I beg to move amendment No. 211, in page 67, line 9, leave out '171ZL(1)' and insert '171ZN(1)'
With this it will be convenient to discuss Government amendment No. 212.
The amendments are needed to correct drafting errors in paragraphs 7 and 13. I am willing—I would not say happy—to go into detail if necessary, but the Committee might be satisfied if I simply point out that the amendments ensure that legislation governing rates of statutory adoption pay is subject to the affirmative procedure, and that there is a clear process for increasing those rates in future as part of social security uprating. That has always been our intention for both adoption pay and paternity pay, and the Bill has achieved that aim in respect of the latter. However, we did not get matters right for adoption pay the first time round, and that is the issue with which the amendments deal.
Amendment agreed to.
Amendment made: No. 212, in page 68, line 9, leave out '171ZM(1)' and insert '171ZN(1)'.—[Alan Johnson.]
I beg to move amendment No. 200, in page 69, line 14, at end insert—
'In section 48 (right to present complaint of detriment to employment tribunal), for ''or 47C'' there is substituted '', 47C or 47D''.'
With this it will be convenient to take the following: Government amendments Nos. 201 to 207.
Government new clause 2—Flexible working—
'(1) The Employment Rights Act 1996 (c.18) is amended as follows.
(2) After Part 8 there is inserted—
80F Statutory right to request contract variation
(1) A qualifying employee may apply to his employer for a change in his terms and conditions of employment if—
(a) the change relates to—
(i) the hours he is required to work,
(ii) the times when he is required to work,
(iii) where, as between his home and a place of business of his employer, he is required to work, or
(iv) such other aspect of his terms and conditions of employment as the Secretary of State may specify by regulations, and
(b) his purpose in applying for the change is to enable him to care for someone who, at the time of application, is a child in respect of whom he satisfies such conditions as to
relationship as the Secretary of State may specify by regulations.
(2) An application under this section must—
(a) state that it is such an application,
(b) specify the change applied for and the date on which it is proposed the change should become effective,
(c) explain what effect, if any, the employee thinks making the change applied for would have on his employer and how, in his opinion, any such effect might be dealt with, and
(d) explain how the employee meets, in respect of the child concerned, the conditions as to relationship mentioned in subsection (1)(b).
(3) An application under this section must be made before the fourteenth day before the day on which the child concerned reaches the age of six or, if disabled, eighteen.
(4) If an employee has made an application under this section, he may not make a further application under this section to the same employer before the end of the period of twelve months beginning with the date on which the previous application was made.
(5) The Secretary of State may by regulations make provision about—
(a) the form of applications under this section, and
(b) when such an application is to be taken as made.
(6) The Secretary of State may by order substitute a different age for the first of the ages specified in subsection (3).
(7) In subsection (3), the reference to a disabled child is to a child who is entitled to a disability living allowance within the meaning of section 71 of the Social Security Contributions and Benefits Act 1992 (c.4).
(8) For the purposes of this section, an employee is—
(a) a qualifying employee if he—
(i) satisfies such conditions as to duration of employment as the Secretary of State may specify by regulations, and
(ii) is not an agency worker;
(b) an agency worker if he is supplied by a person (''the agent'') to do work for another (''the principal'') under a contract or other arrangement made between the agent and the principal.
80G Employer's duties in relation to application under section 80F
(1) An employer to whom an application under section 80F is made—
(a) shall deal with the application in accordance with regulations made by the Secretary of State, and
(b) shall only refuse the application because he considers that one or more of the following grounds applies—
(i) the burden of additional costs,
(ii) detrimental effect on ability to meet customer demand,
(iii) inability to re-organise work among existing staff,
(iv) inability to recruit additional staff,
(v) detrimental impact on quality,
(vi) detrimental impact on performance,
(vii) insufficiency of work during the periods the employee proposes to work,
(viii) planned structural changes, and
(ix) such other grounds as the Secretary of State may specify by regulations.
(2) Regulations under subsection (1)(a) shall include—
(a) provision for the holding of a meeting between the employer and the employee to discuss an application under section 80G within twenty eight days after the date the application is made;
(b) provision for the giving by the employer to the employee of notice of his decision on the application within fourteen days after the date of the meeting under paragraph (a);
(c) provision for notice under paragraph (b) of a decision to refuse the application to state the grounds for the decision;
(d) provision for the employee to have a right, if he is dissatisfied with the employer's decision, to appeal against it within fourteen days after the date on which notice under paragraph (b) is given;
(e) provision about the procedure for exercising the right of appeal under paragraph (d), including provision requiring the employee to set out the grounds of appeal;
(f) provision for notice under paragraph (b) to include such information as the regulations may specify relating to the right of appeal under paragraph (d);
(g) provision for the holding, within fourteen days after the date on which notice of appeal is given by the employee, of a meeting between the employer and the employee to discuss the appeal;
(h) provision for the employer to give the employee notice of his decision on any appeal within fourteen days after the date of the meeting under paragraph (g);
(i) provision for notice under paragraph (h) of a decision to dismiss an appeal to state the grounds for the decision;
(j) provision for a statement under paragraph (c) or (i) to contain a sufficient explanation of the grounds for the decision;
(k) provision for the employee to have a right to be accompanied at meetings under paragraph (a) or (g) by a person of such description as the regulations may specify;
(l) provision for postponement in relation to any meeting under paragraph (a) or (g) which a companion under paragraph (k) is not available to attend;
(m) provision in relation to companions under paragraph (k) corresponding to section 10(6) and (7) of the Employment Relations Act 1999 (c.26) (right to paid time off to act as companion, etc.);
(n) provision, in relation to the rights under paragraphs (k) and (l), for the application (with or without modification) of sections 11 to 13 of the Employment Relations Act 1999 (c.26) (provisions ancillary to right to be accompanied under section 10 of that Act).
