A move to flexible working hours - will we legislate?

Naomi Cervin, Senior Associate | Friday 31 March 2006

Legislating for flexibility

Work-life balance and flexible working hours are increasingly familiar terms in the workplace. Now on the radar is a move to introduce legislation to ensure the option of flexible hours, particularly for those with responsibilities as caregivers outside their jobs.

A private member's bill, introduced to Parliament, aims to allow employees who care for young or disabled children greater flexibility in their working hours.

First proposed by the late Greens co-leader Rod Donald, the Employment Relations (Flexible Working Hours) Amendment Bill has, with Labour's support, passed its first reading.

It has now been referred to select committee for further consideration, but it remains to be seen whether Labour will support the Bill's passage into law.

Purpose of the Bill

The Bill intends to "introduce a duty on employers to consider seriously requests for flexible working arrangements from the parents of young children."

The case put by proponents of the Bill includes:

• over 41 per cent of New Zealand families with dependent children have a youngest child of preschool age (0-4 years);
  
  
• women - often the main caregivers of children - are frequently burdened with the extra stress from having to do both paid work and domestic labour;
  
  
• work and family balance impacts on job satisfaction, workplace productivity and safety at work; and
  
  
• overseas studies show that family friendly strategies in the workplace, such as that proposed in the Bill, reduce staff turnover and therefore recruitment costs, lower absentee rates, improve morale levels and employee loyalty, and increase workplace productivity.

The purpose of the proposed law is stated as providing "employees with young and dependent children the statutory right to request part-time and flexible hours, and a framework in which they can negotiate reduced working hours."

However, the Bill itself states its purpose "is to grant qualifying employees the right to change their working hours."

Clearly, there is a significant difference between these two purposes.

It is questionable whether the Bill, as it is currently drafted, goes as far as providing employees with "the right to change" their working hours.

The Bill requires employers to make a formal business assessment of how flexible working hours can be achieved. This assumes, of course, that flexible working hours can be achieved.

There are three parts to the proposed change:

• the employee's right to request a change in working hours or days worked;
  
  
• a mandatory consideration of that request by the employer; and
  
  
• the avenue of complaint to the Employment Relations Authority.

Right to request flexible working hours

Qualifying employees would be able to apply to their employer for a change in their hours of work or the days on which they work, where the request is to enable them to care for a child under the age of five, or to care for a disabled person under the age of 18.

The employee must have full-time care of the child or disabled person. It appears, therefore, that the Bill will not apply to parents who have separated and who have shared care arrangements in place.

Where an employee wishes to request flexible working hours, the employee must set out in an application to the employer:

• the change in hours proposed;
  
  
• the employee's view on how the change would impact the employer's business;
  
  
• the employee's view on how the impact on the employer's business might be dealt with; and
  
  
• the basis upon which the employee is qualified to bring the application.

The application must be made no later than 14 days before the child's fifth or eighteenth birthday (as the case may be); and an employee cannot bring an application within 12 months of a previous application.

Is this a benefit for union members only?

As it is currently drafted, the Bill appears to be an amendment (of sorts) to section 61 of the Employment Relations Act 2000. Section 61 deals with the establishment of additional terms and conditions for an employee who is bound by an applicable collective agreement - necessarily union members.

It is unclear whether the right to request flexible working arrangements is intended to only apply to those employees who are union members and who are covered by a collective agreement. This is something that hopefully will be clarified by the select committee process.

Employer's duty to consider the application

Where an employee makes an application for flexible working hours, the employer must consider the merits of an application, recognise that the employee has a right to work whenever possible, and deal with the matter as soon as possible.

An employer can only refuse an application where it cannot reasonably be accommodated on one of the following grounds:

• inability to re-organise work among existing staff;
  
  
• inability to recruit additional staff;
  
  
• detrimental impact on quality or performance;
  
  
• insufficiency of work during the periods the employee proposes to work; or
  
  
• planned structural changes.

Increased cost to the employer is not a ground upon which a request can be rejected. Interestingly, the Bill's explanatory note states that an employer can reject a request for a flexible working arrangement, where the request would burden the employer with additional costs.

The Bill does not, however, allow an employer to reject an application on this basis, and this is another matter that will need to be clarified by the select committee.

Complaints to the Employment Relations Authority

The Bill allows an employee to raise a complaint with the Authority where an employer fails to comply with its obligations, or has based its decision to decline an application for flexible working hours on incorrect facts.

The Bill provides that an employee can only bring a complaint after the employer notifies the employee of a decision to reject the application on appeal.

This begs the question as to whether an employee has a right to lodge a complaint in circumstances where an employer does not deal with the complaint "as soon as possible", or simply fails to make a decision on the employee's request at all.

Where the Authority considers a complaint to be well-founded, it must make a declaration to that effect and may make:

• an order for reconsideration of the application; and/or
  
  
• an award of compensation to be paid by the employer to the employee.

The compensation awarded by the Authority must "not exceed the permitted maximum", and must be (in the Authority's view) just and equitable in all the circumstances.

The Bill does not set out what the "permitted maximum" is.

Nor does it give any indication as to how compensation might be assessed, bearing in mind that, if the employee's application had been successful, the employee would presumably be earning less than his or her current salary.

It may be intended that "compensation" will be limited to those expenses incurred by the employee as a result of the employer's decision to decline the application, such as childcare.

Alternatively, there may be an intention to allow employees to be compensated simply for an employee's wrongful refusal of an application for flexible working hours.

Reaction to the Bill so far

Not surprisingly, the Bill has been well received by employee organisations. On the other hand, reaction from the business community has been mixed.

Some employers have commented that the Bill simply reflects good human resources practices, which are already in place in many workplaces.

However, criticism has been expressed that the Bill allows the structure of flexible work arrangements to be determined solely by the employee.

A more balanced approach, it has been argued, would allow for greater negotiation on the type of flexible working arrangement that could be accommodated by the employer, whilst still being acceptable to the employee.

At select committee

The select committee has issued an interim report, which makes the following observations:

• the need for flexible working hours is agreed;
  
  
• the mechanism for delivering flexible hours is not agreed as it is a complex matter; and
  
  
• some employers have already introduced flexible working practices, but many employees submit that they are not sufficiently available.

Where to from here?

The select committee has asked officials to undertake further work to collect and collate reliable information on New Zealand workplace practices in relation to flexible working hours, and to consult more widely on both the principles of and delivery mechanisms for flexible working hours.

The Bill has been set aside for a year while officials collate the further information. The select committee has indicated that it will make a final report at a later date.

The Government supported the Bill at its first reading but has not yet indicated its position going forward.

A definite case of watch this space.

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