The impact of the 1998 Working Time Regulations

UK employers have introduced a number of important changes to working time arrangements in recent years to improve performance and competitiveness, and the 1998 Working Time Regulations were widely seen as providing a further stimulus to major change. However, a major survey of employers conducted in the summer of 1999 shows that employers have so far focused on securing "flexibilities" to minimise the impact of the legislation. As a result, long-hours working remains common and there have been only limited signs of innovations such as annualised hours. Nevertheless, the implications of the legislation are likely to be much more significant in the medium to longer term.

There is mounting evidence that employers see working time change as a key to competitive advantage. According to the most recent results of the Warwick pay and working time survey, which has been conducted each summer from 1995 to 1999, some of the most significant initiatives to improve performance have been to do with working time. The 1999 survey examined developments in four important sectors - print, engineering, retail and the National Health Service (NHS) - with replies received from senior managers in 212 organisations, reporting on a combined workforce of over 427,000 employees. Of these: 53 were from printing firms; 99 from engineering companies; 12 from national retail companies; and 48 from NHS trusts. Over three-quarters (77%) of print workplaces, 62% of retail companies and NHS trusts, and 45% of engineering workplaces said that changes to working time arrangements had been introduced as an important or very important means of improving performance in recent years. In print and engineering, many of the changes focused on extending shiftwork arrangements, often accompanied by a cut in the basic working week. In retail and the NHS, more part-time work has been an important strategy in recruitment and retention, as well as helping to extend service times and respond to variable demand.

The UK's Working Time Regulations 1998 (WTR) were therefore introduced at a time when employers were looking to increase the flexibility of their working time arrangements. The Regulations, which came into force in October 1998 (UK9810154F), implemented the EU Directive (93/104/EC) on working time. The lack of a prior framework of law on working hours in the UK, together with established patterns of long working hours, meant that the Directive had a particularly significant potential impact in the UK (UK9805123F). The Regulations introduced for the first time: a statutory limit on average weekly hours of work (48 hours); a legal entitlement to paid leave; and new laws on rest breaks, night work and shift patterns. However, the WTR were framed to allow employers to vary the terms of implementation by agreement with employees either on an individual or collective basis.

The survey results show that the first reaction of many employers was to take steps to limit the impact of the WTR. First, around half of print and engineering workplaces, three out of five NHS trusts and all but one of the retailers had made or proposed an agreement covering "flexibilities" in the Regulations, such as averaging the reference period for calculating weekly hours over a longer period. In all but one of the NHS trusts, these agreements were made with the trade union rather than other elected workforce representatives. Union representatives were also involved in around half of the print workplaces and two-thirds of engineering and retail cases. Second, approaching two-thirds (63%) of engineering workplaces had introduced arrangements for individual "opt-outs" from the 48-hour weekly limit, or were in the process of doing so. Around half of employers in the other three sectors were also doing the same.

Long-hours working

Long-hours working remains common in all of the sectors apart from retail. In engineering and printing, over a third of firms (39% and 35% respectively) reported that at least some employees regularly work more than 48 hours a week, the "ceiling" introduced by the WTR. This reflects reduced headcount and an increasingly competitive environment where customers feel able to demand shorter production runs and delivery times. In the health sector, over one in five (22%) trusts reported such regular long-hours working, where it reflects recruitment and retention difficulties as well as reductions in staffing levels. Only in retail, where part-time working patterns predominate, was long-hours working not a feature.

Many of the changes to working time referred to above, such as more shift- and part-time working, were introduced to help cut down on long hours of work due to overtime. Employers have also taken steps to introduce greater variability in staff scheduling to share variations in workload more widely through the workforce as a whole. Around a third of print firms (31%) and engineering workplaces (29%) reported that they now had a system of variable hours over a standard week (often called "min-max" arrangements) for the largest occupational group. This was more developed in the NHS, where it was reported by 44% of trusts, and in retail where two-thirds of companies had such a system in place. However, the next step, "annual hours" systems, remained rare outside of the NHS and print (UK9812165F). These were found in 22% of the NHS trusts and 14% of print workplaces, but in only 2% of engineering workplaces and none of the retailers.

According to the survey results, the most important reasons for recent changes in working time have been to increase flexibility and reduce costs. Avoiding redundancy, and recruitment and retention could also be significant factors. Trade union pressure was less important, supporting the view that recent changes to working time arrangements have been predominantly managerial initiatives. Significantly, however, the WTR were a consideration in changes to working time in around half of the workplaces in the survey. The WTR were said to have been a "very important" factor in 38% of NHS trusts, 30% of print firms, and 22% of retailers. Only 8% of respondents from engineering workplaces said the same, although 36% reported the WTR to have been a "fairly important" consideration in recent change. Employers, it seems, had begun to take the WTR into account in their human resources and industrial relations planning at a fairly early stage, which probably reflects the publicity which the Directive itself originally attracted. However, one of the main ways in which employers often had to respond in the early stages was to improve their systems of record-keeping of working hours.

Longer term effects

The likely impact beyond 1999 of the main terms of the Regulations were explored in separate questions. The results show that respondents in each of the sectors expected the 48-hour limit to have important implications in the near to medium-term future (see the table below). This was the case even in retail, where it might reflect the long-hours working of managers. The effects are likely to be felt much more broadly, however. The Regulations concerning night and shiftwork appear to have a particular impact in health and printing, for example. Retail might be more affected by the provisions on statutory entitlement to paid annual leave.

Commentary

Employers have made a number of important changes to working time systems in recent years in order to improve performance. These have focused on introducing new patterns of work by adding shifts or increasing part-time arrangements. Existing employees have also had to deal with greater variability in the scheduling of their working hours. Yet long-hours working remains common, as a result of "downsizing", the extension of operational time throughout the day, and the spread of "just-in-time" systems.

In this context, the WTR have potentially major implications. In fact, the results of the Warwick pay and working time survey show that employers have been aware of the Regulations for some time. In many cases they have accommodated to the legislative stipulations in advance of their coming into force, though some of the main changes have been to administrative systems rather than working time arrangements per se. It is also clear that managers expect the substantive terms of the WTR to have important implications in the future. So far, however, the most immediate effect has been to encourage employers to seek "flexibilities" and "opt-outs" to minimise their impact by agreement with their employees. Paradoxically, this procedural effect might yet be one of the most significant outcomes of the introduction of the Regulations. By lending statutory support to the principle of consultation and negotiation over hours of work, the Regulations help to establish clearly and more widely working time arrangements as a primary concern of workplace industrial relations. (J Arrowsmith, IRRU)