Offering flexible working models to attract and retain staff

Out-Law Analysis | 02 Sep 2022 | 11:06 am |

Employees are increasingly looking for more flexible working time models and a better work-life balance. Employers can stand out in the competition for talent if they adapt to these demands, but they must take the legal framework into account.

The times when businesses could lure young talent and experienced professionals with lavish salaries and big company cars alone are coming to an end. Today’s employees are increasingly prioritising a healthy and satisfying balance between work, family and leisure, in which they can plan their time as well as their life choices more flexibly. Offering ways to individually shape their own working time has therefore become a significant way of attracting talent.

Alongside the classic part-time and fixed-term employment models, there are a variety of other options and concepts for flexible working. Here, we look at the possible tools and their legal frameworks in four of our jurisdictions.

  • UK

    Employers in Britain can provide a variety of flexible working practices for the benefit of their employees and the organisation itself. Those that truly embrace the concept of flexible working may find that this positions them well when it comes to attracting and retaining talent.

    A variety of factors have led to an increase in demand from employees wanting to work flexibly. These range from the changes to working practices as a result of Covid-19 pandemic to a shift in economic, technological and social trends, which mean that employees are now actively seeking out employers who can offer them the flexibility that they want.

    Given the importance of flexible working to attracting and retaining key existing and potential employees, it is useful to take the time to review the current legal position in Britain relating to this matter, along with other contractual arrangements that employers in Britain can offer to suit their business. It should also be noted that the legal position in Northern Ireland is different to that in the rest of the UK.

    The legal position in Britain

    In Britain there is a statutory right to request flexible working which has been in force since 30 June 2014. The flexible working scheme is set out in sections 80F to 80I of the 1996 Employment Rights Act (ERA 1996) (as amended) together with the Flexible Working Regulations 2014 (Flexible Working Regulations).

    When making a statutory request for flexible working:

    • a statutory request can only be made by an employee;
    • the employee must have 26 weeks’ continuous employment at the date the request is made;
    • only one request may be made under the statutory scheme in any 12 month period; and 
    • requests cannot be made by agency workers (except those returning parental leave.

    Employee shareholders and self-employed contractors also cannot request flexible working. 

    Requests for flexible working can involve a change to the number of hours the employee works (to work part time) or the times when they are required to work; or a request to change their place of work (this would most commonly be a request to work from home, or to split working time between home and the employee’s usual place of work).

    An employee’s application for flexible working under the statutory framework must be made in writing and dated. It must also state that the application is made under the statutory framework, specify the change that is sought and when they wish the change to take effect. It must also explain the effect, if any, including how the change would impact the employer and how any such effect could be dealt with; and state whether the employee has previously made an application to the employer and, if so, when.

    An employer must consider the request, discuss it with the employee and notify the employee of the outcome within three months. This period can only be extended by agreement with the employee. The three-month decision period includes the time taken to deal with any appeal.

    Rejecting or refusing the request

    If an employee is not eligible or the employee fails to comply with the procedure, then the employer is entitled to refuse the request. The legislation also recognises that an employer may have entirely legitimate business reasons why it cannot accommodate a flexible working request. There are eight specific grounds for rejecting a request:

    • the burden of additional costs;
    • detrimental effect on ability to meet customer demand;
    • inability to reorganise work among existing staff;
    • inability to recruit additional staff;
    • detrimental impact on quality;
    • detrimental impact on performance;
    • insufficiency of work during periods the employee proposes to work; and
    • planned structural changes.

    Employers should approach flexible working requests with a positive mindset, investigating and fully considering how a request could be accommodated. Employers that take the time to investigate and consider matters carefully will not only minimise the risks of employment tribunal claims from employees, but may also discover that there is a way to accommodate the request, or indeed find a compromise that can be reached which works for both parties. Employers that take this approach are far more likely to retain employees, as they will be less inclined to seek out alternative employment elsewhere with the aim of obtaining the flexibility they are after.

    Risk of discrimination claims

    An employer who takes the position that a role cannot be performed on a flexible basis must be careful to ensure that this belief is justifiable, particularly when the request being made is linked to a protected characteristic such as sex, including childcare responsibilities, or disability.

