By Rodrigo Zepeda, CEO, Storm-7 Consulting

INTRODUCTION
The Employment Relations (Flexible Working) Act 2023 (2023 Act) is statutory legislation that sets out new ‘flexible working’ (FW) rights for employees and other workers. Such FW rights incorporate ‘working from home’ (WFH) arrangements. Although its provisions seem relatively simple enough in principle, in practice it is very likely to lead to many new disputes, appeals, and Employment Tribunal (ET) cases regarding FW rights.

Furthermore, as will be seen, it is likely to prove to be particularly problematic for crypto and financial technology (FinTech) firms to get to grips with and effectively implement. Therefore, senior leaders and management within such crypto and FinTech firms are advised to familiarise themselves with, and at least gain a working knowlege of, the new legal requirements.

In this four-part blog series, I will seek to help guide crypto and FinTech firms by setting out the new FW legal framework, as well as identifying a range of issues, problems, and pitfalls that may potentially arise in practice. In order to maintain a neutral perspective overall, I will set out guidance for both employers and employees regarding FW rights. This blog series will therefore seek to benefit crypto and FinTech firms as well as their employees.

In PART I, I will set out the new legal framework applicable to FW rights, as well as summarily identifying a range of issues, problems, and pitfalls that may potentially arise in practice. In PART II, I will set out guidance for employers (crypto and FinTech firms) regarding FW rights. In PART III, I will set out guidance for employees (crypto and FinTech firm employees) regarding FW rights. In PART IV, I will provide an overall evaluation of FW rights along with recommendations for crypto and FinTech firms.

LEGAL AND OPERATIONAL FRAMEWORKS
The 2023 Act was originally enacted on 20 July 2023. However, the reason why it did not command much greater attention at that time was that its main provisions did not take effect until 6 April 2024 (by virtue of regulation 2 of The Employment Relations (Flexible Working) Act 2023 (Commencement) Regulations 2024, S.I. 2024/438).

The legal framework is a little tricky to understand because it is not contained altogether. The 2023 Act amends the existing Employment Rights Act 1996 (ERA 1996), so the final provisions are contained within the ERA 1996 itself. The ERA 1996 must be read in conjunction with The Flexible Working Regulations 2014 (S.I. 2014/1398) (FWR 2014), which set out previous requirements regarding FW rights.

The Flexible Working (Amendment) Regulations 2023 (S.I. 2023/1328) also amended the FWR 2014 by deleting regulation 3. In addition, the 'Advisory, Conciliation and Arbitration Service' (Acas) has published a new ‘Code of Practice on requests for flexible working' (6 April 2024) (FW Code).

Although a failure to follow the FW Code will not make an individual or firm liable to legal proceedings, ETs will take the FW Code into account when considering relevant cases. This means that although the FW Code is not legally binding, it will nevertheless be authoritative when assessing FW disputes. Consequently, when analysing FW rights there are at least seven sources that may need to be reviewed by crypto and FinTech firms (e.g., by senior management, by the human resources (HR) department, and by the legal department). These are:

1. the ERA 1996;
2. the FWR 2014;
3. the FW Code;
4. the employer’s FW policies, practices, and rules (PPRs);
5. the employee’s employment contract;
6. relevant past ET cases; and
7. relevant past legal cases (i.e., legal authorities).

THE 2023 ACT AND THE ERA 1996
The term ‘Great Britain’ (GB) refers to the nations of England, Scotland, and Wales. The term ‘United Kingdom’ (UK) refers to the nations of England, Scotland, Wales, and Northern Ireland (NI). The 2023 Act is not applicable to NI (2023 Act, s. 2(1)). This means that it only applies within GB not the entire UK. The provisions of the 2023 Act are set out in Part 8A (Flexible working) ERA 1996.

Right to Request Contract Variation
Section 80F ERA 1996 sets out the new statutory right to request contract variation. A ‘qualifying employee’ may apply to the employer (i.e., the crypto/FinTech firm) for a change in employment terms and conditions (T&Cs) if the change relates to:

1. the hours that are required to be worked;
2. the times that are required to be worked;
3. the place where work is to be carried out (home or place of business); and
4. such other aspect of employment T&Cs as the Secretary of State (SoS) may specify by regulations (i.e., this covers any updates that may be made by the SoS via regulations in the future) (ERA 1996, ss. 80F(1)(a)(i)-(iv)).

So, the new statutory FW right allows crypto and FinTech firm employees to request a change in hours (e.g., to reduce a 45 hour working week to a 40 hour working week), to request a change in times (e.g., to work 10am-6pm instead of 9am-5pm), and to request a change in place (e.g., to WFH on Mondays and Tuesdays every week). 

An employee is allowed to make TWO FW applications to the same employer during any 12-month period (ERA 1996, s. 80F(4)(a)).

In addition, the employee cannot make a FW application if a previous FW application to the same employer is still “proceeding” (ERA 1996, s. 80F(4)(b)). The term proceeding includes when a FW application is still in the process of being considered, as well as the time taken for FW application appeals to be resolved (ERA 1996, ss. 80F(4A)-(4B)).

