job_item.rb

class JobItem < ApplicationRecord

  VAT_RATE = 0.2
  AMENDMENT_FORM_LABELS = ['Lateness', 'Full Refund'].freeze
  AMENDMENT_TYPES = ['JobItems::Lateness', 'JobItems::Refund'].freeze
  CHARGABLE_TYPES = ['JobItems::GuardBooking', 'JobItems::LateBookingPenalty'].freeze
  REFUNDABLE_TYPES = ['JobItems::Lateness', 'JobItems::Refund'].freeze
  PERCENTAGE_TYPES = ['JobItems::CancelationPenalty', 'JobItems::LateBookingPenalty'].freeze
  HOURS_TYPES = ['JobItems::GuardBooking', 'JobItems::Lateness',].freeze

  belongs_to :job
  belongs_to :resource, polymorphic: true
  has_one :job_item_payment, dependent: :destroy
  has_one :payment, through: :job_item_payment, dependent: :destroy

  validate :quantity_is_present
  validate :guard_job_exists
  validate :max_hours
  validate :max_refund_exceeded

  before_save :set_vat

  def total_pay
    if quantity.present?
      if PERCENTAGE_TYPES.include?(type)
        (((pay_rate * self.job.number_of_hours) * quantity) / 100.0).round(2)
      else
        (pay_rate * quantity).round(2)
      end
    end
  end

  def total_charge
    if quantity.present?
      if PERCENTAGE_TYPES.include?(type)
        (((charge_rate * self.job.number_of_hours) * quantity) / 100.0).round(2)
      else
        (charge_rate * quantity).round(2)
      end
    end
  end

  def total
    (total_charge + vat).round(2)
  end

  def quantity_is_present
    errors[:hours] << "Please select a duration" unless quantity.present?
  end

  def guard_job_exists
    errors[:guard_id] << "Please select a guard" unless resource.present?
  end

  def max_hours
    return unless quantity.present?
    if HOURS_TYPES.include?(type)
      errors[:hours] << "The amount of hours can not exceed job's length#{self.job.number_of_hours}" if quantity > self.job.number_of_hours
    end
  end

  def max_refund_exceeded
    return unless quantity.present?
    amendments_amount = self.job.job_items.where(type: REFUNDABLE_TYPES).map(&:total).sum
    
    if amendments_amount > self.job.total_charge
      errors[:base] << "You've exceeded maximum refundable amount" 
    end
  end

  def vat 
    vat = (total_charge * VAT_RATE).round(2)
  end

  private

  def set_vat
    vat = (total_charge * VAT_RATE).round(2)
  end
end

Yes, we can use switch statement to determine TYPES and use different formula based on it. However, with the new column, we wouldn't need the immutable arrays (enums in Java) and will only switch(self.type) case '%', case 'h' and whatever we have later on

Why do you have to work add column for type - can you not work out from Type of JobItem what quantity will be?
i.e.
if JI is lateness - we know it is hrs.
If JI is Penalty we know it is %

In Java we can do something like this

Switch (TYPE){ //Type of JobItem

case Penalty, LBP, CancellationCharge: {
//% do percentage calculation
}
break;
case GuardBooking, Lateness: {
//This is always hours
}
break:

} //Close Switch

With this approach we don't need new column of % or hrs.