    The requirement that judicial notice must be taken of the fact that women bear a greater burden of childcare responsibilities than men, which can limit their ability to work certain hours, was reaffirmed by the Employment Appeal Tribunal (EAT) in 2021 in Dobson v North Cumbria Integrated Care NHS Foundations Trust. Employers who refuse a flexible working request from an employee for specific hours to work around childcare responsibilities may therefore face a claim of indirect sex discrimination, and should therefore be prepared to objectively justify any such refusal.

    An employer also has an obligation to make reasonable adjustments, which may include accommodating specific working patterns and reduced working hours, where required by an employee due to their disability.

    Fixed term contracts

    Employers in Britain can also offer fixed-term employment contracts to accommodate an employee’s desire to work more flexibly. Fixed-term contacts can be offered in a variety of circumstances, for example where an employer requires someone for the completion of a particular task; where funding comes from an external source and may not be renewed after a fixed period; or to provide cover for employees on maternity leave or long-term sabbaticals.

    Whilst fixed-term contracts do offer benefits, employers need to remember that fixed-term employees should not be regarded as having fewer rights than permanent employees. Fixed-term employees are protected in UK law from unfair dismissal, provided they have the required two years continuous service to bring such a claim. They also have the right not to be unlawfully discriminated against.

    Employers utilising fixed-term contracts need to ensure that these are carefully drafted. An employee who is dismissed before the end of a fixed-term contract may have a claim for wrongful dismissal. An employer who wishes to retain a right to terminate early must therefore ensure that the contract contains a provision for earlier termination on notice, and that it complies with that provision.

    The expiry of a fixed-term contract without renewal under the same contract will count as a dismissal for the purposes of unfair dismissal, statutory redundancy pay, and the right to written reasons for dismissal. Therefore, an employee whose fixed term contract expires without being renewed or extended on the same terms as before will have the same employment protection rights as a permanent employee, with the same length of service, who has been dismissed. Even where employment continues after the end of the term, there may be a dismissal if the terms and conditions are not the same as in the original contract. However, this is only likely to present an issue if the new terms are less favourable than the previous terms, and in these circumstances the employee could accept the new terms and still bring a claim for unfair dismissal based on the termination of the original contract.

    In addition to the above, the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 mean that fixed-term employees cannot be excluded from the contractual benefits and facilities offered to permanent staff since they are entitled to complain of less favourable treatment. The full terms of the regulations themselves are detailed, and employers must be mindful of the overarching principle set out within them: namely that fixed term employees are entitled not to be treated less favourably than comparable permanent employees by reason of their fixed-term status unless the employer is able to objectively justify the different treatment. As well as protection from less favourable treatment, the regulations also protect fixed-term workers from dismissal on automatically unfair grounds, and give them the right not to be subjected to detrimental treatment on specific grounds.

    Under regulation 8 of the Fixed-term Employees Regulations, employees who have been continuously employed for four years or more on a series of successive fixed-term contracts are automatically deemed to be permanent employees - that is, employed on an indefinite contract - unless the continued use of a fixed-term contract can be objectively justified. Only service after 10 July 2002 counts for these purposes.

    Four-day working week

    There has been increasing interest across Britain in a four-day working week, and it is clear that employers that embrace the concept could position themselves well in the race for talent. Some of the many potential benefits of introducing a four-day working week include in-creased productivity and staff retention, as well as employee wellbeing and increased staff morale. That being said, there are legal risks attached to making the change which employers need to consider.

  • Germany

    Employees in Germany can take advantage of a statutory right to work part-time, as one of a number of potential ways to introduce more flexibility to their working patterns.

    Part-time employment

    Since 2001, almost every employee in Germany has a statutory entitlement to reduce the working hours agreed in their employment contract.

    Section 8 of the Part-Time and Fixed-Term Employment Act (TzBfG) stipulates that employers must allow their employees to reduce their working hours where certain conditions are met. Eligible employees must have been employed at the company for six months, and more than 15 people must be employed by that company. In principle, the employer must agree to the reduction in working hours in accordance with the employee’s wishes unless there are operational reasons preventing this. Operational reasons may include where the reduction in working hours would significantly impact the organisation, workflow or safety in the company, or result in disproportionate costs.

    A further right to so called ‘bridge part-time’, allowing an employee to work part-time for a fixed period and then return to work full-time, was introduced in January 2019 in section 9a of the  Teilzeit- und Befristungsgesetz (TzBfG). However, this only applies to companies with at least 45 employees. The employer can reject an application for bridge part-time employment for the same reasons as regular part-time employment, and also when certain numbers of employees are already working bridge part-time.

