Employees in the UK will soon be able to request greater flexibility to their working arrangements, after the so-called flexible working bill survived its passage through Parliament.
The bill’s approval underscores the changing attitudes towards flexible working, which many now regard as a right, rather than a privilege.
After the bill received royal assent last week, business and trade minister Kevin Hollinrake said: “Not only does flexible working help individuals fit work alongside other commitments – whether it’s the school drop-off, studying or caring for vulnerable friends and family – it’s good business sense, too, helping firms to attract more talent, increase retention and improve workforce diversity.”
Many of the rules around flexible working will remain the same as they are under current employment law. But the new Employment Relations (Flexible Working) Act 2023 will bring changes that employers will be wise to read up on.
What changes will the new flexible working rules bring?
Primarily, the act changes the ways in which employees can apply for flexible working arrangements. Job-sharing, working from home, part-time work, compressed hours, flexible hours, annualised hours, staggered hours and phased retirement are all classified as examples of flexible working by the government.
Under the new legislation, the time that an employer can take to consider a flexible working request before reaching a decision will be reduced from three months to two. Businesses will also be obliged to consult with staff before denying any flexible working requests.
This is a big change and it’s going to have quite an impact on smaller businesses which don’t have large HR teams
In addition, employees will now be able to submit two statutory requests within any 12-month period and no longer have to explain the impact the change will have on their employer or suggest how it might be dealt with.
“These statutory changes represent a pro-employee shift, placing a further burden on employers to deal with successive requests, engage more effectively and respond more quickly,” says Hannah Ford, employment partner at law firm Stevens & Bolton.
Although the day-one right to make flexible working requests has not been included within the employment relations act, the government has committed to this as part of secondary legislation that is expected to come into force next year. Currently, workers are required to have completed 26 weeks’ continuous service before asking for any adjustments. Once the changes have been made, staff will be able to make a flexible working request immediately.
“This is a big change and it’s going to have quite an impact on smaller businesses which don’t have large HR teams,” says Jo Mackie, director and head of employment law at Lawrence Stephens. “People will then have the ability to ask for a flexible working request as soon as they arrive at a business and they can do it twice a year. That could result in an awful lot of requests that will need processing.”
What grounds can employers give for refusing flexible working requests?
The reasons that employers can give for refusing a request will remain the same as they were under current employment rules.
This means that businesses will still be able to reject a flexible working application, if it can provide evidence that:
• It will incur extra costs that will damage the business
• The work cannot be reorganised among other staff
• People cannot be recruited to do the work
• The changes will affect quality and performance
• The business will not be able to meet customer demand
• There’s a lack of work to do during the proposed working times
• The business is planning changes to its workforce.
Although the reasons employers can give for denying such requests remain the same, “organisations will need to have good reason to refuse reasonable requests for flexibility,” Antony O’Loughlin, head of litigation and general counsel at Setfords, adds. The shift of many organisations to hybrid working patterns will make it difficult for any company to outright refuse a reasonable request to work from home.
Mackie also foresees that there will be “slightly more onus on the employer to try and find the solution” as a result of the new act and, if they can’t, to give a good explanation why. But she adds that there is nothing within the new law that compels employers to grant any proposals from staff.
What do HR teams need to be aware of?
It is likely that employers will have to field more requests as a result of the new legislation, particularly if their company does not already offer staff flexible working opportunities. But the new law is not expected to come into force until 2024, meaning that HR teams have some time to prepare.
Ford advises that employers update any staff handbooks or HR policies dealing with flexible working requests to reflect the new process before they come into place. HR teams should also be educated on the incoming changes to ensure they are aware of their new obligations.
This legislation has a few teeth if you get the process wrong
“Developing appropriate and effective systems for employees to make flexible working requests and receive feedback will be crucial,” O’Loughlin adds. “Employers will be exposed to potential grievances if effective procedures to deal with flexible working requests are not developed or adhered to.”
Failure to properly handle a request could mean that employers find themselves in breach of flexible working regulations. Mackie explains: “There’s a very strict process for flexible working requests and, if employers take too long to make their decision or give their appeal, they will automatically incur a penalty. This legislation has a few teeth if you get the process wrong.”
The maximum compensation that an employer would have to pay as a result of this is eight weeks’ pay, capped at the statutory maximum of £643 per week. “This poses the true threat for employers who are unaccommodating or unreasonably rigid in their approach to flexibility,” Ford adds.
Will it have any impact on employment status compliance?
O’Loughlin warns that the additional legal requirements also have the potential to “blur the lines between employees and contractors”.
“Employers would be well advised to ensure that clear distinctions exist between its relationship with contractors and with employees who work flexibly, in order to ensure that the distinction is maintained in law and that employees and contractors are clear on their status,” he adds.
Under IR35 rules, companies that HMRC deems to have been careless with registering employment status can be fined up to 30% of unpaid tax. If a company is seen to be aware of the error, this rises to 70% and active concealment will result in HMRC requesting all unpaid tax.
The flexible working act brings with it a number of changes for HR teams to consider and the consequences of not adhering to these new rules could be financially damaging for businesses.
