staff during troughs, is expensive and strains cash flow. Annualising working time addresses exactly this problem: it lets weekly hours vary from one week to the next, as long as the average stays within the legal framework over the year.

Poorly framed, the scheme backfires: overtime wrongly claimed, an invalid agreement, smoothing challenged before the labour court. Here is how to set it up cleanly, and what we watch in payroll files.

Annualisation, or arranging working time over a period longer than a week (art. L3121-41 et seq. of the French Labour Code), allows weekly hours to be modulated around an average. For a full-time role, the reference threshold is 1,607 hours per year. A collective agreement (branch or company) is in principle required; pay is smoothed each month based on the average schedule, and overtime is counted only at the end of the period, above the threshold.

The principle is simple: instead of reasoning week by week (35 hours, overtime beyond), you reason over a longer period, most often the year. A peak week can reach 42 hours, a quiet week drop to 28 hours, without triggering overtime as long as the average holds.

Two benefits for the business owner:

• Control of the wage bill. You absorb peaks without systematically paying a premium, and avoid paying for hours not worked during troughs.
• Stability for the employee. Monthly pay stays constant thanks to smoothing, which helps recruitment and retention, especially in tight labour markets.

It is a steering tool, not a trick. It requires genuine seasonality and a compliant legal framework. For the classic week-by-week count, see our article on overtime premiums and exemptions.

Quick answer#

Yes, in the vast majority of cases. Arranging working time over the year rests on a collective agreement: an extended branch agreement, or a company agreement made under article L3121-44. Absent an agreement, the employer may, under conditions and within narrow limits, organise working time over a multi-week period set by decree, but this is a much more restricted framework.

In practice#

The first thing to check is your collective bargaining agreement. Many strongly seasonal branches (hospitality and catering, certain retail activities, construction) already provide a ready-to-use multi-weekly arrangement. If so, you apply the branch agreement, respecting its parameters: reference period, weekly caps, notice period, counterparts.

Where no suitable branch scheme exists, you must negotiate a company agreement. It sets, among other things, the reference period, modulation conditions, how absences and mid-period arrivals and departures are handled, and notice conditions when schedules change.

A poorly drafted agreement, or one applied to an employee without a valid legal basis, creates a risk: the employee can claim overtime week by week, as if annualisation had never existed.

For a full-time employee over an annual reference period, the overtime trigger is 1,607 hours. This figure includes the solidarity day. As long as the annual total of hours worked stays below this threshold, and subject to the caps set by the agreement, weekly variations do not, in themselves, generate overtime.

The reference period is usually the calendar year, but the agreement may use another twelve-month period (for example June to May for a summer activity). The choice of period is not neutral: it must match the real activity cycle so that peaks and troughs offset one another.

Quick answer#

Smoothing means paying a constant monthly salary, calculated on the period's average schedule, regardless of the hours actually worked that month. The employee receives the same amount in a peak week and a quiet week, which stabilises their personal cash flow and simplifies payroll management.

Common case#

A caterer employs a full-time commis, annualised over the calendar year. In August, the commis works 42 hours a week; in February, 28 hours. With smoothing, the payslip shows each month a salary based on 35 hours on average. As long as the cumulative total stays below 1,607 hours over the year, no overtime appears during the year. To read this kind of payslip properly, see our article on reading the new 2026 payslip.

Smoothing does not remove the need to track the hours counter. It is in fact the heart of the scheme: you need a reliable count, month by month, to reconcile at period end and on early departure.

Quick answer#

Under annualisation, overtime is counted and paid, in principle, at the end of the reference period, for hours worked beyond 1,607 hours over the year (for a full-time role). The agreement may provide intermediate weekly thresholds above which certain hours are already premium-rated, but the general principle is an annual count.

What to watch#

This is the most sensitive point in a dispute. Three reflexes:

1. Check the agreement's weekly caps. Even under annualisation, certain hours above a high cap set by the agreement may be paid as overtime as you go.
2. Keep an up-to-date individual counter. Without tracking, you cannot prove the annual threshold was not exceeded.
3. Reconcile cleanly at period end. Beyond 1,607 hours, overtime is due with its premium and, where applicable, its social and tax advantages. The premium and exemption regime depends on the rules in force in spring 2026 and on the applicable agreement: we check this file by file.

Annualisation also applies to part-time work. In that case we speak not of overtime but of complementary hours, and the framework differs.

• By default, the number of complementary hours cannot exceed one tenth of the working time set in the contract over the reference period, under article L3123-28 of the Labour Code (a default, fallback provision), calculated where applicable over the period of the agreement made under article L3121-44.
• A collective agreement may raise this limit up to one third of the contractual working time, under article L3123-20, that limit then being calculated, where applicable, over the reference period of the L3121-44 agreement.
• The very principle that each complementary hour gives rise to a salary increase is set by article L3123-8 of the Labour Code, which fixes neither the tenth nor the third.

Confusing the tenth (default) with the third (by agreement), or citing the wrong article, is a common mistake that can prove costly in an audit or a dispute. For autonomous executives, the trade-off usually points to the day-rate forfait, which we detail in our dedicated article on the day-rate alternative for executives.

In payroll files with marked seasonality, annualisation is often the right answer, but it almost always fails for the same reason: a scheme applied without a valid agreement or without a reliable counter. The underestimated risk is not the hours calculation, it is the proof. In a dispute, the employer must be able to produce the agreement, the schedules, the notice periods respected and the individual counter. Without these, the judge can reclassify into week-by-week overtime, with back pay and premiums.

Our recommendation: only deploy annualisation if seasonality is real, if the legal basis is solid, and if the payroll tool can maintain an annual counter. Software such as Silae can automate tracking and smoothing, provided it is configured correctly from the start.

• Mandatory, traceable hours counter. It is the first document requested in an audit or a dispute.
• Notice period for schedule changes. Check the one set by the agreement and respect it to the letter.
• Mid-period arrivals and departures. Pro rata reconciliation is a frequent source of errors and overpayments.
• Articulation with the DSN. Hours and reconciliations must be correctly declared; see our guide to the nominative social declaration.
• The part-time case. Never confuse the default tenth limit (L3123-28) with the conventional third limit (L3123-20).

• Documented seasonality (history of peaks and troughs).
• Collective agreement checked: existing arrangement scheme or not.
• Applicable agreement identified (branch or company) and parameters noted.
• Reference period set (usually the calendar year) and 1,607-hour threshold for a full-time role.
• Forecast schedule of high and low weeks established.
• Notice period for changes defined and respected.
• Smoothed salary calculated on the average schedule.
• Individual hours counter kept month by month.
• Reconciliation rules for arrivals, departures and absences planned.
• Payroll software configuration validated.