Flexible success

With the summer holidays now behind us, many families have used the well-earned break to reassess their busy lives and plan a more effective work-life balance. Part of this reshuffle commonly involves adjustments to childcare arrangements. As the roads are again clogged with traffic on the school run, so too are employers’ in-trays – filling up with requests for flexible working arrangements.

Two recent cases, involving British Airways (BA) and law firm Herbert Smith, have highlighted some of the difficulties in this area. They demonstrate that mistakes can be made even by large employers, leading to costly claims and giving rise to damaging publicity. Valuable lessons can be learned from both cases, allowing employers – large and small – to avoid some of the pitfalls.

Pitfalls of refusing flexible work

Jessica Starmer won her case against BA at the Employment Appeal Tribunal (EAT) earlier this summer. Starmer was a 26-year-old pilot with BA. She made a flexible working request to reduce her hours by 50%, allowing her to care for her one-year-old daughter. Her request was rejected for, among other things, the consequent ‘burden of costs’ that granting the request would place on BA. Both the tribunal and the EAT found in favour of Starmer. The refusal of the request was seen as a breach of the Flexible Working Regulations and BA was found guilty of sex discrimination.

The media commentary in the aftermath of the tribunal finding was critical of BA and damaging to the company and its image as an employer.
In July, Herbert Smith, a top 10 City law firm, came before the EAT in similar circumstances. Michelle Langton was a former senior manager at Herbert Smith who was dismissed following a dispute over flexible working. Langton was made redundant from the firm while pregnant last year. On her return from a period of maternity leave in April 2002, she had worked on a part-time basis. Following the appointment of a new manager, she was told she was expected to revert to working the firm’s ‘core hours’.

A dispute subsequently arose in which some unfortunate statements were made to Langton. She was then dismissed because Herbert Smith was not convinced she could carry out her role on a part-time basis. The tribunal found in favour of Langton in her application for, among other things, sex discrimination. Again, the publicity surrounding the tribunal’s finding was critical, and the firm was disappointed by the outcome, given that it believed it had a working environment that embraced family-friendly policies.

The legal framework for these cases is principally contained in the Flexible Working Regulations. When first introduced in 2002, the regulations were thought unlikely to achieve their declared purpose of promoting family-friendly working arrangements. It was feared that the grounds on which the request could be refused and the limited penalty for failing to comply would deter people from making requests. However, the take-up for flexible working, both by employers and employees, has been much higher than expected.

The regulations do not assert a right to flexible working. Instead, they provide a legislative framework to be followed when considering these requests. The regulations only provide for requests to care for a child. If employers do not follow the correct procedure in dealing with such a request, or refuse the request for an unacceptable reason, a tribunal may order that the request be reconsidered and impose a fine of up to eight weeks’ pay.

The procedural timeframe within which these requests must be processed is reasonably tight. The requirements include a meeting with the employee within 28 days of the application. The employer’s decision must be provided 14 days after this meeting. If an appeal hearing is requested, this must be arranged within 14 days and the appeal finding provided within a further 14 days. While employers are entitled to refuse the request, they must do so for one of the specified statutory reasons.

Uncapped awards

Employers must also be aware of the Sex Discrimination Act 1975 (SDA). The SDA has been used by employees in this area because a breach of the regulations will, in many cases, also give rise to a finding of indirect sex discrimination. The refusal is likely to have a more significant detrimental impact on women than on men.

Crucially, a sex discrimination claim gives rise to an uncapped compensatory award. Such claims could therefore allow for significant payouts of hundreds of thousands or even millions depending on the employee’s pay package. The adverse publicity of a finding of sex discrimination, particularly for an employer such as BA, is likely to be more damaging than a straightforward breach of the Flexible Working Regulations.

What can employers learn from these cases which will assist them in the wake of the end of summer work-life balance reshuffle?

First, despite flexible working having been with us for some time now, employers are still getting it wrong. Many of the mistakes are due to the reluctance of line management to consider requests constructively. A constant line of communication between HR and line management is therefore critical.

The BA case illustrates the importance of selecting the most appropriate statutory reason for refusing a request. Large employers in particular should be careful when relying on ‘burden of costs’ as a statutory reason. Employment tribunals commonly treat this reason with scepticism. Unless strong evidence exists to support such a ground, large employers in particular should avoid using this statutory reason.

Significantly, both cases demonstrate the importance of avoiding the adverse publicity stemming from mistakes in this area. Even if an employer is subsequently vindicated on appeal, this often only merits two lines of editorial in the law supplement. The real damage is done through vilification by the press in the aftermath of an unfavourable tribunal finding in the first instance.

Negative publicity

Herbert Smith was particularly disgruntled by comments made following the tribunal finding in Langton’s case. It described the Equal Opportunities Commission’s comments as “one-sided, selective and grossly unfair in its criticisms of named Herbert Smith individuals”.

Statements relating to Langton’s childcare responsibilities not being “the concern of Herbert Smith” may have been unduly focused on by the commentators.

However, line managers should always be aware that such comments are likely to be quoted out of context in a tribunal hearing. Such comments can lose a case.

Employers should also beware of the potential adverse consequences an unfavourable finding can have on staff retention. Flexible working is an ever-growing trend in the employment market. An employer that fails to embrace the practice may quickly become known as the company that doesn’t tolerate flexible working. Such employers are likely to lose out on some of the best hires and will retain fewer staff.

What then does the future hold?

The Labour government is committed to family-friendly policies and is proposing to extend the right to those who need to care for dependants. Additionally, while the current regulations only cater for those requests made in relation to caring for a child, in practice, requests are being made – and being granted – for a constantly expanding range of reasons. Senior employees coming to the end of their careers, for example, are securing arrangements for part-time work as they near retirement. While the legislative framework does not cater for such requests, it is still worth considering them reasonably to avoid any adverse impact on staff retention and employee morale.

Daniel Wise is a barrister with City law firm Speechly Bircham

Avoiding the pitfalls

  • Draft a procedure for handling requests and approach all applications with an open mind
  • Ensure that all requests are channelled directly to the HR function
  • Consider those requests for reasons both within and outside the legislative framework
  • Train managers to understand the employer’s policy on flexible working and do not tolerate attitudes opposing flexible working on discriminatory grounds
  • Be critical of any reasons given for rejecting a request and beware of using the ‘burden of costs’ statutory reason for refusing the request
  • Explain clearly the reasons for the rejection of any application and use the appeal process constructively to right any possible wrongs in the way the application has been processed
  • Do not ignore the potential knock-on impact on other staff of granting the request, particularly on other professional women who have not opted for flexible working
  • Ensure those who work flexibly are flexible. Educate those making the requests that the most effective flexible working arrangements are those where real flexibility exists on both sides
  • Keep up to date. This area is constantly changing and employers can’t afford to miss a trick

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