UK: Flexible Working - The New Rules

From 30 June 2014, employees with 26 weeks' continuous service will have the right to request flexible working, irrespective of their parental or caring responsibilities.

Many employers already offer flexible working to all employees but for most, the new rules will present new challenges, particularly in relation to how to handle multiple requests. This will inevitably lead to greater exposure to discrimination claims.

In our view, the new rules give rise to concerns that an employer's decision to reject a request will no longer be entirely in their subjective discretion, and so will be at risk of challenge in an employment tribunal. We also see difficulties with balancing competing applications. For example, should employers apply value judgements to decide competing requests? Also, what about if a request is granted, but a few months later another "more deserving" request is made by another employee? Is a "first come, first served" approach the right one to take?

In this briefing, we give you our views on these issues, as well as some practical tips for you to follow so that the risk of claims is minimised.

The new rules apply to requests made on or after 30 June 2014. Any requests made before that date must be made, and processed under the old rules.

Top tips for employers

• As far as possible, employers should stick to the business reasons for rejecting or granting a request, and make sure these are properly reasoned and documented
• Document the reasons for granting or turning down a request because if they do not have a good explanation this could lead a tribunal to infer discrimination even if, in reality, none exists
• To avoid claims, employers need to be able to give a plausible explanation, unrelated to any particular protected characteristic (such as sex, age or disability), for any difference in treatment of employees. The reasoning behind the decision should be sound, sensible and consistent, and should explore alternatives
• Ensure your flexible working policy has been changed to replicate the additional flexibility which the changes permit, in line with the Acas code and guide
• HR and line managers should be trained on how to deal with requests in compliance with the policy, to ensure a consistent approach. They will need to understand the importance of carefully recording the reasons for accepting and rejecting requests and showing how they have weighed up the benefits of the proposed arrangements (while avoiding stereotypes) against the adverse consequences to the business
• Include in your policy reference to a trial period and a review clause as possible conditions of the request being granted.

Decisions no longer entirely in the subjective discretion of the employer

Under the previous regime, there were very prescriptive rules governing the procedural steps that needed to be followed when an employee's request for flexible working was being considered. For example, the time periods within which meetings needed to be held and appeals convened. This is all being scrapped, to be replaced by an obligation simply to consider the request "in a reasonable manner" within an overall 3 month period. Ostensibly, this gives more flexibility to the employer, in line with the Government's red tape challenge.

However, the new Acas code, which sits alongside the new rules, indicates that in order to comply with the new duty, an employer must act reasonably in the way it makes its decision, not just in the manner in which it handles the application. For example, paragraph 8 of the code sets out guidance on how an employer should consider the request: "You should consider the request carefully looking at the benefits of the requested changes in working conditions for the employee and your business and weighing these against any adverse business impact of implementing the changes, see paragraph 11. In considering the request you must not discriminate unlawfully against the employee."

This responsibility under paragraph 8 is new. In what is surely an unintended consequence, it imports an element of objectivity into employers' decision-making process, which had previously been subjective. There were, and still are, 8 specified business grounds for rejecting a flexible working application, such as if the employer considers that there may be a detrimental impact on performance or on the ability to meet customer demand. These were, and purportedly still are, subjective tests in the view of the employer. But now if the employer does not conduct the balancing act advocated by Acas, the employee may have scope to argue that the employer has not "dealt with the application in a reasonable manner".

As a result, it will be open to disappointed employees to challenge the decision, albeit only to claim up to 8 weeks' pay capped, currently at GBP 464 per week. But the Tribunal also has the power to order the employer to re-run its process properly and this remedy has a new force given the requirement to conduct this balancing exercise.

Balancing competing applications

More enlightened employers have for some time given all employees the right to apply for flexible working. A number introduced this right at the time of the credit crunch, at least partly as a method of cutting costs without so many redundancies. But for most employers it will be a new challenge. In the short term, the majority of applications are still likely to be from mothers returning from maternity leave or women looking after elderly parents. But there will be occasions when employers face multiple applications from employees with different reasons for wanting to work part time.