Employers Duties
Section 80G ERA 1996 sets out the employer’s duties in relation to a FW application (i.e., what crypto and FinTech firms must do).

First, the firm must deal with the FW application in a reasonable manner (ERA 1996, s. 80G(1)(a)).

Second, the firm must NOT refuse the FW application unless the employee has been consulted about the FW application (ERA 1996, s. 80G(1)(aza)).

Third, the firm must notify the employee of its decision on the FW application within the “decision period” (ERA 1996, s. 80G(1)(aa)).

Fourth, by default, the decision period is set at 2 months beginning with the date of the FW application (Application Date) (ERA 1996, s. 80G(1B)(a)). However, the firm and the employee are free to mutually agree to a longer decision period (ERA 1996, s. 80G(1B)(b)).

Fifth, the firm can only refuse a FW application if the firm considers that one or more of the FW grounds (FW Grounds) applies:

1. the burden of additional costs;
2. detrimental effect on ability to meet customer demand;
3. inability to re-organise work among existing staff;
4. inability to recruit additional staff;
5. detrimental impact on quality;
6. detrimental impact on performance;
7. insufficiency of work during the periods the employee proposes to work;
8. planned structural changes; and
9. such other grounds specified by the SoS in regulations (i.e., any other grounds specified by the SoS via regulations in the future) (ERA 1996, ss. 80G(1)(b)(i)-(ix)).

Withdrawal
A firm can treat an employee's FW application as ‘withdrawn’ if either:

1. the employee (without good reason) failed to attend both the first and second FW application meetings arranged by the firm to discuss the FW application; or
2. the employee (without good reason) failed to attend both the first and second FW application appeal meetings arranged by the firm to discuss the FW application appeal (where the firm allowed the employee to appeal a decision to reject a FW application or to make a further appeal) (ERA 1996, s. 80G(1D)).

If these circumstances apply, the firm must notify the employee that it has decided to treat the employee's conduct as a withdrawal of the FW application (ERA 1996, s. 80G(1D)).

Employee Complaints to ETs 
Section 80H ERA 1996 deals with complaints to ETs. Any employee that has made a FW request may present a complaint to an ET:

1. that the firm has failed in relation to the application to comply with ANY of the application requirements (i.e., reasonable manner, prior consultation, notification, refusal on FW Grounds, decision period);
2. that the firm’s decision to reject the FW application was based on incorrect facts; or
3. that the firms’ notification that the FW application was ‘withdrawn’, was given in circumstances that did not satisfy stated withdrawal requirements (ERA 1996, ss. 80H(1)(a)-(c)).

THE FWR 2014
The legal position that existed previously, was that in order for an employee to be entitled to make a FW application under the FWR 2014, the employee had to have been continuously employed for a period of at least 26 weeks (FWR 2014, reg. 3 (old)). However, this requirement no longer applies, which means that employees can now make a FW application from the day that they commence work with a firm. Regulation 4 FWR 2014 specifies that a FW application made by an employee must:

1. be made in writing;
2. state whether the employee has previously made a FW application to the firm and, if so, when this was made; and
3. be dated.

A FW application will be taken as being made on the day that it is received (FWR 2014, reg. 5(1)). If a FW application is delivered personally the Application Date will be the day of delivery (FWR 2014, reg. 5(2)(c)). If a FW application is sent by post the Application Date is “the day on which it would have been delivered in the ordinary course of post” (FWR 2014, reg. 5(2)(b)).

In order for a FW application to be made by “electronic transmission” (e.g., by electronic mail (email)), the firm must first:

1. agree that a FW application can be sent in this way;
2. specify an electronic address to which the FW application can be sent; and
3. specify the electronic form to be used by the employee (FWR 2014, reg. 5(3)).

Where a FW application is sent by electronic transmission, the Application Date is taken to be the day of transmission (FWR 2014, reg. 5(2)(a)). All the dates when a FW application will be taken to have been made will apply UNLESS the contrary is proved (i.e., the Application Date can be contested by providing evidence that contradicts the Application Date claimed) (FWR 2014, reg. 5(2)).

POTENTIAL ISSUES, PROBLEMS, AND PITFALLS
There are a huge range of potential issues, problems, and pitfalls that can be identified from the outset. These are likely to prove to be challenging for crypto and FinTech firms, as these types of firms operate in much more flexible, laid-back, and open environments, and they tend to feature a higher proportion of younger employees.

Such firms may wish to provide an attractive environment for employees. However, the problem is that the greater the flexibility of FW arrangements provided, the more difficult such arrangements may become to effectively operate, monitor, and supervise, especially within smaller crypto and FinTech firms. As a result, there may be a significant risk that employee performance may deteriorate, and it may become much more difficult to maintain an effective work culture. 