(3) Regulations under subsection (1)(a) may include—
(a) provision for any requirement of the regulations not to apply where an application is disposed of by agreement or withdrawn;
(b) provision for extension of a time limit where the employer and employee agree, or in such other circumstances as the regulations may specify;
(c) provision for applications to be treated as withdrawn in specified circumstances;
and may make different provision for different cases.
(4) The Secretary of State may by order amend subsection (2).
80H Complaints to employment tribunals
(1) An employee who makes an application under section 80F may present a complaint to an employment tribunal—
(a) that his employer has failed in relation to the application to comply with section 80G(1), or
(b) that a decision by his employer to reject the application was based on incorrect facts.
(2) No complaint under this section may be made in respect of an application which has been disposed of by agreement or withdrawn.
(3) In the case of an application which has not been disposed of by agreement or withdrawn, no complaint under this section may be made until the employer—
(a) notifies the employee of a decision to reject the application on appeal, or
(b) commits a breach of regulations under section 80G(1)(a) of such description as the Secretary of State may specify by regulations.
(4) No complaint under this section may be made in respect of failure to comply with provision included in regulations under subsection (1)(a) of section 80G because of subsection (2)(k), (l) or (m) of that section.
(5) An employment tribunal shall not consider a complaint under this section unless it is presented—
(a) before the end of the period of three months beginning with the relevant date, or
(b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months.
(6) In subsection (5)(a), the reference to the relevant date is—
(a) in the case of a complaint permitted by subsection (3)(a), the date on which the employee is notified of the decision on the appeal, and
(b) in the case of a complaint permitted by subsection (3)(b), the date on which the breach concerned was committed.
(1) Where an employment tribunal finds a complaint under section 80H well-founded it shall make a declaration to that effect and may—
(a) make an order for reconsideration of the application, and
(b) make an award of compensation to be paid by the employer to the employee.
(2) The amount of compensation shall be such amount, not exceeding the permitted maximum, as the tribunal considers just and equitable in all the circumstances.
(3) For the purposes of subsection (2), the permitted maximum is such number of weeks' pay as the Secretary of State may specify by regulations.
(4) Where an employment tribunal makes an order under subsection (1)(a), section 80G, and the regulations under that section, shall apply as if the application had been made on the date of the order.''
(3) After section 47C there is inserted—
''47D Flexible working
(1) An employee has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that the employee—
(a) made (or proposed to make) an application under section 80F,
(b) exercised (or proposed to exercise) a right conferred on him under section 80G,
(c) brought proceedings against the employer under section 80H, or
(d) alleged the existence of any circumstance which would constitute a ground for bringing such proceedings.
(2) This section does not apply where the detriment in question amounts to dismissal within the meaning of Part 10.''
(4) After section 104B there is inserted—
''104C Flexible working
An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee—
(a) made (or proposed to make) an application under section 80F,
(b) exercised (or proposed to exercise) a right conferred on him under section 80G,
(c) brought proceedings against the employer under section 80H, or
(d) alleged the existence of any circumstance which would constitute a ground for bringing such proceedings.''.'.
Amendment (a), in proposed new section 80F(1), after 'apply', insert 'in writing'.
Amendment (l), in proposed new section 80F(1)(a), leave out sub-paragraph (iii).
Amendment (m), in proposed new section 80F(1)(a), leave out sub-paragraph (iv).
Amendment (n), in proposed new section 80F(2), after 'must', insert 'be in writing and'.
Amendment (bb), in proposed new section 80F(2)(b), at end insert—
'(bb) specify the reason the employee requires the change in his terms and conditions for the purpose of the care of a child.'.
Amendment (b), in proposed new section 80F(2), leave out paragraph (c).
Amendment (c), in proposed new section 80F(3), leave out first 'day' and insert 'week'.
Amendment (z), in proposed new section 80F(4), at end insert
'and any application made under this section shall be taken to be an application permanently to change the employee's terms and conditions of employment.'.
Amendment (o), in proposed new section 80F(8)(a), leave out sub-paragraph (i) and insert—
'(i) has been continuously employed by his employer for a period of 26 weeks'.
Amendment (d), in proposed new section 80F, at end insert—
'(9) For the purposes of this section an employer shall have the right to request that an employee reverts back to the original terms and conditions of employment, once the child reaches the age limits prescribed in subsection 3.'.
