Work & Parents: Competitiveness and Choice Green Paper

Encouraging flexible businesses	6
6.1 This chapter sets out what help might be given to businesses to get most benefit from people's desire to work flexibly. It draws on the case for change set out in Chapter 2 and considers options on flexible working, making parental leave more flexible, and developing childcare as a business.

Setting the context

6.2 Employers have moved a long way in the past 10 years to accommodate people's wishes to balance their home and work lives. While this chapter concentrates on working parents, what it has to say is applicable more widely to the debate on work-life balance.

Work-Life Balance campaign The Prime Minister launched the Work-Life Balance campaign in March 2000. Its aim is to increase employers' awareness and take-up of employment policies and practices which benefit their businesses and help their employees achieve a better balance in their lives. The campaign is being developed with advice from the Ministerial Advisory Group on Work-Life Balance. It is being delivered in partnership with Employers for Work-Life Balance (an independent group of 22 employers who have benefited from work-life balance policies). The campaign covers England and Scotland. Separate but related campaigns are planned in Northern Ireland and under way in Wales. Sixty-nine employers, including large charities, manufacturers, hospital trusts and small businesses have been awarded funding in the first round of the £3.2 million Work-Life Balance Challenge Fund. Each winner will receive free consultancy advice to help them introduce flexible working practices. The results of each project will be publicised widely to make sure that other employers can learn from the experiences gained. The Government will invite more applications from employers for Challenge Fund support in the spring.

6.3 In 1998, over 60% of workplaces with more than 10 employees had at least one arrangement to help employees balance work and family lives as shown in Figure 9[82].

Figure 9: Workplaces with more than 10 employees [83]

6.4 By 2000 part-time work was available in three-quarters of workplaces. A sizeable minority allowed term-time only working or working from home. In 1998 large organisations were more likely to offer flexible working than small organisations, although there was no clear difference between them on working from home. The differences by size of company are much less marked in 2000.

6.5 The public and voluntary sectors have often led the way in exploring innovative ways to help working parents. They can rarely afford to pay at the top rates and so seek to recruit and retain staff on the basis of better conditions. DTI allows unpaid parental leave to be used for temporary shortening of hours during school holidays. DfEE offers maternity leave of up to 52 weeks, gives parents special leave on the day their child starts school and currently has 500 home-workers. The NHS has experimented successfully with allowing nursing teams to devise their own work schedules.

Greenvale AP plc is one of Europe's leading suppliers of fresh and seed potatoes with 14 operating outlets in the UK. At March in Cambridgeshire, the company employs 213 people, a large percentage of whom are female. There are several direct competitors locally, so to recruit and retain staff, Greenvale successfully operates a variety of shifts. The 'family friendly' shift (9.30am - 2.30pm) was designed to fit in with school hours. During the summer school break, these workers are allowed to take authorised absence from work if they wish. Greenvale also operates a weekend shift, which appeals mostly to college students. They often wish to work full-time during the summer and so they are able to cover for those staff taking leave. Greenvale have retained most of the initial recruits for this shift and gained the flexibility required to meet customer demand.

What do businesses think?

6.6 More than half of all employers think that everyone should be able to balance their work and home life. Only 20% thought this was none of their business although small employers are more likely to say this. This is shown in Figure 10[84]. Most employers put the needs of the business first. Support for balance is tempered by concern about its impact on the business, particularly about costs and getting the job done when key people are not available.

Figure 10: Is balance a matter for business?

Concern about backlash

6.7 A sizeable minority of businesses recognise that policies which support only working parents can create unfairness. Concern about backlash was greater in smaller workplaces. Substantially fewer employees, when asked the same question, thought that work-life balance policies were unfair. This was also the case amongst those people who do not have caring responsibilities[84]. This suggests that employers may be overestimating the significance of this issue for their workforce. Indeed the Equal Opportunities Commission (EOC) reports that it has seen no evidence of backlash in calls to its helplines.

6.8 The demand for flexible working patterns is similar for employees both with and without caring responsibilities. Only job sharing and compressed hours are more attractive to those with caring responsibilities. This is shown in Figure 11[84].