In addition, the right to request FW is NOT a legal right to FW. However, younger employees may fail to make such a distinction, as they may have expectations more akin to a legal right to FW (Global Data, 2024; Feeley, 2023; Abril, 2022; Moore, 2022). There are a number of additional potential issues, problems, and pitfalls that can be identified that will be briefly outlined below (more will be identified in the next blogs).

• NI is considered to be a global FinTech hub, and features firms such as AirPOS, CurrencyFair, DailyPay, FD Technologies, FinTru, Lightyear, MiFinity, and Payescape. Crypto and FinTech firms based in NI will be subject to different NI legislation (e.g., The Flexible Working Regulations (Northern Ireland) 2015) and employment law. This may prove to be problematic for employers who operate throughout the UK. Although they may choose to implement a harmonised approach by applying GB changes to NI employees, such employees would still be subject to different NI employment law, which may potentially lead to complications and confusion with FW applications.

• In theory, the new FW framework will invariably necessitate that firms update their existing FW PPRs, as well as training all existing and new employees on the new FW requirements. However, this may prove to be somewhat of a challenge, in terms of time and costs that must be invested, especially for smaller-sized crypto and FinTech firms. Indeed, many firms may be tempted to gloss over the new FW requirements, which may actually lead to increased FW disputes arising in the future, and which may ultimately end up costing the firm more in the long term.

• Smaller-sized crypto and FinTech firms may also be tempted to deal with FW applications on an ad hoc basis, to save time and costs (i.e., as and when they arise without making across-the-board changes to firm PPRs). However, such an approach may lead to highly complex FW arrangements developing in the long term. As will be seen, without a standardised approach to FW, FW applications may set different, and potentially conflicting, FW ‘precedents’ for employees (e.g., why are some employees authorised to WFH on Fridays whilst others are not).

• Although the new right to request employment contract variation relates to work hours, times, and place, such a request may necessitate a significant, or even complete, amendment of the existing employment contract (e.g., changes to employer flexibility clauses or disciplinary measures). If employees are regularly requesting FW changes, this may result in significantly increased time and/or legal costs spent reviewing and updating employment contracts. In addition, it may even result in employers using the FW request as ‘leverage’ to force an employee to agree to new changes in an existing employment contract.

• There are plenty of opportunities for administrative and procedural errors to be made. For instance, employees may not follow the firm's FW requirements strictly, as a FW request may be emailed to the wrong people or in an incorrect format. Emails may not be received. Application Dates may be contested. Firms may run into problems with shortened decision periods (e.g., because they have too many FW applications to review). There may be disputes about good reasons provided by the employee for not attending FW application or FW applidation appeal meetings. Employees may be unhappy with ‘flimsy’ boilerplate justifications used by the firm to deny FW requests. Employees may feel that the required FW consultation was not long enough to discuss the FW request adequately.   

• There may be an increased number of disputes arising because of differences in interpretation of key FW terms and requirements. For example, in terms of the applicable meaning of dealing with a FW application in a reasonable manner, or the applicable meaning of the requirement to consult with an employee prior to refusing a FW application. If an employee believes they have essentially been fobbed off, they are increasingly likely to argue they were not dealt with in a reasonable manner, or that their ‘consultation’ was a pretence, a sham, or rubber-stamping of a decision that had already been made. Even worse, some employees may believe they have been discriminated against, and a simple FW dispute may rapidly escalate and become complex because of discrimination and equality issues. This is an area that firms should tread carefully with. A FW application that is denied may very quickly escalate internally and rapidly incite consternation among a broader group of employees.  

• The two FW applications annual limit may prove to be restrictive for employees, especially younger workers. Many younger workers regularly move accommodation. They may also wish to change FW arrangements because of changes in their relationships (e.g., they no longer cohabit with someone). Therefore, two FW applications per year may not suffice. If firms change this requirement they can provide employees with more flexibility. However, this may come at a price, because more employees may be making FW applications regularly, which may increase firm administration costs and time.

• The FW Grounds are likely to prove to be the most challenging for crypto and FinTech firms (these will be assessed in more detail in the next blogs). This is because they are highly generic, and therefore subjective, in nature. For example, the burden of additional costs may differ between a small crypto firm and a medium-sized FinTech firm. Also, any analysis of detrimental impact on quality or performance is inherently subjective. This inherent subjectivity is problematic, because in theory, crypto and FinTech firms can use any of the FW Grounds as a cover for denying a FW request. However, this in turn may run the risk of employees appealing denied FW requests, or even presenting a complaint to an ET, which may end up ruling against the crypto or FinTech firm.

SUMMARY
As can be seen, the new FW rights necessitate a significant investment in terms of time and costs. At a minimum, the new FW framework may require firms to update their existing FW PPRs, as well as training all existing and new employees on the new FW requirements. However, this may be something which some crypto and FinTech firms deem as low priority. A central point of this blog series, is to better educate crypto and FinTech firms and their employees on a range of issues, problems, and pitfalls that may potentially arise in practice, which they may not have thought about.  

TO BE CONTINUED.