Amendment (t), in proposed new section 80G(1)(b), leave out from 'he' to 'applies' and insert
'reasonably considers that to comply with the request in the application would result in him facing one or more of'.
Amendment (p), in proposed new section 80G(1)(b)(i), leave out
'the burden of additional costs'
'material additional cost'.
Amendment (q), in proposed new section 80G(1)(b)(iii), leave out 'staff' and insert 'employees'.
Amendment (r), in proposed new section 80G(1)(b)(iv), leave out 'staff' and insert
'employees of similar capability on similar terms and conditions'.
Amendment (s), in proposed new section 80G(1)(b)(viii), at beginning insert 'Incompatibility with'.
Amendment (u), in proposed new section 80G(1)(b), leave out sub-paragraph (ix) and insert
'or because he reasonably considers that he is entitled to refuse the application on such other grounds as the Secretary of State may specify in regulations'.
Amendment (e), in proposed new section 80G(2)(a), leave out '80G' and insert '80F'.
Amendment (f), in proposed new section 80G(2)(b), after first 'of', insert 'written'.
Amendment (g), in proposed new section 80G(2)(d), after 'appeal', insert 'to the employer'.
Amendment (h), in proposed new section 80G(2)(e), at end insert 'in writing'.
Amendment (i), in proposed new section 80G(2)(g), leave out 'discuss' and insert 'hear'.
Amendment (j), in proposed new section 80G(2)(h), after 'employee', insert 'written'.
Amendment (v), in proposed new section 80G(2)(k), leave out from second 'a' to end and insert
'fellow employee or a representative of a recognised Trade Union'.
Amendment (k), in proposed new section 80G(2)(k), leave out 'the regulations may specify' and insert
'referred to in section 10 of the Employment Relations Act 1999'.
Amendment (aa), in proposed new section 80G(2)(k), at end insert—
'(kk) provision for the employer to be accompanied by an official or representative of an organisation of which he is a member, where the employee has exercised his right under (k) above.'.
Amendment (y), in proposed new section 80G(4), at end insert—
(1) An employer who accepts an application made in accordance with section 80F above shall be entitled to reduce pro-rata in respect of any reduction in working hours by the employee, any benefits paid to the employee.
(2) Where the nature of a benefit renders impossible pro-rata reduction in accordance with subsection (1) above, the employer may instead withdraw the benefit and make a pro-rata cash payment in lieu of the benefit to the employee, based on the value of the benefit payable prior to the application being made.'.
Amendment (w), in proposed new section 80H(1)(b), after 'on', insert 'materially'.
Amendment (x), in proposed new section 80I(2), at end insert
'having regard to the loss sustained by the complainant as a consequence of his employer's refusal of the application'.
Government amendment No. 208.
On a point of order, Mr. Conway. I appeal to you to use your influence with the channels available to you through the Chairmen's Panel to address an unfortunate quirk of the rules of order for debate in Standing Committee. Under the heading of a minor consequential Government amendment to a schedule, we will discuss in a single debate perhaps one of the most significant clauses in the entire Bill, which is some eight pages long and to which 28 amendments have been tabled. Frankly, I am not a great fan of modernisation and all its ramifications, but this is an issue that needs to be addressed. We need to change the procedure so that the Chairman has sufficient discretion to deal with the fact that it is clearly inappropriate and unhelpful to the scrutiny process to be required to discuss a major new clause and 28 amendments in a single debate that will involve long and complicated speeches and will be very difficult to follow.
I am grateful to the hon. Gentleman for his point of order. Of course, Government amendment No. 200 is necessarily related to Government new clause 2, but I hear what he says and I shall ensure that his comments are drawn to the attention of the Leader of the House, so that they can
be taken into account when the business managers decide how much time to allow for the Bill's consideration on Report.
This is an important new clause and an important group of amendments. We tabled the new clause last week because we wanted to ensure that the Committee had as much time as possible to consider it ahead of this debate. Its purpose was also explained in the report of the work and parents taskforce, which was published in November, and the Government's response to it. We are seeking to turn that response into legislation. As I have said, it is not in the Government's interest to inconvenience members of the Committee, or to try to bounce them into accepting last-minute amendments. We tabled the new clause as early as we could, and we also circulated an accompanying lengthy explanation, which I hope has proven helpful.
It makes sense to start with new clause 2 because it is the substantive provision in this group of amendments. It provides parents of young children with the new right to apply for flexible working, and deals with the procedure that employers must follow in considering such a request. I agree with the hon. Member for Runnymede and Weybridge that this is perhaps the most significant clause in the Bill, taking us as it does into a brave new world of uncharted territory. It forms part of a package of measures that are aimed at improving choice for working parents and enhancing business competitiveness. We have already discussed improvements in maternity leave provisions, and the introduction of paid paternity leave and adoption leave. The new proposals on flexible working will constitute an important step towards making parents' lives easier, while enabling them to retain their skills in the workplace. They are based on the existing and successful flexible working arrangements of leading businesses and organisations of all sizes, and are designed to make best practice on flexible working the norm.
