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Changes to flexible working law

18 July 2008

The new law governing flexible working arrangements came into force on 1 July 2008, namely the Employment Relations (Flexible Working Arrangements) Amendment Act 2007 – which introduces a new Part 6AA to the Employment Relations Act.

It allows employees who are responsible for the care of any person and who have worked for an employer for at least six months, to request flexible working arrangements.

Employers must respond within three months, either accepting the request or stating reasons why the request cannot be accommodated. Here, we offer some guidance for employers faced with requests for flexibility.

Where a request is not just accepted straight away, the issue will be whether there is a valid reason for saying no. The Act provides that an employer may refuse a request if, and only if, the request cannot be accommodated on certain grounds. Those grounds are:

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

However, an employer must refuse a request if the proposed working arrangements would be inconsistent with an applicable collective employment agreement.

Inevitably there will be disputes from time to time, so the Act provides a dispute resolution mechanism. If the employee believes that the employer’s decision has not been made in accordance with the Act, he or she may refer the matter to a Labour Inspector. Labour Inspectors are authorised not to determine the dispute, but to provide such assistance as they consider appropriate to bring the parties to a resolution.

If at the end of that process (presumably, when the Labour Inspector says so) the employee remains dissatisfied, then he or she can refer the matter to mediation, and then to the Authority.

The Authority has limited powers in this context. It can only quash an employer’s decision if the employer has failed to follow the correct process. In other words, the structure of an employer’s business decision remains for the employer to decide. The Authority’s power to fine employers who get it wrong is also limited to $2,000, although employers will be keen to maintain their reputations as 'good' employers.

In some (probably rare) cases, requests may be declined for technical reasons. For example, a request will not amount to a valid statutory request unless it meets certain formal requirements: it must be in writing and state the employee’s name and the date of the request; it must expressly mention that it is made under Part 6AA of the Employment Relations Act.

The request must also detail the flexible working arrangements that are being sought. Flexibility can mean working a full-time week outside core office hours (e.g. starting or finishing work at different times and/or working some hours at home). Or it can mean permanently reducing the number of days or hours the employee works (of course, with a corresponding adjustment to remuneration). Other variations are possible. Whatever it is, the request must describe the proposed variation.

And finally, the request must also contain an explanation of how the proposal will enable the employee better to care for the person under their care, and what changes, if any, the employer may need to make if the request is granted.

If a request is not ERA-compliant – and this may be difficult to assess, especially when it comes to questions about the adequacy of the employee’s explanations – the Act provides no guidance on what should be done with the request.

What can be said is that, in theory, a non-compliant request will not trigger the basic duty of employers under the Act to deal with the request within three months.

Even so, good faith may require at least some measure of assistance be provided to achieve a proper request.

The second "technical" issue given rise by a statutory request is whether the employee is eligible to make such a request. If the employee is ineligible, then the statutory request may be refused on that ground alone.

As indicated already, the right to make a statutory request applies only to employees who meet certain criteria:

  • that they care for a person, and
  • that they have been employed by the employer for at least six months before the date of the request.

If the Employment Relations Authority later finds that an employer was wrong to refuse a request because of ineligibility, then it will refer the matter back to the employer, who must then decide the matter again "as soon as practicable".

Against that prospect, an employer may prefer also to consider whether the request should be refused for substantive reasons.

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