Creating a modern workplace

In the last update from the Chartered Institute of Payroll Professionals (CIPP) we covered the proposal to introduce a system of flexible parental leave in 2015. This month we look at the other proposals within the four part consultation on Modern Workplaces, namely:
• a right for all employees to request flexible working
• changes to the Working Time Regulations affecting the interaction of annual leave with sick leave and family-friendly leave
• measures to encourage equal pay for equal work between men and women.

Flexible working
The right to request flexible working gives employees the statutory right to request a change to their contract, usually for a more flexible working arrangement. This places an obligation on employers to consider requests seriously. The right currently applies to parents of children under 17, of disabled children under 18 and to certain carers. This part of the consultation sets out the government’s proposals for extending the right to request flexible working to all employees, which will help them to balance their work, family and wider responsibilities, and also help employers to retain experienced and skilled staff.

There are several types of flexible working already used by many companies across the UK and the list below is by no means exhaustive.

Flexi-time is where employees work a standard core time but can vary their start, finish and break times each day within agreed limits.

Compressed hours mean employees work their total number of contracted weekly hours in fewer than the usual number of working days each week by working longer individual days.

Home working is a very popular type as costs are reduced for the employee as no travel is required.

Shift work takes place in for example in 24-hour airports where there are shops that don’t close. A number of set hours may be annualised rather than per week.

Term-time is a necessary type of flexible working as school employees’ work will have to follow school term patterns. These employees work as normal during term-time and then during school holidays they do not go to work but are still employed.

Code of Practice
The proposals include replacing the existing statutory process with a duty to consider requests “reasonably” alongside a non statutory new Code of Practice. The Code would not be legally enforceable but would act as a good practice guide on the benefits of flexible working. Regardless of the reasons for which the employee has made the request, there are no plans to change the eight existing business reasons under which an employer may refuse a request:
• the burden of additional costs
• detrimental effect on ability to meet customer demand
• inability to recruit additional staff
• inability to reorganise work among existing staff
• detrimental impact on quality
• detrimental impact on performance
• insufficiency of work during the periods the employee proposes to work
• planned structural changes.

Risk of discrimination
Within the consultation it states that the government does recognise that some employees may have a greater need for flexible working due to their personal circumstances. However, if they were to officially prioritise certain groups it would only reinforce the idea that flexible working is primarily for parents and carers when their aim is to promote a society where flexible working is a realistic aim for all employees.

As a result they are proposing instead to allow, but not require, employers to take account of the employees’ personal circumstances. Employers would still have to show business reasons for requests that could not be accommodated, but this does leave the employer open to the risk of being accused of discrimination if they are not seen to be being absolutely fair in their consideration of requests.

Eligibility
Employees must currently have been employed for 26 consecutive weeks to be eligible to the right to request flexible working. There have been calls to remove this qualifying period on the basis that it fails to support people who may benefit from flexibility to help their entry into the labour market.

Research suggests that most jobs are not advertised as being flexible and that many employers do not actually consider flexible working when advertising a job. The government recognises that employers need to have confidence in the conditions of appointment for a new employee so their plan is to not remove the qualifying period but instead work with employers to encourage them to consider flexible working before appointing staff and to discuss flexibility at the interview stage.

Limitations
The existing rules limit employees to making only one request for flexible working in any 12-month period. The consultation asks for views on whether changing this limit would help to support certain employees who perhaps only have a temporary need to change their working arrangements. One proposal is to amend the rules so that employees could make an additional request within the 12-month period if they state in their original request that they expect it only to be temporary.

In the March budget it was announced that there would be a moratorium to exempt start-ups and microbusinesses (less than 10 staff) from new regulation for three years from April 2011. The move means the government will not impose new regulation on small businesses, however, the Financial Services Authority will continue to able to apply regulation as it sees fit. In line with the moratorium the Modern Workplaces consultation also asks whether the extension to the right to request flexible working should apply to those employees working in a microbusiness or start-up for the three year period.

Working Time Regulations
There have been a number of judgments in the Court of Justice of the EU (CJEU) relating to the interaction of annual leave with sick leave, maternity leave and parental leave in the context of the European Working Time Directive (WTD). Stringer v HMRC and Pereda v Madrid Movilidad SA were two of the key cases where the rulings contravened the UK’s Working Time Regulations (WTR). We have known for some time that the WTR needed to be amended in order to ensure full compliance with these judgements.

The CJEU established the principle that employees who have not had the opportunity to take their annual leave because of sickness absence, maternity or parental leave in the current leave year, must be able to carry it forward into the following leave year. The proposed changes are in part consistent with the overall approach on parental leave as they will ensure that parents do not lose out on annual leave entitlement as a result of taking family-related leave. So where someone has been on maternity or paternity leave they will be able to carry over the full 5.6 weeks of annual leave to the next year.

Where an employee has been on sick leave, it is proposed to allow employers to limit the ability to carry over annual leave to the 4 weeks of leave required under the WTD, so excluding the additional 1.6 weeks required by the WTR and any further contractual leave. The proposals will also mean that employers can, if they wish, insist that leave untaken due to sickness absence must be taken in the current leave year (where possible) rather than being carried forward. There will also be provision to allow employers to defer that leave until the following year, when this can be justified by the needs of the business.

Views are also being sought on further options for increasing the flexibility for employers around the operation of statutory annual leave in a proposal to allow them to “buy out” the additional 1.6 weeks or to require employees to defer that leave until the first six months of the following leave year.

These changes are a very positive move as they will provide clarity for employers and will tie in nicely with one of the government’s objectives in its overall review of the tribunal system to reduce the number of cases going through the courts. The intention is to introduce secondary legislation to amend the WTR with implementation likely to be in 2012.

Equal pay
Despite the legal framework around equal pay being in force since 1975, there is still a considerable gender pay gap and continuing evidence of non-compliance with the law. The gender pay gap has multiple and complex causes, and the government is committed to working with business to address these, in particular through improving flexibility at work, encouraging greater transparency and ensuring effective enforcement of equal pay law.

As part of this approach, this piece of the consultation seeks views on a legislative proposal which aims to ensure that employers who have breached the law take appropriate action to rectify the problem. The proposal will require employment tribunals that have found an employer to have discriminated in contractual or non-contractual pay matters to make that employer conduct a pay audit, unless the tribunal is satisfied it would not be productive to do so.

By focusing on employers who have been found to have failed to comply with the law, this proposal will not add burdens for good employers who have taken steps to ensure they do not discriminate against women in relation to pay.

For more information
info@cipp.org.uk
www.cipp.org.uk