The Government made it clear from the outset that we would amend the Bill to give legislative effect to the recommendations of the work and parents taskforce. As I have said, the taskforce reported its recommendations last November, after the Employment Bill was introduced in the House. My right hon. Friend the Secretary of State for Trade and Industry said in her opening statement to the House that the Government would introduce such an amendment as soon as possible after the taskforce had reported, and that is precisely what we have done.
For the first time, the law will facilitate a dialogue between parents and their employers about working patterns that better meet parents' child care responsibilities and employers' needs. The new clause will help to remove the stresses that parents face in raising their children and in meeting their work responsibilities. It will ensure that about 3.8 million parents—2.1 million men, 1.5 million women with children aged under six, and 200,000 parents with disabled children up to the age of 18—are able to apply for new working arrangements. Flexible
working was raised as a key issue during consultation surrounding the publication in December 2000 of the Government's Green Paper, ''Work and Parents: Competitiveness and Choice''. Parents repeatedly told the Government that the opportunity to arrive 15 minutes later for work, for example, thereby enabling them to drop their children off to a child carer, would significantly ease the pressures that they face, and help their participation in the labour market.
Last June, the Government therefore established the work and parents taskforce as an independent body to examine how to meet parents' desire for more flexible work patterns in a way that is compatible with business efficiency. The taskforce consisted of employers—large and small—and their representatives, and trade union and parents' representatives. One of the taskforce's key terms of reference was to build on best practice and design a light-touch legislative approach to giving parents of young children a right to make a request to work flexible hours, and to have that request considered seriously by the employer.
The taskforce met to consider the issues over five months and wrote to more than 600 organisations and individuals who responded to the Green Paper consultation. Key questions also appeared on the taskforce website, and an advisory group helped the taskforce to explore and identify the merits of different options. The taskforce held discussions with the better regulation taskforce, the Small Business Council, the maternity review group, the Engineering Employers Federation, the Association of Convenience Stores and the Transport and General Workers Union to test emerging thinking on key issues.
The taskforce reported last November, and its recommendations represent a sound, workable approach that is acceptable to employers and employees alike. At the time, the CBI said:
''The Government has clearly been listening to the problems of business at this difficult time. The UK has one of the most flexible labour markets in the developed world. We have the second highest proportion of part-timers in Europe so employers have no objection to seriously considering requests from working parents.''
The TUC said:
''The TUC welcome the taskforce's recommendations. They will give parents a new opportunity to seek flexible working. The best employers already agree to flexible working patterns because they can see the advantages.''
By reaching a consensus of opinion, the taskforce presented the Government with an opportunity to facilitate a genuine culture change in the workplace to the benefit of employers, parents and their children.
The Minister is playing up the consensus that has been achieved, but he will also acknowledge that Mr. Bill Morris has described the measure as ''meaningless'' because it gives a right only to have a request considered rather than an absolute right to have it granted in the variation of working terms. The Minister will concede that although employers are broadly happy with the drafting of the Bill—issues have yet be raised—they are extremely fearful that on the evidence of past work the Bill has
been drafted to be the thin edge of the wedge, which will provide a quick, obvious and easy route to placing a greater burden on employers and granting a more specific right. He might want to imply that he has satisfied everybody, but must recognise that, beneath the surface, great concern about the measure exists on both sides.
I do not say that we have pleased every individual, but the CBI and the TUC have voiced their support. Everybody involved in the sector from the Maternity Alliance, to Parents at Work to charities have utterly refuted the derogatory comments that have been made. I vehemently feel that we have found the right package. We began the process in 1999 by consulting individuals and employers on whether we should take a route that introduced the compulsory right to demand part-time working, or leave it totally to the spread of best practice. After full consultation and after listening, most importantly, to the views of individuals, we ended up with working parents telling us that the issue is about working more flexibly rather than simply part time; often the same number of hours are involved but in a different form. In particular, lower-paid workers said that working part time to allow them to look after their children, meant taking a cut in income that they could not afford. They said that the problem was not about the right to return after maternity leave, which formed part of our initial consultation stage three years ago, but about the problems of parents not only at childbirth, but during various stages, such as the important break point or transition period when a child starts school. They also said that it concerns not just mothers, but fathers.
I believe that we have introduced the measure in the best possible way, so that we will not wait a generation for a culture change. We recognise that the world of work is completely different from years ago, when companies large and small adopted working practices that they have not much looked at since. That was a world where, in general, women were not in the workplace and the culture was that men did not want to spend time with their children, but were happy to be at work while women were at home. That has changed completely. We now have more than 4 million working mothers, the highest level since records began in 1953. This is an elegant way of addressing that.
The organisations involved have backed us. One or two individuals might take different views, which is the nature of all issues. There will never be a unanimous point of view, but I certainly refute some of the hon. Gentleman's more lurid comments.
I accept much of that, and the best guarantee that employers will listen to requests for flexible working practice is a healthy economy and a strong, tight labour market. Those of us who represent areas in which the labour market is incredibly tight do not recognise many problems that the Minister seeks to address through legislation, because employees dictate the terms and employers are tripping over themselves to be flexible to secure that precious and scarce commodity. I know that that is not the case in every single area, but the Government should focus their attention on ensuring that the buoyancy of the economy creates labour market conditions that mean
that everyone seeks out best practice in order to engage as many people as possible in the labour market.
