Navigating the forthcoming flexible working reforms
Market Insight 31 July 2023 31 July 2023
UK & Europe
Workplace culture, behaviour & conduct
The Employment Relations (Flexible Working) Act received Royal Assent in July 2023. The landmark Act introduces several important changes to the current flexible working regime.
Shortly before the Act was passed, ACAS released a consultation on an updated Code of Practice to reflect the upcoming changes to the law, aiming to create a culture which is more supportive of flexible working arrangements. As the changes are expected to take effect a year from now, it is crucial for employers to understand the key changes and proactively address potential risks.
Key changes in the Employment Relations (Flexible Working) Act:
- Removal of requirement to explain impact of request: The Act removes the requirement for employees to explain what effect, if any, their flexible working request might have and how any adverse effects would be addressed. While this streamlines the application process for employees, it may pose challenges for employers in assessing the potential impact of flexible working arrangements on their business operations.
- Increased number of requests: With the Act allowing employees to make up to two flexible working requests within a 12-month period, employers may experience a higher volume of requests to manage. This influx may put additional strain on HR departments and line managers, demanding a well-structured approach to address each application fairly. An increased number of requests also enhances risks of grievances and discrimination claims. Granting flexible working arrangements to some employees but not others may create tensions within teams. Employers will need to implement transparent and fair decision-making processes to address any potential resentment or feelings of inequality among employees.
- Reduced response time: Employers will be required to respond to flexible working requests within 2 months, a significant reduction from the current 3-month timeframe. While this shorter response period aims to expedite the process for employees, it may create pressure on employers to make timely decisions and potentially overlook essential considerations.
- Mandatory consultation: The Act introduces a requirement for employers to consult with employees on their flexible working requests before rejecting them. While there is no minimum standard of consultation given in the Act, this requirement should encourage collaboration, particularly in light of the revised ACAS Code (see below). However, it may also lead to protracted discussions and negotiations, potentially causing disruptions to business operations and decision-making processes.
The flagship reform: Day One right to request flexible working
Currently employees need six months’ service before making a request but it is expected that regulations (to be introduced at the same time the Act comes into force) will entitle all employees from the first day of their employment to make a flexible working request.
Key aspects of the updated ACAS Code of Practice:
The statutory right to request flexible working is supported by the current ACAS Code of Practice on handling in a reasonable manner requests to work flexibly and also a more detailed non-statutory guide. The existing Code was published in 2014 and sets out minimum standards of fairness that employers should follow. Compliance with the Code can be taken into consideration by employment tribunals. ACAS is now consulting on an updated Code. The key aspects are as follows:
- New foreword: encouraging a positive approach: The draft Code highlights the mutual benefits of flexible working. It emphasizes a better work-life balance for employees and how an open approach to flexible working can improve diversity and address labour shortages for employers. This foreword sets the tone for a more positive and constructive attitude towards flexible working requests, encouraging meaningful dialogue and collaboration between employers and employees.
- Collaborative approach to consultation: Echoing the new statutory requirement to consult on a flexible working request, the updated Code seeks to encourage a collaborative approach during the consultation process. It suggests exploring alternatives together, ensuring that finding a viable solution becomes a shared responsibility. This approach complements the removal of the employee's requirement to explain the effect of their flexible working request, as proposed in the updated legislation.
- Strengthening good practice principles: While not statutory rights, the right to be accompanied to meetings considering flexible working requests and the right to appeal a rejection are strongly promoted as good practice by ACAS. The draft Code expands the group of proposed meeting companions to include union representatives and recommends offering appeals proactively. Employers are encouraged to explain in writing how appeals can be raised and to handle them impartially, providing employees with a fair and transparent process.
- Transparency: The updated Code places emphasis on transparency throughout the process. Even when a request is accepted, a meeting should be held to ensure that all relevant information is understood for effective implementation. In cases of rejection, the employer is encouraged to provide additional information to explain the decision thoroughly. This proactive approach aims to motivate employers to ensure well-founded decision-making, mitigating potential discrimination risks arising from opaque processes.
- Predictable working patterns: ACAS' revised Code also addresses the proposed right to request a predictable working pattern, clarifying how requests under the two regimes may interact. It explains that requests that aim to improve predictability may be better dealt with under the procedure for requesting a predictable working pattern.
What these changes mean for employers
Despite these progressive changes, it is important to remember that the right to request flexible working does not guarantee the automatic approval of the request. Employers will still have the discretion to assess requests based on business needs and operational feasibility. The eight grounds on which employers may refuse a request remain unchanged, providing a framework for legitimate reasons to reject requests while ensuring fairness and compliance with the law.
While the Act presents certain risks for employers, the Code's emphasis on positive dialogue, collaboration, and transparency will help create a supportive work environment, promoting employee well-being, and driving organisational success. To navigate the risks, employers must prepare by updating internal policies, establishing clear decision-making processes, and allocating resources efficiently. By aligning internal policies with the forthcoming new rules and embracing the principles outlined in ACAS' proposed updated Code, businesses will be able to navigate the changing landscape of flexible working, securing a competitive edge and fostering a more engaged, productive and agile workforce.
What to look out for next
- The Act is expected to come into force a year from now. Employers should look out for regulations introducing the day one right.
- The public consultation on the ACAS statutory Code will close on 6 September 2023 and is expected to be published when the Act comes into force.
- ACAS has also indicated it will update their non-statutory guide which sits alongside the Code.
- On 20 July 2023 the Department for Business and Trade issued a call for evidence on non-statutory flexible working, such as ad hoc and regular arrangements which employers may agree outside the flexible working regime.
Clyde & Co is here to assist you in adapting to these changes and ensuring compliance with the reforms. Please speak to a member of the employment team or your usual Clyde & Co contact if you have any questions or would like advice on flexible working requests.