A survey published by the Confederation of British Industry in September 2005 highlights employer concern over the impact of the right for workers to request flexible working, and of employment legislation more generally. Other recent reports reach a more positive verdict.
One of the issues highlighted by the Confederation of British Industry (CBI) in its Employment trends survey 2005, published in September 2005, is the apparently increasing discontent among employers with the right of some employees to request to work flexibly. Other recent research offers a different view, and the debate links to a wider controversy about the business effects of employment regulation generally (UK0112103N).
The CBI findings
The CBI survey reports data from 420 senior executives across a wide range of sectors and company sizes. On the issue of flexible working, which parents with young children have the right to request under the Employment Act 2002 (UK0210103F), the findings indicate that employers offer a positive response to 90% of requests to work flexibly. This can take a range of forms, with 55% of surveyed firms formally agreeing to the request, 20% agreeing informally and 15% reaching an acceptable compromise with the employee. The smallest companies were the least likely to refuse a request, and more likely to accept requests informally. However, the proportion of companies reporting that the right to request flexibility is having a negative impact on their business rose from 11% in 2004 to 26% in 2005, and the number reporting a positive impact fell since the 2004 survey from 25% to 21%. Smaller companies were more likely to report no impact (81% of those with fewer than 50 employees) and larger firms most likely to report positive effects (48% of those with more than 5,000 employees).
The CBI report argues that mounting dissatisfaction is linked to the cumulative effects of this and other employment legislation introduced since 2000. More specifically, it could be linked to government plans to widen entitlement to the right to request to work flexibly, along with other 'family-friendly' measures (UK0507104F). Over three-quarters of all firms reported spending an increasing amount of time dealing with compliance-related administration, and almost 60% reported that valuable senior management time was being diverted to dealing with new employment legislation. The deputy director-general of the CBI, John Cridland, said that 'companies have made great strides during the last 18 months to make a reality of the government’s family friendly policies. But this survey provides a disturbing insight into the impact that new employment legislation is having which a government committed to better regulation must heed ... Companies still need to get the job done. The temptation to overwhelm them with unjustified employment law, just to placate the trade union movement, must be resisted.'
In response, the general secretary of the Trades Union Congress (TUC), Brendan Barber, said that 'the right for new parents to request flexible working, to which employers can too easily say no, is one of the most popular rights introduced by this government as a result of union campaigning. For the CBI to see this as simply a way of placating trade unions, rather than a key way of retaining and motivating staff, says a great deal about their attitudes to the modern world.'
Positive effects
A more optimistic employer assessment of the new employment rights was published by the Chartered Institute of Personnel and Development (CIPD) earlier in the year. Its February 2005 report, Flexible working: impact and implementation, based on responses from human resource (HR) professionals in 585 organisations, found that three-quarters reported a positive impact of flexible working practices on employee retention, two-thirds reported improvements in employee motivation and over half said there were benefits in recruiting staff. Positive effects were also reported in terms of absence, productivity and customer service, though a minority (around 15%) reported some problems in terms of teamworking and knowledge sharing. Despite this, 40% of organisations had extended the right to request flexible working beyond the statutory requirement, and two-thirds of organisations also reported an increase in the number of employees making use of flexible working arrangements.
Rebecca Clarke, the CIPD’s organisation and resourcing adviser said: 'At a time when recruitment and retention are major problems for many employers operating in the current tight labour market, it is good that many are discovering that flexible working can be a win-win situation for their business and their employees. Far more employers have found this new, light-touch, legislation to be a boost for their firms than those feeling it is negative.' Similar results have been reported elsewhere by case study research.
These findings were reinforced by a further CIPD study published in June 2005 - Employment and the law: burden or benefit?. Only 14% of the 601 organisations represented in the latter survey saw the right to request flexibility as 'unnecessary red tape', though there were strong sector differences (5% in the public sector compared to 23% of manufacturing companies). Likewise, 74% of public sector respondents viewed the right as a 'driver of good practice', compared with 41% in manufacturing. Managers in the commercial sectors were also more likely to report problems of managing employees with different shift patterns or accommodating their preferences to operational needs. However, such concerns were muted by the low take-up of the right to request flexible working: nearly one in five organisations (18%) reported receiving no requests, with most (57%) receiving one to 10 requests and almost all of the remainder 11-50. Only 38% of organisations reported no business benefits from the legislation, with most of the reported gains being improvements in staff retention and morale.