Figure 11: Demand for flexible working among employees with and without caring responsibilities

6.9 This widespread desire for flexible working indicates that there is more likely to be a backlash if businesses do not offer opportunities for flexible working to everyone. Many employers recognise this in their policies. But there are also cases where these do not translate into consistent practice because managers have different views of how the policies should be applied. Changing corporate culture is an important element in non-regulatory solutions to meet the demand for flexible working.

Employees want flexibility too

6.10 People in workplaces which offer flexible working practices report that 8% offer annual hours or a compressed working week, 24% offer job share, 17% reduced hours or term-time employment, 25% flexi-time and 88% part-time work. The last two are the only practices which are taken up by a quarter or more of employees at the workplace. Take-up is consistently higher in the public sector. Management discretion in deciding who is eligible for these policies is widespread. About 80% of employees said that managers had "a great deal" or "a fair amount" of discretion.

6.11 Employees report that requests to transfer from full-time to part-time work were less likely to be accepted in organisations with fewer than 25 people than they were in organisations with more than 500 employees[85].

Improving flexible working opportunities...

6.12 Flexible working means a negotiation between the employer and the individual about their needs to determine the pattern that helps them both. It does not mean that employers always have to accommodate demands to work Tuesdays and Wednesdays or 9.30am to 3pm if the work cannot be done that way. Employment tribunals have recognised this[86]. Nor should traditional manager perceptions prevail that the job can be done only from 9am to 5pm, or that the person needs to be in the office at all hours. There is a great deal of expertise available to business about how to design jobs to meet needs.

MTM Products Ltd has been manufacturing labels and nameplates in the East Midlands for over 30 years. By 1996 it had been making a loss for several years. Drastic action was needed to turn the business around. A key strategy was to recognise the value of the knowledge and skills of its employees. It began to implement work-life balance policies with a particular focus on flexible working patterns. Today MTM Products offers 25 different working patterns to its 31 employees. Importantly, the company is now making a profit and its performance is in the top quarter of its sector. It has been able to extend the working day at its key plant, staff turnover is negligible and last year absenteeism was just an average of two days per person. Equally, its employees are happier now that they are better able to balance their working hours with their lifestyle.

...through legislation or best practice?

6.13 The knowledge economy demands flexible working. Chapter 2 explains the main benefits to business of improving the quality of life for employees. Innovation is important and legislation can discourage it.

6.14 In implementing the European Directive on equal treatment for part-time workers, for example, the Government decided to eliminate any obstacles to part-time working through developing best practice advice[87].

6.15 The Government will seek an amendment to the part-time work regulations. This will ensure that officers appointed by the Advisory, Conciliation and Arbitration Service (ACAS) to conciliate over claims of less favourable treatment of part-time workers are able to reach a binding agreement where this claim is brought to an employment tribunal[88].

Four businesses told us... "It is important for government to promote the benefits of introducing flexible working practices, with legislation taking a back seat as this tends to put Chief Executives' backs up." "It is important not to lose sight of the fact that in some instances it is not operationally feasible for particular jobs to be performed on a part-time (or even a job share) basis." "Employers are afraid to say no to requests for part-time work even when operationally it's not feasible. There are no practical guidelines for employers to follow." "Part-time working disrupts the work patterns and is a vehicle for all employees to get on the bandwagon."

Through best practice?

6.16 More could be done to encourage employers voluntarily to offer flexible working practices more widely. One option is to consider whether incentives would encourage employers to offer flexible working patterns to more people and what incentives might work best. The Government would welcome views on whether incentives would be sufficient to help businesses respond to the demand and on priorities on the options for incentives set out below.

Radcliffe-Fleet Project In the US, Fleet Financial Group and the Radcliffe Public Policy Institute explored how they would develop strategies to address business goals and to enable employees to balance work and their families. A number of different approaches were tested, including teleworking, flexible schedules, and job reorganisation. Qualitative and quantitative measures were developed to judge the success of the project. These showed that: there is a positive relationship between improvement in business outcomes and quality-of-life outcomes productivity improves when people gain time to concentrate on their real work employee turnover fell to 4.5% in those business units participating in the project compared to 6.9% in those not participating commitment to changing work processes was increased when it involved employees

6.17 There is a clear need for better information about what is possible and for practical advice. Many employers encounter the same problems but, while some find solutions that suit all sides, others do not and lose a valuable employee. They may be reluctant to try something even on a temporary or pilot basis because of the implications for others in the workplace. But it is important that employers consider all the options.