    Fixed-term employment

    Under section 14(1) of TzBfG, fixed-term employment contracts are permissible for a period up to two years (four years for newly established businesses) without an objective reason. All periods of that employee’s fixed-term employment without an objective reason must be added together for the purposes of calculating the two-year period. Employers cannot enter into a fixed-term contract without an objective reason with an employee who has been employed by the business before (‘pre-employment ban’).

    In all other cases fixed-term employment needs to be justified by an objective reason. Examples of reasons include a temporary need for work for example on a specific project or to cover for an employee who is long term absent on sickness or parental leave; or for special types of work such as artists and sportsmen.

    Fixed-term employment formally requires a ‘wet ink’ signed agreement prior to the commencement of work.

    Unlimited vacation and paid time off policies

    The statutory minimum leave entitlement in Germany is 20 days each year, based on a five day working week. The Federal Vacation Act only regulates this statutory minimum leave entitlement. Employers and employees are, however, free to regulate vacation entitlements exceeding the statutory minimum entitlement in individual contracts.

    As an example, the idea of ‘confidential leave’ is that employees can decide on their number of vacation days independently if and as long fulfillment of contractual duties is guaranteed. From an employment rights point of view, ‘confidential leave’ is the statutory minimum leave entitlement plus (unlimited) additional leave. Another option are so-called “time vs. money” approaches, where employees can decide to opt for more paid vacation days in return for a lower overall salary.

    European and national laws and case law on vacation is one of the most technically complicated matters in employment law. When making use of vacation as a tool for flexible employment models, employers should therefore proceed carefully when drafting respective agreements. Some aspects to be considered include:

    • forfeiture of additional untaken leave at the end of the year;
    • compensation or no compensation for periods of confidential leave;
    • whether any limits on the policy should be reflected in the contract to avoid excessive claims;
    • any derogations during an employee’s notice period, or where notice of termination has been given;
    • a carve-out for employees on long-term sick leave;
    • tying entitlement to additional leave to a certain length of service, or to completion of a probation
    • reservation of the right to revoke the policy at any time.

    Sabbaticals

    A sabbatical is an extended break in an existing employment relationship from which the employee subsequently returns, usually of between three and 12 months. There is no legal definition of a sabbatical in Germany. Without a standard legal definition, sabbatical arrangements can have different forms, such as:

    • agreement to terminate the contract with the promise of reemployment after the sabbatical;
    • a period of unpaid leave;
    • accumulation of employee working time credits with subsequent reduction.

    Not all of these arrangements must be recorded in writing, but this is recommended to define and protect the rights of both the employer and the employee. Employers may also wish to consider making contractual provision for the employee’s social security protection employments to continue during the sabbatical period. Tax and social security aspects must also be carefully considered.

    Four-day working week

    Apart from the TzBfG, there is no explicit legal framework in Germany governing a shortened working week which, again, makes different models available. However, these have to comply laws on working time, such as maximum daily hours and mandatory rest periods.

  • Spain

    Part-time employment

    In Spain, companies are allowed to hire part-time employees without any limitations or additional legal requirements. If the employee provides services for fewer hours than established in the relevant collective bargaining agreement (CBA), the employee is a part-time employee.

    There are additional situations in which an employee may request a reduction in working hours: for example, due to childcare for children up to the age of 12. However, these employees will continue to be classed as full-time workers and will not be considered part-time.

    Employees who apply for partial retirement can become part-time workers if they reduce their working hours by up to 75%, in which case they would be considered part-time workers at 25%.

    Fixed-term employment

    Given the high number of temporary workers in Spain, legislative reforms introduced in December 2021 eliminated temporary contracts for work and services and also the use of temporary contracts for ‘production circumstances’, meaning temporary increases to company activity due to fluctuations in demand. These can now only be signed for occasional and unforeseeable work with a maximum duration of six months, extendable up to one year by CBA and for occasional and foreseeable situations. Extensions are limited to 90 days, the company cannot use this contract for more than 90 calendar days a year, and it must be used in a non-consecutive manner.

    Moreover, if an employee signs two or more temporary contracts for a period of more than 18 months in a reference period of 24 months, the employee must be considered a permanent employee.

