Flexible work practices – a guide for employers
In a time of skill shortages and an ageing workforce, employers need to be creative in their methods not only to attract staff but to retain their invaluable knowledge and experience. Many businesses are implementing flexible work practices to gain the edge over other companies competing in the same tight labour market for employees.
A flexible work environment does not have to mean spending more money – many of the ideas involve restructuring the workplace or looking at new work methods such as working from home. Businesses that experience difficulty attracting skilled and experienced staff may find flexible work practices a viable option.
Some of the more commonly used flexible working arrangements are:
- job sharing
- flexible hours – rostered days off, time in lieu, compressed working week, school-term employment, annualised hours and employer-provided services
- working from home
- phased retirement
- family friendly workplaces i.e. assisting with child care arrangements/ costs
- flexible leave arrangements or purchased/self-funded leave
- part time work.
Implementing these new work practices could see the organisation become an employer of choice with increased staff retention and improved staff morale and productivity. Importantly, staff loyalty may be improved whereby the organisation retains its staff and their valued experience.
In today’s competitive market with multiple job offers, employees can pick and choose the company they want to work for. Often, employee preference is ultimately determined by which employer offers more favourable work conditions and practices. Applicants will often thoroughly research a company’s opportunities and culture before applying for an advertised position. Businesses that have open and flexible work culture and practices may have access to a greater number of candidates.
In considering any of the suggestions in this article it is critical that you seek advice on any potential penalty or allowance payments that might arise under an Award if any changes to hours are implemented.
Effective from January 1, 2010, the Fair Work Act 2009 (the Act) provides a right to request flexibility in the workplace. This right is only accessible to employees who have completed at least 12 months of continuous service with their employer.
In addition, effective July 1, 2013 the Fair Work Amendment Act 2013 has extended the right to request flexible working arrangements to include:
- a parent, or person who has responsibility for the care, of a child who is of school age (i.e. the age at which a child is required by law to attend school) or younger
- a carer (as defined by the Carer Recognition Act 2010) which includes those who provide care, support and assistance to a person who requires support due to a disability, medical condition, mental illness or fragility due to age
- an employee with a disability
- an employee that is 55 or older
- an employee that is experiencing violence from a member of their family
- an employee that provides care or support to a member of their immediate family, or a member of their household, who requires care or support because the member is experiencing violence from the member’s family.
The Amendment Act sets out “reasonable business grounds” for refusing flexible working arrangements to include:
- that the new working arrangements would be too costly for the employer
- that there is no capacity to change the working arrangements of other employees to accommodate the requested work arrangements
- that it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the requested working arrangements
- that the requested working arrangements would be likely to result in a significant loss in efficiency or productivity
- that the requested working arrangements would be likely to have a significant negative impact on customer service.
This list is not intended to be exhaustive and such grounds will be determined having regard to the particular circumstances of each workplace and the nature of the request made.
Eligible employees must put their request for flexible work in writing. The employer then has 21 days to consider the request and must provide a response in writing with the reasons for refusal, if applicable.
Despite the Fair Work Commission not being able to prosecute employers for refusing such requests, the employee can still claim discrimination on the grounds of family responsibility.
It is likely the new legislation will increase the number of requests for reduced or changed hours. In many cases, it may be difficult for the employer to refuse based on reasonable business grounds given the structure and operations of the business. Therefore, it is advisable for employers to assess the impact flexible working arrangements could have on the workplace and begin preparations accordingly by considering:
- staff demographics and the likelihood (or type) of flexibility requests
- the extra workload for administering varying arrangements for management and payroll
- security and supervision for staff who want to work outside usual business hours
- staff coverage of core hours and the impact on employees’ productivity
- the cost of setting up different arrangements, and
- implementing a policy on flexibility including a process to deal with requests.
The most popular and widely used methods are time off in lieu (TOIL), working from home and flexi-time. These arrangements come at little or no extra cost and sometimes even save money. Additionally, they are of great benefit to staff as they try to juggle work and home commitments. Please ensure that you check any awards that might be binding before implementing any of these work practices as some awards are very specific on how hours of work are applied or may not allow for the work practice at all.
The following is a simple outline of the range of flexible work practices that companies are putting in place to improve their workplace conditions and culture.
Flexi-time is a common practice among many businesses these days. The company extends the span of ordinary working hours of the business so that staff can start earlier or finish later. As long as the employees complete the hours they are required to under their contract they work at times convenient to them. This is a very popular workplace practice as it enables staff to juggle their personal commitments simultaneously with work while still working in a full time position.
- provides flexibility to employees which is an attractive incentive.
- extra monitoring of staff may need to be put in place to ensure employees do not misuse this added benefit and that all core business hours are covered.
- ensure you have a comprehensive policy in place that details how and when this benefit is to be used and the consequences of misuse;
- employers will need to ensure they have enough staff coverage for each working day. For example, they cannot have all employees starting at 7am and finishing at 3pm as there would be no coverage after this time; and
- it is essential to check the overtime and shift work provisions in any binding awards to ensure that there no penalties or allowances that should be paid for any hours that are worked under any amended arrangement.