The burden of employment regulation?
The wider employer objections to mounting employment regulation reported by the CBI were also contradicted by the June 2005 CIPD report, the broader purpose of which was to examine 'whether employment legislation promotes efficient employment practice or creates an unnecessary burden on UK businesses'. As indicated above, its scope included perceptions of the right to request flexible working, but it also canvassed views on extended maternity and paternity provision, new anti-discrimination laws, the Information and Consultation of Employees Regulations (UK0502103N), statutory dispute-resolution rules, statutory union recognition (UK0201171F), and the Working Time Regulations (UK9810154F). Overall, the findings were that 'the majority of employers see employment law as making a positive contribution to employee relationships and as increasing employees’ sense of fairness and trust in their employer'. The survey also indicated that many of the concerns employers have about 'red tape' are caused by 'the clumsy drafting of legislation and inadequate guidance', rather than objections to regulation per se, with the biggest complaint concerning the time spent on administration. Most criticism was reserved for the Working Time Regulations, where 57% of respondents reported a negative impact. As a result, the proportion of the workforce covered by opt-outs from the 48-hour week (UK0401104F) rose from 18% in the public sector to 52% in private services and 65% in manufacturing. In the CBI report, three-quarters of companies said that removing the opt-out would affect their ability to do business, with approaching half (43%) saying that it would have a significant or severe impact.
The overall verdict of the CIPD studies is supported by a report of the House of Commons Trade and Industry Committee, UK employment regulation, published in March 2005. The report, which included submissions from employers and trade unions, concluded that: 'We are not convinced that the burden of regulation is excessive or damaging to competitiveness at present.' The committee also stated: 'We are pleased that the right to request flexible working for the parents of young children has been well received and welcome the proposal that it should be extended to all those with caring responsibilities. With the numbers of working mothers rising and an ageing population, employers will find that accommodating the caring obligations of their employees is a necessity, not a luxury.'
The select committee report also suggested that many employers were over-ready to make recourse to the opt-out provisions in the Working Time Regulations. The report concluded that 'we are not convinced by the arguments for retaining the opt-out from the working time Directive, which we consider has enough flexibility to accommodate the needs of business'. The British Chambers of Commerce (BCC) responded that 'a fundamental strength of our economy is the flexibility of our labour market. Losing the opt-out could damage this flexibility.' It added that the committee was 'clearly out of touch on regulation', not least given the deregulatory thrust of two government-sponsored reports also published in March 2005 - Regulation: less is more from the Better Regulation Taskforce, and Reducing administrative burdens, the final report of the Hampton review for the Treasury of more efficient approaches to regulatory inspection and enforcement.
Commentary
Government proposals to extend family-friendly rights (UK0507104F) were always likely to revive the debate over the impact of employment legislation in the UK. The CBI seems to have an instinctive dislike of statutory interventions in employment and the labour market, preferring market-based approaches to disseminating good employment practice. This is echoed by the BCC, which also has specific concerns about the impact on small firms, though the idea that small employers necessarily suffer a greater burden of employment regulation is debatable (UK0310105F), and somewhat contradicted by the CBI data. The CIPD, for its part, is well placed to offer a reasoned evaluation, given that HR managers are usually responsible for implementing and monitoring new regulations in the workplace. However, they also arguably have a vested interest in supporting employment law to bolster their professional status within the organisation. In these research reports much, it seems, depends on who you ask and what you ask them. The more interesting, and challenging, question was raised by the select committee report, specifically in relation to the opt-out form the Working Time Regulations. By implying that granting employers greater 'flexibility' over how they respond to legislation might undermine its intended 'fairness' and 'efficiency' effects, the case is made for tighter rather than looser regulation; the focus on more or less is a distraction from the key point of effectiveness. (J Arrowsmith, IRRU)