By Shazia Shah

The City is beginning to awaken, albeit it sometimes feels like two steps forward and one step back with emerging Covid-19 variants. For many, though, a new normal, hybrid working, is beginning to take shape.

Before the pandemic, it is estimated that only 18% of all workers in the UK had some form of homeworking arrangements with their employer, with just 2% working mostly from home. Up to 54% of employees worked continuously at home during the coronavirus pandemic and now, 37% regularly work from home with 22% working from home all the time. The CIPD report, ‘Embedding New Ways of Working: Implications for the post-pandemic workplace’, offers these and other interesting statistics.

The pandemic has forced both employers and employees to think outside the box about how, when and where they work, and how this can improve efficiencies and profitability.

Legal framework: old and new

Despite the relatively low uptake, the UK has had a framework for homeworking in place for many years under the Employment Rights Act 1996 as amended by the Employment Rights Act 2002. Employees have a right to request flexible working (which includes remote working arrangements) if they have worked for 26 weeks continuously.

An employer must deal with the request in a reasonable manner, and there is an Acas code of practice on flexible working to assist. The request should be dealt with within three months, and an employer can only deny requests for a handful of select reasons. Failure to comply with the regime can lead to complaints in the employment tribunals.

The Government launched a consultation in September 2021, ‘Making Flexible Working the Default’, which sets out a number of proposals. These are built around the principle that working arrangements are best decided through dialogue between the parties. The Government intends to provide what it calls an ‘enabling framework’ within which these conversations can take place, rather than setting out specific legal requirements.

It will not change the law to allow employees a ‘right’ to have flexible working and employers will be able to turn down requests they can’t accommodate. Employees will still have to initiate the discussion (as they do now) and the focus of the consultation is to support employees to start these conversations and to help employers to respond to them. In other words, the Government has no intention of making flexible working the default position despite its manifesto pledge to do so.

It has set out five specific proposals

1. Making the right to flexible working a ‘day one’ right The Government believes that making flexible working available at the outset of the employment relationship will help encourage employers to consider flexible working options early in the job design and recruitment process, and give employees more confidence to make a request. Even if that’s true (and I have my doubts), the problem is that on day one, the employee may not have any actual experience of how the job works in practice and their assumptions about how they’d like to work may be completely impractical.
2. Ensuring that the eight business grounds for turning down a request remain valid Employers who turn down a request to work flexibly under the statutory scheme must be able to point to one or more of the business grounds set out in the legislation. The Government doesn’t believe that these present a disproportionate barrier to flexible working (they don’t) and doesn’t think that they need to be changed. However, it wants to find out if the existing business reasons are still appropriate.
3. Requiring the employer to consider alternatives Currently, an employer can turn down a request if it has a relevant business reason. It doesn’t have to consider alternatives to the one proposed (although, in practice, many employers do). The Government wants to explore whether it’s practical to ask employers to set out, when rejecting a request, what alternatives it has considered (and, if viable, presumably offered to the employee). It believes that asking employers to consider alternatives will help influence organisational norms.
4. Reviewing the administrative process underpinning the process Currently, an employee can only make one statutory request every 12 months and their employer has three months to consider it. The Government is considering removing both the 12-month barrier and shortening the three month period for consideration. It is obvious that people’s personal circumstances can change and they may need to ask to make a further request to alter their working patterns before the end of the 12-month period. The reduction to the time limit of three months to consider the request is also welcomed, as it should not take a quarter of a year to decide if the request can be granted.
5. Requesting a temporary arrangement Currently, if the employer agrees to an employee’s flexible working request, it will be a permanent change to the employee’s terms and conditions of employment unless the parties agree otherwise. The Government believes that the ability to request a temporary arrangement is under-utilised and it wants to know if businesses are aware that they can agree short-term arrangements.

Beyond the pandemic

The Covid-19 pandemic has resulted in an explosion in home working. Hybrid working has been, for many employees, a great benefit: a better work/life balance, lack of a time consuming commute, and possibly even lower childcare costs. Indeed, it has also been a bonus to many employers; with a happier workforce, opportunities to downsize property costs/other overheads (paper, furniture, travel for meetings etc), increased productivity and reputational benefits – and many have embraced it.