Will the Minister address a specific issue? He said that he thinks that he has got this just about right. Bearing in mind his earlier comments, I thought that he might say, because there were concerns on both sides, that those showed that he had got it just about right. On Second Reading, however, his right hon. Friend the Secretary of State, responding to an intervention from a Government Member, referred to what I must describe as a threat to employers from the new clause. She said that how it worked would be reviewed, and that if it was not found to be working satisfactorily, steps would be taken.
That is being interpreted by many employers to mean that although the provisions in the new clause are broadly acceptable, the DTI intends to push the steamroller further if employers do not comply with what the Government clearly want. That is my concern. Can the Minister say anything about the Government's future intentions and the implicit threat that his right hon. Friend made?
The hon. Gentleman is wrong in his analysis of the situation in places such as Runnymede and Weybridge. We have sought to combine the basic civilised rights of the workplace with a dynamic economy, and he is right in that, in the so-called war for talent, many working parents, especially women, can dictate their terms and conditions because of the skills that they have. However, we have found in the same areas that many working in other sectors who are not so highly skilled, especially women, are not so able to dictate their terms and conditions and are almost ignored on those issues.
Should we not be looking at work patterns that have existed for years, which have no flexibility, in order to accommodate very simple requests? I was present to hear the comment of the woman who said, ''I would have stayed in my job if only my employer had allowed me to start 15 minutes later so I that could drop my child off.'' That was in Reading, part of the booming Thames valley. I disagree with that part of the hon. Gentleman's analysis.
As for the threat that the hon. Gentleman mentioned, I believe that my right hon. Friend the Secretary of State is utterly incapable of issuing anything so inelegant as a threat. She was referring to the fact that the taskforce, made up of business and union representatives and other experts, said that the measure should be reviewed in three years. It made the point that because this was not a statutory right to demand to work more flexibly, the balance was absolutely right. We are providing is a right to make a request and a duty on the employer to take the request seriously. We expect the vast majority of employers not to go through some box-ticking exercise, but to give the matter serious consideration and to change their attitude and approach.
Many employers have done that during the past 15 or 20 years. There has almost been a revolution, sometimes in total quality management and sometimes through Investors in People, which was discussed this
morning. Employers now genuinely value employees and look much more carefully at how individual rights, responsibilities and duties can be better balanced.
We have accepted the nine unanimous recommendations in their entirety. I do not usually read out CBI briefs, but the latest one is interesting and this would be a good point to read from it. It says that
''we accept that the new right is likely to increase the availability of flexible working without damaging business competitiveness. We support the Government's decision to adopt the unanimous recommendations of the Work and Parents Taskforce''.
One of those recommendations was that there should be a review in three years' time.
I support the thrust of the new clause. Does the Minister accept that in many respects it essentially codifies the way in which case law on indirect sex discrimination has developed? As the law stands now, any woman who wants to work part-time, reduced hours, more flexibly or from home for a period can put that request to the employer. An employer who refuses her request, if it is based on child care needs, is subject to a claim for indirect sex discrimination. In the same workplace, a man who is refused that request where a woman was granted it, could have a claim for direct sex discrimination. In a way, the new clause simply puts into writing, in clear form, the way in which the law has developed. Is that the Minister's understanding?
The hon. Gentleman makes an important contribution. Some small business people do not have such procedures and think that they are immune from any request to work more flexibly. Many small business people think that our approach is right. Sex discrimination could affect small companies, but that is a much more cumbersome and difficult process to go through.
The hon. Member for North Norfolk made a very important point. Is the Minister saying, that where the new clause applies, access to sex discrimination law will be ruled out and the employee will have to go through this procedure rather than seeking to bring an indirect sex discrimination case? If the Minister is not saying that, he is not clarifying and codifying the law but heaping more upon it, because the sex discrimination route will still be available. I shall seek to show the Committee later that one problem is that the compensation and remedies available in the Bill and in the sex discrimination legislation are different. If both are available, that places a double jeopardy in front of employers, which could further confuse the situation. Can the Minister clarify matters?
I am not saying that this changes sex discrimination regulations but, in response to the hon. Member for North Norfolk, that there is a fear and a danger that employers who believe that they can ignore this changing pattern of work may be hit by the blunt instrument of sex discrimination law. That is a difficult route for individuals to pursue and it does not deal with the issue at the heart of this problem: how
can an employer and an employee engage in a useful exchange about the way in which they can best make changes to the benefit of the company, the employee and the customers?
In general I support anything that we can do to encourage flexible working, which is something that my wife, as a new mother, benefits from. Sadly, the Conservative Whips' Office, probably like the Labour Whips' Office, is not so flexible when it comes to the father. However, I want to make a more substantial point.
I am concerned at the lack of rigour in the regulatory impact assessment on this proposal, because, even on the basis of the assessment, the costs involved are enormous—a quarter of a billion pounds. The impact assessment says that 3.8 million employees will be entitled to submit requests under the clause. It goes on to say that the premise behind the assessment
''is that a considerable proportion of parents do seek new working patterns.''
