Government investigates flexibility of employment law

Could a move to employment law based on guidance be a solution to the over-regulated UK workplace? John Charlton reports.

Our political masters have stirred the employment law pot quite vigorously this year, yet little of substance has yet been served.

One of the Government’s objectives is to increase flexibility about how employers and employees agree on flexible working patterns and also to promote flexibility on negotiations over other employment terms such as pay. This might be achieved by a move away from regulations towards guidelines.

In the near to medium term, the Government is digesting responses to its Modern Workplaces consultation, the deadline for which passed in August 2011, and deciding what it will do next as regards to flexible working. This covers several key areas such as the right to request flexible working, leave entitlements, Working Time Regulations and maternity and paternity leave.

The Government believes that current rules on parental leave “are too rigid, restrict employers and are based on outdated ideas of parenting and family responsibilities”. It wants to replace the current first year entitlement with:

  • four months’ maternity leave around birth, plus two weeks’ paternity leave;
  • one month paid for the mother, one month paid for the father; and
  • seven months’ flexible parental leave.

In addition, it has proposed that parents and employers can consult on how parental leave should be taken, including, for example, on a part-time basis. These arrangements will also take into account the needs of employers as well as employees.

Such changes to the current parental leave regime, largely focused as it is on ordinary and additional maternity leave, would represent a fundamental switch. Whatever happens, it will be some time coming. In Modern Workplaces, the Government says that changes to parental leave will not be in place until 2015, which may well be an election year.

“Our challenge between now and then is to make a compelling case for the new culture of workplace flexibility that our proposals will facilitate,” it adds.

Flexible thinking

The right to request flexible working may also be revised, with employers having a duty to consider all requests “reasonably”. They will be guided by a code of practice. The 26-week qualifying period for requesting flexible working may be dropped, and employers may be encouraged to raise flexible working issues at the job interview stage. Employees may also be allowed to make an additional request – during a 12-month period – if the original request is expected to be temporary.

quotemarksOur challenge between now and then is to make a compelling case for the new culture of workplace flexibility that our proposals will facilitate.”

Modern Workplaces consultation

The Government has set out its plans to amend the Working Time Regulations to take into account recent rulings by the Court of Justice of the EU, especially those covering the accrual of leave during sickness absence. This should come into effect next year.

Finally, the Government says that it is looking at lifting some of the regulatory burden from micro-businesses and start-ups.

Back in the real world, and especially in the private sector, the recent and current relatively harsh economic and business climate has compelled many employers and workforces to adopt a flexible approach to pay and conditions. Reduced hours, pay freezes, flexible working and pay cuts have been the order of the day for many as companies and employees alike seek to survive the downturn.

Employers’ bodies have referenced the Government’s Modern Workplaces consultation as evidence that guidance rather than legislation is what is needed in any reform of employment law.

The CBI has stated that: “The Government should build on the success of workplace relations forged during the recession by embedding this flexible approach into future employment law. Rather than automatically opting for legislation in most cases, the Government should specify what it is trying to achieve and set out suggested processes in more flexible guidance or codes of practice.”

CBI director-general John Cridland adds: “We simply don’t need the state telling us how to manage every aspect of basic human relations. The Government should adopt a simpler approach to future employment laws, one which maximises choice for employers and staff and plays up the strengths of our flexible labour market.”

Simplified outlook

Manufacturers’ body the EEF also proclaims the joys of employer-employee cooperation and calls for the Government to “look harder at alternatives to regulation and to avoid complex and prescriptive regulations that get in the way of increasingly productive relationships between employers and employees”.

The EEF cites recent research that it conducted, Flexibility in the modern manufacturing workplace, based on a survey of 214 companies. Among the findings:

  • 30% of those polled think that the UK working and regulatory environment provides the flexibility they need, compared with 41% who disagree;
  • 80% of firms surveyed said that cooperation between management and workforce had helped achieve the flexibility they needed; and
  • 90% of respondents said that flexibility in the workplace was necessary to meet customer needs.