Lacking flexibility for fathers "When my son was about six months old, my employer relocated to a site that was more than an hour's drive. I'd end up having to leave before my son woke up and getting home after he was in bed. I could have worked a little from home or left early a couple of days a week. But ... my boss wasn't interested in the impact on my family life. So I had to leave."

6.18 Although there is a considerable amount of advice and guidance available, it is neither accessible in one place nor well known. A number of web-based tools or management consultants are available in the private sector to help employers assess the business case for change or to find matched job share partners.

6.19 Given this, one option would be to provide better information and practical advice through an easily accessible Internet Flexible Working Gateway, backed up by a call centre, to link together expertise and the employers who seek it. This would be relatively low cost and could gradually link into other initiatives, such as Childcare Link (see Chapter 4).

6.20 There is also nothing to help people looking at recruitment advertisements to identify whether employers recognise the need for work-life balance. There are various symbols, such as Investors in People, that employers can show in recruitment, advertisements and other information. One option would be to create and promote a kitemark that organisations committed to an appropriate code on flexible working would display. This would give instant information to existing staff, potential recruits, customers and shareholders. This could build on the checklist put forward by Employers for Work-Life Balance.

6.21 The code would have to be simple and unbureaucratic if it is to be useful to small businesses. Complex accreditation procedures can be costly and off-putting for small employers. To help, an option would be that winners of awards with acceptable criteria and judging processes should automatically be accredited to the code and able to display the kitemark. The same could be done for employers who have completed appropriate self assessment tools, such as the Work-Life Balance Standard or the CBI's Headstart programme. Tools specifically for small businesses may need to be developed. All of them would need to be adequate to ensure that accreditation to the code had real meaning.

6.22 The code could include a menu of flexible working practices, such as reduced hours, part-time, term-time or flexi-time. One option would be that employers would agree to offer a certain percentage of flexible working practices and to seek to achieve an agreed level of take-up.

6.23 Light touch accreditation would have to be balanced with an effective mechanism to see that policies are put into practice and that award-winning activities continue. An option would be for employers signing up to the code to survey their staff anonymously and report the findings. This might be done every three years. Accreditation would be taken away if the level of take-up was not being achieved and the employer was unable to resolve the problems.

6.24 A further option would be for the code to include sectoral and size specific "how to" guides, developed by the Work-Life Balance campaign. These would include policies that individual employers could easily tailor and adapt for themselves. Compliance with these would be sufficient for accreditation.

6.25 To have any impact on society, much more needs to be done to publicise existing initiatives as well as any suggestions adopted following this consultation. This would be particularly important in order to establish demand from potential recruits to work for employers that display the kitemark. An option would be to launch an advertising and publicity campaign to spread information about the help available and what the kitemark means.

6.26 Other incentives may be needed before employers sign up. While the value of displaying the kitemark should be high, given appropriate publicity, it offers rewards in the future while the potential costs are immediate. This is particularly a problem for small businesses which do not have access to in-house expertise. An option would be to introduce a challenge fund for small businesses to provide grants to help them adapt systems for, and training managers in, flexible working. Such grants might contribute to the costs of job redesign, skills training for managers in identifying opportunities for flexible working and managing people working flexibly or evaluating the business case for change. The availability of such grants would help to remove barriers that may be preventing small businesses increasing productivity through flexible working.

6.27 Big and small businesses can also help each other by passing on innovative ideas. This already works with various supply chain initiatives, for example to improve production methods. The Government could pump prime a supply chain initiative to demonstrate the potential for cost savings from flexible working.

Through legislation?