Yet, over the page the estimate for the cost suggests that just over 500,000 additional requests will be made—one eighth of eligible parents. There seems to be confusion about the facts: the assumption is that a considerable proportion will take it up, but the costs are worked out on the basis that only one eighth of eligible parents will make a request. Does the Minister accept that if more than one eighth of eligible parents use the clause, the cost will be considerably higher?
The regulatory impact assessment is difficult to make. We are in uncharted territory. We are working closely with the advice and guidance in particular of the charities that have encouraged flexible working for a long time, because they believe that there is a latent desire for flexible working. We are assuming 418,000 new requests for flexible working each year. A request may come at any stage in the child's life. It may come not when the child is born, but two years later. It can come up to 14 days before the child's sixth birthday.
Our other assumption is that the majority of those 418,000—about 80 per cent.—will be dealt with through the internal process. At the initial stage of the request, the individual and the employer will sit down together and decide a new way of working. Another big chunk will be dealt with at the appeal. The individual will say ''Fair enough. I accept there is no way I can do it.'' We believe that few of those will go to employment tribunals. They are rough assessments. Regulatory impact assessments are always difficult, but it is right that we should have a stab at it. I think that members of the Committee will appreciate having at least some indicative figures.
After the task force presented its views, we accepted all its recommendations, in full or in principle, and we have kept as close to its recommendations as possible when translating them into legislation, an approach that we shall continue to adopt as we draft and test the accompanying regulations.
The taskforce's approach was to design the right to apply for flexible working so that it would work for small businesses. A right that works for small business will work for larger employers, and small businesses can benefit as much from flexible working as any other organisation. However, we recognise that the introduction of this new right will have costs for business. The impact will depend on the number of parents who exercise the right and the way in which employers respond. I have been through the regulatory impact assessment in response to the intervention of the hon. Member for Tatton, but we must also recognise that the economy also benefits, with savings in recruitment costs alone of about £113 million. However, processing requests and accommodating them is not without cost. Our assessment is that one-off implementation costs will be £38 million and recurring costs £286 million a year.
I consider that cost across British business to be justifiable, particularly as helping parents to balance their work and childcare responsibilities will be good for business by encouraging employee commitment and motivation and ensuring that businesses are better placed to deal more effectively with changing market conditions.
I want to comment on what my hon. Friend the Minister said about the benefits to business from saving money on recruitment.
Before I became a Member of Parliament I ran a small organisation with 20 to 25 people and on several occasions dealt with requests for changes in flexible working time to deal with childcare and other commitments. It was always difficult and, because some of the requests came from highly skilled research people, the advertising costs were substantial. Accommodating those employees meant that one not only retained skilled staff but saved considerable costs in advertising and subsequently in retraining and skilling. That is only one example. People tend to think about the costs of such requests, but there are also benefits from saving money.
My hon. Friend makes the point that I was about to make, which is that employers who have adopted flexible working practices, and there are many of them, have had a tremendous boost to their bottom line. They have done it for various reasons, principally because of the business case, but large and small employers have emphasised time and again that it really benefits their business.
The right to make requests will not be available to all employees. The Government's work-life balance campaign continues to promote the wider case for flexible working through best practice. However, for working parents, who daily juggle raising their children with meeting their work responsibilities, we are looking to speed up the rate of change, targeted at those who will benefit most. The new law will therefore apply to parents of children under six, because parents' demand for flexible working is at its greatest when children are young. Parents of disabled children will be able to make requests until their children reach 18 years of age.
To summarise the new right, the initial onus will be on the parent to set out the working pattern that he or she wishes to adopt and to explain the effect that he or she envisages it having on the employer. The parent and employer should then meet to discuss the request and, if it cannot be met, to consider alternatives. A parent who is not satisfied with the employer's decision will be able to appeal. An employer will be able to reject an application only on specific business grounds that appear in the Bill. The employer will have to explain in writing to the parent the reasons why the grounds apply to the business. The procedure is intended to encourage both parties to resolve a disputed request at the workplace, and we believe that every effort should be made to do so. It is our intention that alternative dispute resolution mechanisms should be available to both parties and that ACAS should widen its binding arbitration scheme to cover requests for flexible working.
Where cases reach an employment tribunal, employers will need to demonstrate that they have gone through the procedure, including having held meetings and given the parent a short written explanation of the business reasons. The tribunal will verify whether the employer has followed all the proper procedures and will examine any disputed facts. Tribunals will not have the power to substitute their judgments on the business reasons for the employers, but will be able to send the case back to the business for reconsideration and to order compensation where appropriate. That test will provide parents with the assurance that their requests are taken seriously by the employer and will avoid employers' day-to-day business judgments about what working patterns are sustainable, while keeping the business functioning.
The Minister says that it is not a question of second-guessing employers' business decisions. However, the notes provided by the Government on the Bill cite in paragraph 20 a fairly detailed example of a small shop where the mother is asked to turn up early to be the first person to open the shop in the morning. It suggests that the employer might say to her, ''I can't trust the other members of staff with a key because they have not been working for me for more than a year.'' That seems reasonable. However, it goes on to say that the employee might dispute the fact that they have to work for that length of time to be a keyholder—in other words, they might dispute the small shopkeeper's decision to give a key only to someone who has worked for him for more than a year. That is very much getting into the detail of business decisions taken by small employers.