However, for some firms, there is a keen desire to bring people back into the office on a more full-time basis, from banks such as JPMorgan Chase and Goldman Sachs, to tech firms such as Netflix and Apple. So where then do workers stand amid this tension, and with calls for pay-cuts to those working remotely?

Right to remote working/hybrid working

The pandemic has not changed the law as it relates to flexible working. Employees have the right to ask to change their working pattern or their location and employers have a duty to consider it. Pre-pandemic it was relatively easy to turn down applications, provided the employer didn’t operate a blanket ban and could point to a material adverse impact on its business. But, it may be much more difficult to do so now, particularly where staff have been working in different ways in response to the pandemic and want to maintain that level of flexibility.

Employers may have to give much more thought before they turn down requests and, be prepared to explain in much more detail their reasons for doing so than they are used to. This could lead to an increase in the numbers of employees challenging decisions that don’t go their way and to consider whether they can use the existing equality framework to bring discrimination claims (sex, age, and disability).

Even if the Government does make the right to request flexible/hybrid working a ‘day one’ request, it may not encourage more staff to have conversations about their working preferences. The Government has already made it clear that it does not intend to impose a legal duty on employers to say in job adverts whether they are open to flexible working. New employees won’t necessarily know how their employer is likely to react if they immediately make a request to change when or how they work and that may put them off asking. And those employers that do ask could become quickly disillusioned with their shiny new job if they don’t get exactly what they want, which is hardly the start both parties would want.

It’s therefore difficult to predict whether the right to request a different working pattern at an earlier stage in the employment relationship is likely to increase the numbers of claims against employers who turn down requests. However, reducing the time limit from three months may increase claims. The Government is considering requiring the process to be concluded in less than two weeks. Anyone who has been involved in this process will know that such a short timescale is completely unrealistic unless the parties are in agreement at the outset. Unless the parties agree to extend time, an employee can ask a tribunal for up to eight weeks’ pay by way of compensation even if the delay didn’t affect the outcome.

Hybrid working and pay

Companies such as Facebook and Google are believed to be considering cutting the pay of those workers who choose to work remotely in the US. They may be able to justify this on the basis that employees don’t have to commute and can relocate to an area with a lower cost of living. It appears that US employers may be able to legally and unilaterally reduce the pay of their employees, but employers (and employees) in the UK should be aware of their legal position before they attempt to follow suit.

The default position is that an employer cannot unilaterally reduce an employee’s pay without their consent. Doing so is likely to be a repudiatory breach of contract and potentially unfair constructive dismissal (see Cantor Fitzgerald).

Unless an employer can persuade its staff to accept a pay cut for working from home (which is unlikely), it will have to consider other ways of doing this. One option is to dismiss employees and offer them re-engagement on differing pay (and potentially remote working) terms, a practice known as ‘fire and re-hire’.

‘Fire and re-hire’ on these grounds may also lead to a claim of unfair dismissal, as the employee is ultimately being dismissed before being offered new employment. There must have been a potentially fair reason for the dismissal, and employers are likely to rely on ‘Some other substantial reason’ under s.98 of the Employment Rights Act 1996. Reduction of costs can be a potentially fair reason where it is needed (for example, Slade), but a fair procedure will still need to be followed. This will include ample consultation and considering other alternatives.

It is unlikely that a reduction of salary will be considered necessary simply because an employee is working remotely or flexibly, unless there is a genuine pressing business need. Even so, targeting homeworkers could be considered unreasonable, especially when other cost-cutting measures exist, such as slimming overheads in offices, voluntary redundancies etc, and could be discriminatory for various reasons:

• Indirect sex discrimination – if women are more likely to be working from home;
• Associative disability discrimination – will claims from carers be more prevalent? And
• Age discrimination – if older people are making the requests.

Conclusions

Flexible working, such as remote working and compressed hours, is clearly beneficial to many people, allowing a better work-life balance. It can be even more beneficial to those with commitments outside of work, such as carer responsibilities, eldercare and childcare.

The pandemic has resulted in an explosion in homeworking, demonstrating the workability of flexibility, widening the realms of what is achievable, and undermining the viability of the statutory reasons to reject a flexible working request.

However, the balance of power in many flexible-working requests has now already clearly changed with a shift towards employees, potentially irreversibly, and the ‘new normal’ of hybrid working is here to stay.

This article was first published in ELA Briefing (© Employment Lawyers Association).