    Unlimited vacation and paid time off policies

    The Workers’ Statute establishes a minimum holiday period of 30 calendar days including 22 working days. However, CBAs may provide for better conditions by extending holiday days. Notwithstanding, paid time off policies are not currently under discussion more generally in Spain.

    Leave of absence

    A leave of absence is an extended break in an existing employment relationship from which the employee subsequently returns. The Workers' Statute regulates leaves of absence as forced or voluntary.

    • Forced leave:

    if an employee is appointed or elected to a public office that makes attendance at work impossible, they can take a leave of absence and keep their job.

    • Voluntary leave:

    (a) without cause: the employee must have at least one year of seniority in the company before they can request this for a period of between four months and five years.

    b) childcare: employees are entitled to a period of leave of absence of no more than three years to care for each child.

    c) care for family members: employees are entitled to leave of absence for a period of up to two years to care for a family member up to the second degree of consanguinity or affinity who for reasons of age, accident, illness or disability is unable to look after themselves and is not gainfully employed.

    CBAs may regulate different types of leave and even longer periods of leave.

    Four-day working week

    There is no explicit legal framework in Spain which makes different models available. However, some companies have implemented this measure and it has been well received.

  • UAE

    The new UAE Labour Law (UAE Federal Law No, 33 of 2021, as amended) has brought about significant changes to the ability of employees to work flexibility, as well as the legal mechanisms for doing so.

    One of the law’s primary objectives is to enhance the flexibility and sustainability of the UAE’s labour market. The new ‘atypical’ working options introduced under the law go some way to meet this aim.

    Part-time employment

    Part-time employment has been available in the UAE since 2018 when it was introduced un-der the Ministry of Human Resources and Emiratisation’s (MoHRE) Part-Time Ministerial Resolution (the PT Resolution). However, the scope for employees to work part-time was limited by part-time work permits being reserved for employees working for a ‘mainland’ reg-istered employer; and employees being able to work for a secondary employer whose busi-ness competed with the primary employer.  

    The new UAE Labour Law takes the additional steps required to clarify the obligations for both the employer and the employee to make part-time working a real option. Crucially, the law confirms that holidays and end of service gratuity for part-time employees will be pro-rated, therefore providing employers with the much-needed certainty to quantify their em-ployment liabilities.

    While there remains no statutory right for employees in the UAE to request part-time work-ing, it is reasonable to assume that a part-time work model could provide an ideal solution to cut costs for companies and, at the same time, empower employees to work in a way that they want.

    Temporary employment

    Temporary employment covers situations where a time frame or project objective is a de-termining factor in the length of the employment period. In many ways, this is very similar to the traditional fixed-term employment contract (FTC) we were familiar with under the ‘old’ 1980 UAE Labour Law. FTCs are now mandatory under the new UAE Labour Law and unlim-ited term employment contracts have been done away with altogether.

    Remote working

    The law acknowledges that an employee may – with the employer’s consent - work from home or outside of the country. Home working is today familiar to lots of employees, how-ever working outside of the UAE for a UAE employer will likely require additional considera-tions for both parties, for example regarding taxation and immigration.

    Flexible working

    This is where the work involves different work days or hours depending on the needs of the business. Whilst flexible working might have been done in practice for some time, the fact that flexible working is legislated for in the text of the UAE Labour Law should give employ-ers the clarity and certainty they need in order to make this a real atypical work option for employees.

    Job sharing

    Job sharing is another flexible working model, and was legislated for in the new Labour Law for the first time. The Executive Regulations supplementing the Labour Law confirm that job-sharing employees “should be treated according to the same controls of part-time employ-ment”. This should therefore provide employers some degree of clarity surrounding the pro-rating of statutory entitlements for any job-sharing employees.

    What is clear is that these changes drafted into the UAE Labour Law reflect the modern day work environment and practices, align UAE labour relations with international best practices, and recognise the need – both for business and employees on an individual level - for atypical and flexible working structures. 

    Employers should audit their current work model in the against the needs of the business to see if they – and their employees - could benefit from any new atypical work arrangement.

    Amending working times or days will most likely amount to a change of a key term of the employment which must be recorded in writing by both parties for it to be effective and incorporated into the employment contract. 

    At the same time as updating the terms and conditions in the company “supplemental” employment contract, the employer should check to see if the MoHRE or the relevant free zone within which the employer is registered needs to be formally notified of this contractual change.  

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