6.28 To proceed on flexible working through better information and a code backed by incentives demands a leap of faith by government. The arguments about preserving space for innovation and managers to manage are strong. But so are the arguments that flexible working opportunities will be available only to those with negotiating clout, and that only employers already converted will sign up to codes. Clear legislation on the existence of a right to work reduced hours, which sets out the rights of both employees and employers, might also be easier for employers than the current legal uncertainty. As highlighted in Chapter 4, this is clearly a controversial area. The Government would welcome views on the issues raised.

6.29 Chapter 4 contains three options. The first is that mothers should have the right to return early from maternity leave on reduced hours, if they wish to do so, for the remainder of their maternity leave period. As this would be a net gain for employers, who would get their skilled and experienced employee back earlier, no exemptions are proposed.

6.30 A second option is for fathers also to have the right to work reduced hours during the period of the mother's maternity leave. This would bring them for the first time into the equation and thus increase costs for their employers. But this is for a strictly time limited period and thus there are no long term adjustment costs. However, there may still be particular problems for small businesses and these, and options for solutions to them, are discussed at paragraph 6.36 below.

6.31 A third option would be for both mothers and/or fathers to seek reduced hours when a mother's maternity leave ends. This right would not be time limited and would not replace maternity leave.

Exploring rights for employers

6.32 Any right for employees to work reduced hours would need to be balanced by rights for employers. One option would be to allow employers, except when a women wants to return early from maternity leave, to refuse in writing an individual's request to work reduced hours where to grant it would cause harm to the business. The harm test might be that to allow the individual to work reduced hours would unduly disrupt the business. This test is used for determining whether employers have the right to postpone parental leave. Employers would need to make sure that they are able to demonstrate, if challenged, that the claim of undue disruption was a justified one. Employers could be required to set out the reasons for refusal and this would show that the matter has been considered and could be used as evidence of this if a dispute arises.

6.33 A harm test is being used in Germany and the Netherlands to meet employers' concerns about the introduction of a general right to work reduced hours. Contacts with employer organisations in those countries indicate that it has not entirely done so, particularly because the legislation would diminish the scope for flexibility in the workplace. Examples of how the German harm test might work include:

• a detrimental impact on normal operational processes,
• changes would jeopardise health and safety, or
• considerably increased costs.

6.34 An option would be to produce guidance on what the harm test might mean in Britain and publish this alongside any change in the law to introduce a limited right to work reduced hours. The status of this guidance would need to be determined.

6.35 In the UK a harm test approach in respect of requests to work part-time has been adopted by employment tribunals when considering cases brought under the Sex Discrimination Act 1975. The objection to flexible working has to correspond to a real need, be appropriate and necessary to achieve the objective of the employer. As highlighted in Chapter 4, the application of such tests has confined decisions on part-time working to generally junior and unskilled work. The following are examples of their approach:

• the work requires continuity of service
• it is not possible to do the job at the times the employee wants to work
• the size and resources of the undertaking
• the employee has supervisory responsibilities and there are no suitable means to delegate part of their responsibilities
• the job involves team work
• the cost of training someone else to do the remaining time or parts of the job would be prohibitive
• the nature of the job is such that it cannot be split.

The small business litmus test...

6.36 Small businesses and their representatives have played a major part in the review. A number of local Chambers of Commerce hosted discussions on the issues that concern small businesses.

6.37 Administrative costs tend to fall particularly hard on small businesses. The options in Chapter 5 on simplifying legislation and improving guidance, and the discussion of mechanisms for paying maternity and paternity leave recognise this. Changes in legislation that are relatively easy for large employers who already follow best practice can fall particularly hard on small businesses.

...produces the option of a limited exemption

6.38 It is the question of a right to work reduced hours that has most concerned small businesses. If such a right is introduced, one option would be to exempt employers with fewer than a pre-determined number of employees from the statutory requirement to offer reduced hours working. This would apply to fathers from the birth of the child and to mothers and fathers at the end of the period of maternity leave. This would recognise that the disruption is greatest in the smallest employers so that the test of undue disruption is automatically met and such employers will not have to justify this in each case.

6.39 However, it would remove the right to work reduced hours from the employees. They would need to be warned, on recruitment or in literature, that the right does not apply to them unless the employer voluntarily chooses to offer it. While the incidence of pregnancies in a small employer is low (see Chapter 5) they may also be employing fathers whose partners have recently had a baby.