The EEF has used this to back its call for the Government to take a non-regulatory approach to future employment regulations, to simplify existing legislation; to promote employer-employee communications in the workplace, and to resist any EU proposals that will “damage” the UK labour market’s flexibility.

quotemarksThe Government should adopt a simpler approach to future employment laws, one which maximises choice for employers and staff and plays up the strengths of our flexible labour market.”

John Cridland

Other employers’ bodies take a similar line. For example, the Institute of Directors says it “strongly supports” flexible working. “In principle, we also support shared parental leave, providing the administration of the leave is not burdensome to employers. Unfortunately, the Government is implementing these proposals in a way that will add to the complexity and cost of managing workforces,” it adds.

The Government is also toying with the idea of excluding micro-businesses and start-ups from some employment law red tape. The Chartered Institute of Personnel and Development warns that this may create a two-tier labour market and would give a “perverse disincentive” to such firms expanding.

But Conservative MP Mel Stride says that maternity leave Regulations are too onerous for very small companies, while 64% of employers polled in a survey by HR consultancy Reabur said they did not expect staff to return to work at all after maternity leave.

Of course, what many employers would like is for employment law to be rolled back. The harsh economic climate should strengthen their case but the political reality is that the Liberal Democrats effectively hold the balance of power and would not countenance much of a move away from the current regulatory regime that relates to flexible working.

More regulation

No surprise that the labour side of the flexible working equation is rather wary of what may emerge once the Government firms up its plans.

TUC senior policy officer Sally Brett says its submission to the consultation process will stress its concerns over some of the ideas that are being floated, “such as the very low levels of statutory pay for parental leave and the reduction in designated maternity leave to 18 weeks, which could mean some employers cutting back on more generous occupational maternity pay”.

It wants more, rather than less, regulation. “We hope,” adds Brett, “that ministers remember how much of a success family-friendly working rights have been over the last decade and push ahead with further changes, including the extension of the right to request flexible working to all workers.

“Removing the statutory procedure for handling a request will make it much harder for employees to get a fair hearing. Good employers already go far beyond the statutory minimum – regulations are there to push on those that are less prepared to help staff. Guidance alone is not strong enough to make reluctant employers seriously consider flexible working requests.”

quotemarksSimply transposing the existing statutory procedure into a code of practice does not address the concerns of many employers.”

Vanessa Hogan
Hogan Lovells

Commenting on the proposed changes to the right to request flexible working, Vanessa Hogan, senior associate at Hogan Lovells, says: “Simply transposing the existing statutory procedure into a code of practice does not address the concerns of many employers. That said, it is important to remember that the proposals are to extend the right to request flexible working – not the right to actually work flexibly. While the Government is proposing to extend the right to request flexible working to all employees, the eight business reasons under which a flexible working request can be rejected will remain unchanged.”

Making a difference?

In the view of Mark Taylor, an employment partner at Jones Day, “very little would happen” following a move from regulation to guidance. “The aspect most employers fear is sex discrimination – as it is an act of indirect sex discrimination not to accommodate part-time working unless there are good objective grounds for refusal – and not the actual Regulations themselves.”

However, Maya Cronly-Dillon, senior associate at Hogan Lovells, commenting on extending the right to request flexible working, says: “Managing competing requests made for different reasons could pose some tricky employee relations issues. Certainly the expanded scope for potential requests will mean more management time spent handling them, an increased risk of grievances and, possibly, discrimination claims from employees who have their requests turned down.”

Taylor adds that extensions/amendments to parental rights “are likely to be inviolable. Also, the sex discrimination legislation weighs very heavily in that area – again very unlikely there will be any changes here. Cynically, one could say that the Government will like granting rights which are not heavily taken up. They can promote their family-friendly credentials while placating businesses by saying the burden is not proving onerous”.

Taylor also says that the safest grounds on which to turn down a request for flexible working are: “Either having trialled it and being able to show material inefficiencies and shortcomings, or trying and failing to recruit a suitably skilled job-share partner where it can be shown there is a need for full-time cover.”

XpertHR provides a good practice guide on flexible working.

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