UK Employment Law Coffee Break | Flexible working, subject access requests and our July HR pensions spotlight
Published on 27th Jul 2023
Welcome to our latest Coffee Break in which we look at the latest legal and practical developments for UK employers
Flexible working legislation passed
The Employment Relations (Flexible Working) Act has now received Royal Assent; this was a private member's bill backed by the government in light of its desire to provide a "strong and flexible labour market which supports participation and economic growth".
The Act provides for the existing right to request flexible working to be enhanced as follows:
- Employers will be required to consult with an employee before rejecting their flexible working request.
- Employees may make two statutory requests in any 12-month period (rather than the current one request).
- Employers must make a decision on the request within two months of the statutory request being made.
There will no longer be a requirement for an employee to explain what effect, if any, the change applied for would have on the employer and how that effect might be dealt with.
We now await implementing regulations.
Day one right to flexible working
The Act does not provide for the promised "day one" right for an employee to make a request for flexible working; as it stands employees must still have 26 weeks' continuous service before they can make a statutory request.
However, this still appears to be on the cards with the government announcement stating that "alongside the measures in the Bill, millions of workers will be given the right to request flexible working from day one of a new job" and which "will bring an estimated 2.2 million more employees in scope of the entitlement". The government has indicated that this right will be brought in via regulations.
To give employers time to prepare for the changes, the government has stated that it expects the measures in the Act and secondary legislation to come into force in approximately a year.
Employers should also note that Acas is currently consulting on amendments to the statutory Code of Practice on making flexible working requests. The code aims to provide good practice on handling requests, as well as an explanation of the law, and is taken into account by tribunals when considering relevant cases. The Acas consultation closes on 6 September 2023.
Employers should now consider what changes they need to make to existing flexible working policies and ensure that managers are trained to recognise requests made under the new statutory procedure and manage them accordingly. The extension to the right to request flexible working will also sit alongside the new statutory right to one week's unpaid carer's leave, for which we are also awaiting implementing regulations.
These developments come at a time when employers are continuing to work out how hybrid working fits for their organisation in the longer term. Where an employee is unable to find the flexibility they need within the parameters of their employer's hybrid working policy, they may look to the statutory right to request flexible working to seek agreement to an arrangement which is a better fit for them.
While many employers recognise the value in employees being able to work in a more flexible way (for example in enabling greater diversity in recruitment and retention of staff) for many there are also strong motives to ensure that a structure is maintained for teams to come together in one place and provide a place for team-building, learning new skills and development opportunities, and a physical forum for collaboration, creativity and innovative thinking. The workplace also remains an important place for those employees whose home setting does not provide an appropriate place of work, or for whom the workplace is important in supporting a mental or physical disability.
Employers will need to ensure that a flexible working request is not dismissed without consideration simply because it does not fit within the organisation's hybrid working structure. Each request must be considered on its own merits in line with the statutory requirements, wider employment law considerations and the Acas best practice code.
Employers must remain alert to the fact that even though a request falls outside the statutory process (for instance, where currently an employee has less than 26 weeks' continuous service or the employee has made a number of requests within a year), careful consideration of the request may still be appropriate in the circumstances: for example where the request relates to a protected characteristic for the purposes of the Equality Act 2010. You can read more on the discrimination considerations in our earlier Coffee Break.
The government has also launched a call for evidence on non-statutory flexible working to gather knowledge of the extent of flexibility in the labour market. It aims to increase understanding of the role of informal flexible working in meeting the needs of both employers and employees. At a time when many businesses are now revisiting and reviewing how their hybrid working policies operate, it will be interesting to see the response to this.
With new legislation coming into effect, charity Working Families – in partnership with the government’s Flexible Working Taskforce and the Chartered Institute of Personnel and Development – is re-launching its "Happy to Talk Flexible Working" strapline and logo to assist employers in showing their willingness to consider flexible working from the point of recruitment. Working Families and the taskforce have also developed new guidance for employers, outlining the business case for flexible working and offering step-by-step instructions for designing and advertising flexible roles that work for businesses.
GDPR for HR: New guidance on subject access requests
Our latest edition of our GDPR for HR newsletter looks at new guidance from the Information Commissioner's Office (ICO) for employers on how to respond to a data subject access request (DSAR) from a current or former employee. This was designed to assist employers in handling DSARs and ensuring they fulfil their data protection obligations. It provides helpful clarifications for employers when approaching a DSAR exercise, as well as wider considerations for HR processes, such as investigations and settlement agreements.
We also look at the updated guidance from the ICO on practical steps that businesses and their staff can take to safeguard personal information and ensure data is kept safe and secure and the new government guidance on ethnicity pay gap reporting.
July HR Pensions spotlight: understanding an ageing workforce
Our recent Insight discusses the findings of our report "Providing for tomorrow today: understanding an ageing workforce", which draws on research conducted by Censuswide. This highlighted that younger workers are not saving enough in order to retire at the age they plan to. Therefore as workforces get older, individuals may reach their planned retirement age and not be able to retire. This may create difficulties for the employer in terms of succession planning and uncertainty over what the workforce will look like.
Our Insight highlights the important role employers can play in financial education around pensions and income. Employers might also like to review their pensions offering, especially the contribution structure for any money purchase (also known as defined contribution) pension plans and whether their pension arrangement offers the best value for money. Occupational pensions in particular are under the regulatory spotlight to ensure that the value they offer compares well to other alternatives, such as the commercial master trusts.
One of the areas looked at by the research was the average income (including pension) that workers felt would enable them to retire. The findings suggest that higher earners might expect there to be a greater gap between their current earnings and their total income in retirement than workers with lower salary. For example, on average, workers surveyed with a wage of £85,001 - £95,000 said an income of £57,000 (including pension) would enable them to retire, whereas workers surveyed with a wage of £35,001 - £45,000 said they would need an income (including pension) of £49,000 – higher than their current salary. The report also highlights differences in responses between staff working in particular sectors to give businesses an insight into what their workforce might be hoping for.
For an objective assessment, the Pensions and Lifetime Savings Association has published a guide to the annual income that single people and couples might need in order to enjoy a "minimum", "moderate" or "comfortable" retirement. The starting figures (which are updated from time to time) assume that you live outside of London and will not need to make any rent or mortgage payments. They are also based on a number of other assumptions which mean that some employees might need more.
Employers might like to take advice and consider what sort of retirement the typical contributions payable to their workforce pension is likely to provide. Is the contribution structure flexible? For example, when the employee pays more, so does the employer? How many employees pay more than the basic requirement? Would higher employer contributions or financial education help more staff to achieve their retirement goals? An increase to the employer contribution could be coupled with an explanation of the value that this adds to their total reward plus what that might mean in retirement as a result of investment returns and compounding.
If you would like to discuss making changes to your pension arrangements or contributions, please contact Claire Rankin or your usual Osborne Clarke contact.