6.40 The Government would welcome views on this option and in, particular, what size of employers should be exempt. For example if the limit was set at employers with fewer than:

• 5 employees, 2 million people in 900,000 businesses would be exempt
• 10 employees, 3.4 million people in over a million businesses would be exempt
• 20 employees, 5 million people in 1.2 million businesses would be exempt
• 50 employees, 7 million people in 1.25 million businesses would be exempt
• 100 employees, 8 million people in 1.4 million businesses would be exempt
• 200 employees, 9 million people in 1.5 million businesses would be exempt
• 250 employees, 9.4 million people in over 1.5 million businesses would be exempt.

Encouraging flexibility through parental leave

6.41 Only half of employers are aware that parental leave has to be taken in weekly blocks[89]. But this is the point that their representatives have consistently said is essential for employers. There are examples, particularly in the public sector, where parental leave can be taken on a daily basis. The parental leave regulations already provide for employers and employees to negotiate more flexible arrangements and the Government is keen that this opportunity is taken up. An option would be to pump-prime the development of sector and size specific schemes by employers and to encourage widespread dissemination.

Two examples Neath Port Talbot County Borough Council, Wales, offers parental leave that can be taken up to the child's eighth birthday. It can also be taken in days rather than blocks of a week. South Lanarkshire Council, Scotland, also offers their staff more than the statutory fall back scheme requires. They have extended parental leave until the child's fourteenth birthday.

Changing culture

6.42 Systems that are designed around the idea of a stay-at-home spouse do not reflect the reality of today's society where two-thirds of British mothers work outside the home. A person's work-life balance stands or falls on a manager's ability to turn policies into workable practice. This can be difficult where managers do not have balance in their own lives or are under particular pressure to achieve targets. It can also be difficult to persuade them that someone can work effectively from home or that allowing a team to devise its own schedules will still get the work done.

Fear of change? An employer reported that he had received a request from a mother to work for part of the week from home to help her balance her work-life responsibilities. He did not dispute that the post was compatible with home working but turned down the request. Reasons given were the cost of installing computer equipment, the fear of other employees making similar requests and the difficulty in managing people working away from the office and ensuring they were really doing their jobs.

6.43 Managers need better information on where flexible working has produced good results in specific industries or situations. The Work-Life Balance campaign is currently preparing good practice guides for employers which will look at assessing the business case and other practical issues. One of these will provide advice for managers on what they need to know to negotiate with employees seeking flexible working patterns.

6.44 Changing culture takes time and effort. Most small businesses will think about the issue only when it arises for them. To help inform them on a regular basis of the possibilities, the Work-Life Balance campaign will be distributing a regular one-page best practice news sheet to small businesses or to advice networks such as Trade Associations.

Childcare as a business

6.45 Women entrepreneurs are praised. But, one of the possible entrypoints, childcare businesses, have not been sufficiently supported until now.

6.46 The Government has announced a £2 million-a-year programme to provide business support to childcare businesses in England. From next year each of the 150 Early Years Development and Childcare Partnerships in England will appoint an individual to help support and grow childcare businesses.

Longbridge Childcare Strategy Group is a training provider or creator, an employer of nursery workers, a provider of nurseries and crèches, provider of a library of books for loan to nurseries, a retailer of nursery resource materials and much more. They also provide training and support to after school clubs and work with employers to recycle unwanted materials to local groups. As such, they do not fit easily into any one category. The only boxes with which this group is comfortable are the ones that they send out to support their innovative "Playtemps" scheme. Playtemps can set up a crèche in any suitable venue to cover a meeting or other short-term need. Anything that will improve the quality and availability of childcare is tackled by the Longbridge Childcare Strategy Group. Founded by local parents 10 years ago, it is a community-based organisation identifying and responding to parents' needs, seeking funding from all sources and using their own initiative to achieve their ends.

6.47 The Regional Development Agencies (RDAs) are responsible for the Single Regeneration Budget which had traditionally been available for good value projects including childcare. Government funding for RDAs has been increased to £1.7 billion in 2003/04. The Government plans to discuss with RDAs how their forthcoming plans can be used to support childcare businesses.