We are trying to give examples. The hon. Gentleman left out the part about the other member of staff having worked for the company for only four months. The employee would be able to question matters of fact that explained the employer's business reasons for declining the request, but not the reason itself. That is quite right.
The hon. Gentleman helpfully said that in general he supports the thrust towards more flexible working. We are approaching this with light-touch regulation. We must ensure that claims submitted by employees
are considered seriously, not just binned. The employee has the right to make the request and the employer has the duty to take it seriously. That is the right way forward. It is difficult for us continually to try to give examples of where such cases may arise. I do not accept the hon. Gentleman's suggestion that there is an alternative solution. We have hit upon the right one.
The Minister is introducing this measure on the basis of the fiction that there will be no second-guessing of the business decisions of employers. In reality, people are bound to do that in the context of matters that are integral to the way in which businesses are run, such as working patterns. Indeed, the Government's case study in paragraph 20 provides an example. The Minister could simply say, ''This is a new power which represents a considerable extension of employment regulation. We think it's worth it. However, it does involve second-guessing business decisions.''
We are not second-guessing business decisions. The employee is entitled to question the facts. If the employer said, ''You've got to start at 9.30 because the other keyholder has only worked here for four months''—or whatever the example says—and the employee found out that the other employee had not worked there for four months, that dispute of fact is what the tribunal would be concerned with.
The taskforce debated the matter at great length. It concluded that it would be horrendous if employment tribunals had to try to second-guess business decisions by putting themselves in the role of employers, with all the complications and problems that they face, and imposing a solution on them. The tribunal is there to question whether the procedure has been operated correctly, whether the employee has submitted the application correctly, whether the employer has considered it seriously and whether there is a dispute about facts. I hesitate to think what the hon. Member for Tatton would have said if the taskforce had suggested for one moment that tribunals should spend their time looking over the business case. I am sure that he would not have taken such a reasonable approach.
Although I, like my hon. Friends, broadly welcome the contents of the new clause, there is a converse argument. I am concerned by the persistent way in which an employee may apply on the basis that the facts change. My hon. Friend the Member for Tatton raised an example of an employee who had been employed for 11 months, to whom it would be inappropriate to give a key. If a tribunal decided two months later not to allow the employee's working hours on that basis, and if the employee had been employed for 13 months and had therefore gone beyond the one-year barrier, would he or she be allowed to reapply for a change to flexible working hours? If not, is there a structure or ceiling beyond which employees cannot continue to reapply on the same basis?
The tribunal might ask the employer to reconsider because of those circumstances, and that issue is dealt with in the Bill. Once an employee has requested flexible working, then whatever happens, they cannot request it again for a period of one year. It is not possible to make continuous applications to work flexibly.
The Minister is setting out his case reasonably. As I have said before—I shall say it again in a moment when it is my turn—nobody has a huge problem with the Bill, subject to one or two caveats that we want to explore through the amendments; the concern is where it might lead in the future. He is setting out cogently a case for having a right to put a reasonable request and have it properly considered and responded to. How does he feel about making that reciprocal? How does he feel about giving an employer, perhaps only a small employer, the right to put to an employee a request to change working hours, working patterns and workplace, with an obligation on the employee to consider reasonably that request, and, if it is refused, to give reasons in writing, and to have those reasons subject to scrutiny as to fact by a tribunal? Does he see a reciprocal situation as fair and reasonable?
Employers have the right at any time to propose to their employees a different way of working, and I am pleased that they do that all the time. In the best examples that we have seen of changes to a company's culture to allow more flexible working, it has been the employer who has gone to the employee, not the other way around.
Of course employers have the right to put a proposal to their employees at any time, and employees have the right to put a proposal to their employer at any time.
They have the right because there is nothing to stop any employee writing to the employer, and there is equally nothing to stop the employer putting the letter in the waste paper bin without reading it. The reciprocal provision would be that in a proposal from an employer to change working hours, practices or terms, an employee would also have an obligation to consider that seriously and respond to it. The employee could refuse it only on specified grounds, and that refusal would be subject to a tribunal with an ability to inquire into the facts. That would be the mirror image of what the Minister is introducing; does he think that it would be reasonable?
I can see lights going on in many places. The hon. Gentleman offers an interesting invitation, suggesting that an employer would have to request that an employee adopted a different way of working, and that we would lay down the decisions on which the employee could decided not to accept the new terms and conditions, and the employment tribunal would not be able to interfere in any way with the employee's basic decision. We are discussing an unequal situation.
It is interesting.
It may be interesting, but it is also hypothetical. The hon. Gentleman may or may not find this happening somewhere in Runnymede and Weybridge, but I have found it time and time again not only in Hull, West and Hessle but all over the country. Large and small employers are not engaging with flexible working patterns not because there is some problem or barrier with their companies, but because they have always done things that way.
