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Recent Changes to Flexible Working Requests

by internationalbanker

 

 

 

 

By Emma Vennesson, Counsel, Charlotte Marshall, Associate, and Emily Evans, Trainee, Faegre Drinker Biddle & Reath LLP

 

A recent expansion of the statutory flexible working request regime has made it easier for employees to make flexible working requests. This comes at a time when many banks are taking an increasingly tough stance on in-office work, so it is unlikely to be popular in certain circles. However, whilst the changes may create increases in the number of requests that employers receive, they do not substantially alter the position of employers regarding accepting or rejecting employees’ requests.

There is some variance across the banking sector in the approach to flexible working. Some US-headquartered banks require their bankers to be in the office five days per week, whilst, at the opposite end of the scale, some UK-based banks mandate staff to be in the office only several times a month. A recent article by the Financial Times highlighted research showing that 93 percent of UK finance companies offer hybrid-working options, which is often a key consideration for prospective applicants. The effective handling of flexible working requests can be an important factor in maintaining positive employee relations whilst also balancing the stringent requirements of client confidentiality and robust data-protection practices required in banking.

What is a flexible working request, and what has changed?  

In the United Kingdom, employees have the legal right to request flexible working arrangements—a provision first introduced in 2003. With a statutory flexible working request, an employee requests a change to their terms and conditions relating to their hours, the times that they are required to work or their place of work. This includes requests for home- or hybrid-working.

The statutory flexible working request regime was expanded by recent legislative changes introduced on April 6, 2024. As part of these recent changes, the requirement to have 26 weeks of service has been removed so that employees can now make flexible working requests from Day One of their employment. Employees can also make up to two flexible working requests in a 12-month period, whereas previously, they could make only one.

Additionally, employees no longer need to explain the potential effects (if any) of their requests and how the employer could deal with them, which they previously needed to do. Under previous legislation, it was considered best practice for the employer to consult with the employee before a flexible working request was rejected. However, consultation with the employee is now a mandatory requirement before rejecting any request. Finally, once a decision is made, it must now be communicated to the employee within a shorter timeframe of two months (rather than three) from the date of the request.

These changes make it easier for employees to make flexible working requests. They do not, however, change the basis upon which employers can reject a request.

What counts as a flexible working request?

A flexible working request must meet certain requirements. For example, it must be made in writing, dated and state that it is a request made under the statutory procedure. If an employee makes a request verbally, this can be considered an “informal” flexible working request. While there is no obligation on the company to follow the formal process in this case, it may be more efficient to do so if the employee is likely to make a formal request at a later date. It would also avoid any inconsistencies in the reasons given for rejecting the informal and formal requests, which could expose the company to potential claims.

What must employers do?

Upon receipt of a flexible working request, there are certain steps that employers must take, regardless of their internal policies or expectations. Once a valid request has been submitted, the employer must (i) deal with it in a “reasonable manner”, (ii) notify the employee of its decision within two months of the date of the request and (iii) refuse the request only if it considers that one or more of the eight statutory reasons for refusal apply.

To demonstrate that it has dealt with the request in a “reasonable manner”, the employer should acknowledge the request once it has been made and set out the next steps in the process. Usually, this would be to invite the employee to a meeting to discuss the request. The employer must consult with the employee prior to rejecting his or her flexible working request. However, if the employer accepts the employee’s request in full, it is not necessary to hold a meeting.

Once an employer has concluded the process, it should respond with its decision in writing, and the employee should be given an opportunity to appeal the decision. The whole process (including any appeal) must take place within two months of the request (unless extended by agreement between the employer and employee).

Employers can agree to the request, reject it or propose a variation or a trial period. Any agreement to either the original request or a modified version will constitute a permanent contractual variation of the employment terms, unless otherwise agreed.

Crucially, an employer may refuse a request for flexible working only if it considers that one or more of the eight statutory grounds for refusal apply:

  1. the burden of additional costs,
  2. detrimental effect on the ability to meet customer demand,
  3. inability to reorganise work among existing staff,
  4. inability to recruit additional staff,
  5. detrimental impact on quality,
  6. detrimental impact on performance,
  7. insufficiency of work during the periods the employee proposes to work and/or
  8. planned structural changes (for example, the employer intends to reorganise or change the business and believes the request will not fit with these plans).

The above grounds for refusal are broad and will likely enable banks to make robust decisions in relation to requests in the majority of cases. For example, a bank facing a request to work from home from an employee who works on the trading floor may be able to make a case that home-working would have a detrimental effect on the ability to meet customer demand, as well as on quality and performance. Additionally, employees in the banking sector are subject to strict confidentiality and data-protection obligations. When it would be difficult for the employer to ensure compliance with these obligations if the employee worked from home, the employer is likely to have sufficient grounds to reject the request. Each request, however, should be dealt with on a case-by-case basis.

What if the employer gets this wrong?

Employers cannot simply ignore these requests. Failure to deal with a request reasonably or rejecting the request for a reason other than one of the eight statutory reasons (for example, on the basis that it is against the bank’s policy) could give rise to a claim that there has been a breach of the flexible working statutory scheme. An employment tribunal’s ability to scrutinise the employer’s decision in relation to this claim is fairly limited, and compensation is currently capped at around £5,600.

Other potential claims arising from rejections of flexible working requests may have more significant impacts. Employees who have made these requests must not be subjected to any detriment or be dismissed because they have made a request. Should the employer take either of these steps, it would be exposed to potential claims that include detriment and automatic unfair dismissal.

Claims of sex discrimination, and particularly indirect sex discrimination, can also result from rejections of flexible working requests. Indirect discrimination arises when acts, decisions or policies that are not intended to treat anyone less favourably have the effect of disadvantaging a group of people with a particular protected characteristic in practice. An example of indirect sex discrimination is when an employer requires an employee to work full-time—since this requirement could disadvantage women, as women tend to bear greater shares of domestic and childcare responsibilities than men and are more likely to want (or need) to work part-time. If an employee is successful in a claim of sex discrimination, the compensation that can be awarded to the employee is uncapped and, therefore, can be very significant.

Claims of constructive dismissal and constructive unfair dismissal could also arise from an unreasonable rejection of a flexible working request if such a rejection amounts to a fundamental breach of contract by the employer. In the event of a successful claim of constructive dismissal, compensation would be limited to any amounts contractually due to the employee under his or her employment contract. Successful claims of constructive unfair dismissal would be capped at around £136,000—although if the rejection is found to be discriminatory, compensation would be uncapped and potentially very significant.

What should employers be doing now?

Dealing with a flexible working request is a delicate situation that can potentially expose the company to a number of claims. Any statutory flexible working request should be considered in accordance with the statutory regime outlined above and on a case-by-case basis.

Banks that do not already have flexible working request policies in place should consider implementing them, and any policies dated before April 6, 2024, should be updated in light of the recent changes. Banks should also ensure that managers have received training on flexible working requests and the steps they should take if they receive them. Employers must be well organised and implement policies and procedures to deal with requests within the shorter prescribed time frame of two months.

Proper consideration and accommodation of flexible working requests will have positive effects on employee retention and morale. If banks can demonstrate that they will properly consider any request (even if, ultimately, they are likely to reject it) and provide robust reasoning for any rejection, it will not only protect them from exposure to potential claims but also encourage positive relations between management and employees.

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