6.48 More work is being done to raise the standard of business support provided by the Small Business Service (SBS), the new government agency created to support UK small businesses. People entering childcare will rarely see it first and foremost as a business opportunity. This stands in the way of the growth of more childcare, particularly in areas where investment by large chains is not viable. One option would be to ask a group of business advisers and providers of childcare to consider on a continuing basis what support those setting up such businesses need from the SBS. Their work could include looking at how people can find out more about the support, including financial support, offered by the SBS, and could also look at whether there are any obstacles in current schemes to anyone setting up childcare businesses.

www.businessadviceonline.org April 2000 saw the launch of the Small Business Gateway: a website that seeks to provide a single easily accessible source of reference about running a small business. Information on the site ranges from creating a new business, finding suppliers, marketing, training, to selling a business. The Gateway also includes a summary guide outlining the main employment regulations faced by small businesses. The Gateway will be developed further over the coming months by the SBS. It will cater for all entrepreneurs but will be sensitive to the needs of groups which face particular barriers to business, including women. It may help to foster online communities of women entrepreneurs to aid networking and the exchange of experience.

6.49 Childcare businesses can already seek support from the Small Firms Loan Guarantee scheme (SFLG) to underwrite bank loans. In five months this year, the scheme has provided support to 15 childcare businesses totalling around £1.25 million. However, playgroups and other providers of non-education based childcare are not currently eligible for support. The SBS is reviewing the SFLG and will look at making all childcare businesses eligible for support.

6.50 There are currently a number of sources of funding available to support childcare businesses. It is important to balance the aim of keeping access to funding as simple as possible with the flexibility of being able to target resources to a range of areas in different ways. Whilst the richness of funding available is positive, an option is for the Government to streamline funding where practical.

Summary This chapter sets out a number of options to encourage businesses to be more flexible. Views are sought on the following options, including their relative priorities and the costs and benefits, including comments on those set out in the text. Providing incentives for flexible working as an alternative to legislation: providing better information and practical advice through an easily accessible Internet Flexible Working Gateway, backed up by a call centre, to link together expertise on flexible working and the employers who seek it creating and promoting a kitemark that organisations committed to an appropriate code on flexible working would display accrediting achievement of existing awards, codes, or self assessment tools and developing a code tailored to small business needs including in the code a menu of flexible working practices. Employers would agree to offer a certain percentage of these practices and to seek to achieve an agreed level of take-up employers signing up to the code would survey their staff anonymously and report the findings. Accreditation would be withdrawn if the level of take-up is not achieved introducing a challenge fund for small businesses to provide grants to help them adapt systems for, or train managers in, flexible work pump priming a supply chain initiative to demonstrate the potential for cost savings from flexible working promoting an advertising and publicity campaign to spread information about the help available and what the kitemark means. Pump priming the development of sector and size specific flexible parental leave schemes by employers and encouraging widespread dissemination. Considering with a group of business advisers and providers of childcare businesses what support those setting up such businesses need. Making more childcare businesses eligible for support from the Small Firms Loan Guarantee scheme. Streamlining funding for childcare businesses. In addition, if a limited right to work reduced hours is introduced the Government is seeking views on whether to: allow employers to refuse in writing an individual's request to work reduced hours, where to grant it would cause harm to the business produce guidance on what the harm test might mean exempt employers with fewer than a pre-determined number of employees and if so what that number should be. For information on how to comment on these options, see "How to respond".

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82 Cully, M. et al, op. cit.

83 Cully, M., et al, op. cit.

84 Hogarth et al, op. cit.

85 Hogarth et al, op. cit.

86 A summary of employment tribunal cases in this area is at Annex E.

87 This guidance is available on the Internet at www.dti.gov.uk/er/pt-info.htm

88 The Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000

89 "Employers' survey on support for working parents", DTI, 2000

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Setting the scene | The economic context | Supporting parents around the time of a child's birth | Supporting parents in the workplace | Supporting businesses | Encouraging flexible businesses | How to respond | Annexes

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Published December 2000

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