As a trade unionist, I admit that there are faults on both sides. Many unions established a pattern, agreed the shifts that would be worked, and took the attitude that no one could possibly change one dot or comma of a collective agreement that had governed industry for the past 120 years. Indeed, such attitudes still persist. If we leave this matter to culture change and best practice, it will take us a generation to deal with it. That is why legislation is necessary.
To answer the point made by the hon. Member for Runnymede and Weybridge, as the law stands the employer already has the right, in effect, to request a change of terms and conditions with a real sanction attached. If there is a good and substantial business reason for making such a request and the employee refuses, dismissal could be deemed fair. The employer therefore has real power to make such a request to an employee. In that sense the provision would create more of a balance.
The hon. Gentleman is right. As I recall, a period of notice of about six months applies, irrespective of the views of the employee.
I was going to make a point even before my hon. Friend mentioned the rigidity of some employers. When, in considering part-time workers, the Education and Employment Committee asked representatives of a particular sector why they could not establish different working patterns, they replied, ''Because we can't'', and said that the Committee did not understand the nature of their business. That was as much as they could say, despite the fact that they appeared before us knowing that we were considering the potential for changing working practices. Incidentally, the rigidity of that sector's working practices, its mindset and certain of its attitudes have not helped its businesses overall. Does my hon. Friend agree that, under the regulations, refusing even to consider the matter and offering the excuse, ''Because we can't'', will not necessarily be acceptable? To say, ''We can't, because of X effect on our business'' would be very different, in that it does not involve a suck-it-and-see attitude towards business practices.
My hon. Friend gives a good example, and I have used a similar one to emphasise the prevailing culture in the workplace, which is changing, but not fast enough. Before the hon. Member for Runnymede and Weybridge jumps in and mentions the Post Office, I should point out that my example relates to telecommunications in the late 1970s, when I was a representative—
Oh, the glory days.
They were indeed the glory days. My flares, tank-top and feather-cut hair were on full display, and I was drinking Top Deck shandy.
So no change there.
I am trying to preserve my fashion statement. In those days, a day telephonist had to be a woman, and a night telephonist had to be a man. Between the day shift of female telephonists, who worked more or less 9 to 5, and the night shift of male telephonists was a group of part-timers who existed for the convenience of both shifts. They were class B members of the union, which says an awful lot. I am talking not about ancient history but fairly recent history, and it could be replicated in industries and organisations throughout the country. The Sex Discrimination Act 1975 eventually caught up with that practice, but a residue of such practices remains.
To help employers and parents to ensure that they have a full understanding of the process, we plan to introduce the new law with a package of support. Key to that will be guidance containing a wide variety of examples of how the right will apply to help parents to make requests and employers to consider them. We estimate that only 1 per cent. of requests will need to end up at a tribunal and most cases will be settled at the initial meeting.
The approach recommended by the taskforce and accepted by Government encourages both parties to consider flexible working patterns that suit them both. That mechanism will enable employers and parents to explore solutions together, and is based on existing best practice, will promote dialogue throughout the process and encourage both parties to think about alternative solutions. It will contribute to increased productivity, help to make working parents lives easier and benefit their children.
I will briefly speak to the other, less substantial but none the less important, Government amendments. Amendment No. 200 ensures that employees are able to go to employment tribunals when they suffer a form of detriment for applying to work a flexible working pattern. For example, the provision will apply where an employee is held back from promotion after applying to work flexibly and has reason to believe that that is a result of making the request. Amendment No. 201 ensures that the flexible working provisions cover Crown employees, amendment No. 202 ensures that they cover the armed forces and amendment No. 203 ensures that they cover House of Lords and House of Commons staff—there will be cheering in New Palace Yard tonight.
The armed forces include many personnel who do not work on the front line or who are involved in the direct support of continuing operations. I am sure that the armed forces already do a lot to help those individuals to have the opportunity to work flexibly like other employees. I imagine that the hon. Gentleman is worried about front-line troops, but a clear reason will be set out in
the regulations as to why any request from them would probably not be granted.
Amendment No. 204 excludes share fishermen from the flexible working provisions. They are a unique category of workers and are routinely exempted from employment rights such as the national minimum wage. Although they are employees, they share the profits of their catch between the crew and agreeing flexible working patterns would not be suitable given the way that they work.
Amendment No. 205 relates to the fact that the provisions require the determination of compensation against an employer to be based on an employee's weekly pay. The amendment establishes that where an employer has been found not to have properly considered a request, the date to be used to determine the employee's weekly pay will be the date on which the employee made his or her formal application to work flexibly.
Amendment No. 206 ensures that when calculating compensation for failing to consider an application properly, an employee's weekly pay may not exceed the specified amount. That is provided for by the Employment Rights Act 1996 and is currently £250. Amendment No. 207 states that regulations made under new section 80G will be affirmative. The new section covers the employer's duties under the flexible working provision, including the process that they must follow.
The effect of amendment No. 208 is to amend the long title so that it is clear that the Bill contains provisions about flexible working. Hon. Members will have points to raise and amendments to move on this important new clause, so I will stop now and comment further after they have spoken.
Debate adjourned.—[Mr. Pearson.]
Adjourned accordingly at Seven o'clock till Thursday 24 January at half-past Nine o'clock.