Should employers in these circumstances apply a value judgment about which are the more worthwhile reasons for wanting to work part time, for example favouring childcare over golf? The Acas guide (the non-binding guidelines issued by Acas to supplement its statutory code) makes it clear that you don't have to, and that you could even decide between two otherwise legitimate applications by drawing lots. But most employers won't want to take as arbitrary an approach as this. Where only one of the applications can be accommodated within business needs, then it seems to us that, if the employer wants to decide on the basis of a value judgment about how "worthwhile" the employees' reasons are, then it can do so. Indeed the balancing act set out in the Acas code almost requires employers to do so, when it says that they should be "carefully looking at the benefits of the requested changes in working conditions for the employee and your business and weighing these against any adverse business impact of implementing the changes".

First come first served

A different but related point is what happens when applications for flexible working within the same department come not at the same time but one after the other. What if the employer's general policy is to favour childcare over golf as a reason for wanting to work part-time, but it receives - and has already agreed to - the golfing application a few months before it gets an application from a mother returning from maternity leave, which it can now no longer accommodate?

The legal position is that it is first come first served - i.e. that you should consider each application on its merits at the time you receive it - and that (unless you have built complex review provisions into the golfer's part-time contract) the returning mother will lose out.

This again is in one sense a perverse outcome - that the employees who really need, as opposed to want to work part-time may sometimes lose out under the new regime.

But in another sense it isn't. Part of the socio-political purpose of widening the right to request flexible working was to normalise flexible working as something that everybody does (or can do). In other words, to make it more culturally acceptable to the (still overwhelmingly male) business leadership that everyone may work part-time for certain portions of their career. With the intended result that employees (still overwhelmingly female for the foreseeable future) who do go part-time during certain pinch-points of their now longer working lives (because none of us can afford to retire any more and don't have to) can still be promoted. If working part time is seen as normal and not as opting out of the career rat race, then part time women have more chance of climbing the corporate ladder.

So individual women may lose out as a result of the Friday golfers, but these changes may still advance the cause of retaining women in the workplace and redressing the gender imbalance at more senior levels.

Changes to flexible working requests

Eligibility criteria

From 30 June 2014, employees can make a flexible working request if:

• They have at least 26 weeks' continuous employment at the date of the request
• They have not made another statutory request within the last 12 months

New process for considering requests

• The existing highly prescriptive statutory procedure will be abolished
• Instead, employers must deal with requests in a 'reasonable manner' as guided by the new Acas code
• The only statutory time limit will be that the employer must notify the employee of its decision (including any decision on appeal) within three months of the request
  • The code identifies the following 'keys to handling requests in a reasonable manner': Consider the request and arrange to discuss it with the employee as soon as possible
  • Inform the employee of their right to be accompanied
  • Consider the request carefully by weighing up the benefits for the employee and business against any adverse business impact
  • Inform the employee of the decision in writing
  • Discuss with the employee how and when the changes might best be implemented (if the request is accepted or accepted with modifications)
  • Allow the employee to appeal

Rejecting a flexible working request

The grounds on which an employer may refuse a request will not change under the new regime – these are:

• Burden of additional costs
• Detrimental impact on quality
• Inability to recruit additional staff
• Detrimental impact on performance
• Inability to reorganise work among existing staff
• Detrimental effect on ability to meet customer demand
• Lack of work during the periods the employee proposes to work
• Planned structural changes

Tribunal claims

Employees may bring a tribunal claim if their employer:

• Failed to deal with the application in a reasonable manner
• Failed to notify the employee of the decision within three months of the application (unless extended)
• Refused the request for a reason other than one of the prescribed reasons
• Made a decision based on incorrect facts
• Wrongly treated the request as withdrawn

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.