(b) Time off in lieu (TOIL)
This method works by allowing employees to claim the equivalent paid time off at another time rather than being paid for overtime or additional hours.
- most employees like this system as it gives them time off with pay during a normal work day. This allows them to complete tasks such as going to the bank or the dentist that are difficult to organise after hours.
- employees may be motivated to work unnecessary overtime or additional hours so that they can take advantage of this entitlement.
- ensure that you have a policy in place that outlines how this entitlement will work, the procedure for claiming TOIL and if there is a time limit for using the accrued hours;
- ensure that the provisions of any binding Award are met. This could include a requirement to pay overtime if the TOIL is not taken in a prescribed period.
- as most salaried staff are expected to work reasonable additional hours as part of their normal duties, it is important to outline in the policy that staff are still expected to do these reasonable additional hours and that TOIL only comes into play over and above those hours. Clearly defining when TOIL can and cannot be claimed will reduce any confusion on how this entitlement will work.
(c) Rostered days off (RDO)
Similar to TOIL, this entitlement works whereby time worked beyond the ordinary hours (per week) is banked and accrues toward a paid day off per fortnight/month. For example, an employee doing a 40 hour week is only paid for 7.6 hours per day and the extra 0.4 hours accrues to enable one full paid day off per month. This method is very common in the construction and mining industries. Generally salaried staff do not make use of this method as their salary covers any reasonable additional hours, however it can be used if the company does pay overtime.
(d) Employer-provided services
Some examples of employer-provided services are:
- subsidised child care or on-site child care facilities
- dentist/doctor day - where the employer books out the local dentist/doctor for the day and employees can book into an appointment during work time (please note the employee can be required to pay for the appointment)
- massage – the employer contracts a masseuse for one day a month and the employees can book appointments during work hours at normal or subsidised prices
- subsidised or fully provided gym memberships
- on-site yoga classes, employer-sponsored boot camps or other sports
- doona day – employees are entitled to a day (or two) per year where they can take the day off to sleep in and recuperate when they are not actually unwell
- employer sponsored parking or discounts at selected stores and services
- subsidised or fully provided lunches
- financial adviser/insurance broker, and
- salary sacrifice and other packaging arrangements.
- these services are very attractive to potential employees and may assist in the retention of staff and making the company an employer of choice.
- employers need to be careful what they contract themselves into with third parties as they may be bound by a contract that contains services that their employees do not use; and
- the costs involved in some of these services could be prohibitive.
- canvas your employees to find out what kinds of services they would find useful and be of benefit to them. For example, having subsidised or on-site child care facilities would be very beneficial in an industry dominated by employees with families while providing yoga classes in a blue collar environment is unlikely to be a good investment.
(e) Compressed working week
If the work situation allows for it, some employees are compressing their 38 hour week from five days to four and having the fifth day off. This means that the employee works 9.5 hours over a four-day week rather than 7.6 hours over five days.
- this method is very popular in high-stress work roles as it enables a longer weekend to relax; and
- in work situations where you operate by appointment this can be very beneficial as you can schedule the appointments over four days and can also be more flexible for customers by providing after-hours appointments if required.
- for this method to work the job must not require full contact hours every day.
(f) School-term employment
This practice is not as widely used as some of the others however it is invaluable for some workplaces. Staff are employed to work only during the school term, so they only work when their children are at school. Therefore, employees’ work hours are typically school hours between 9am and 3pm and only during school terms.
- this practice is particularly beneficial to those workplaces that have a downturn in the work during school holidays or are able to easily supplement their staff with casual school or university aged employees such as in the hospitality industry. An added benefit is the cost reduction.
- this practice is limited to only some types of jobs or workplaces that can cope with the reduced hours.
(g) Annualised hours
Normally employees are expected to work a 38 hour week each week. In this scenario, employees can instead average their hours over a monthly or annual basis. For example, the employee could work 50 hours one week and then 26 hours the next so that on average over the two weeks the employee still completed 38 hours.
- this is advantageous for staff that often have personal commitments they need to attend to whilst still guaranteeing them the same pay check each week; and
- it can be of great benefit to workplaces that experience peaks and troughs of work as staff can work longer hours one month and then less the next as the workload increases and decreases.
- requires more work to be done administratively;
- it may limit the amount of ‘reasonable additional’ hours that could be worked as part of the employee’s salary;
- this work method could be in conflict with the Fair Work Act 2009 as it does not specifically allow for extra hours worked being carried over and paid for in the following anniversary year, and;
- as with all flexible working arrangements there may be some occupational health and safety risks surrounding employees working 50 hours some weeks.
- to ensure this work practice is effective, employees are requested to fill in timesheets. Towards the end of the anniversary year, total hours worked need to be calculated in comparison to hours paid to ensure they reconcile. If there is a shortfall in hours the employees are required to make the time up, or if there is an excess of hours worked these may be carried over to the next anniversary year (however it is advisable to check with the CCI Employee Relations Advice Centre before implementing this arrangement).
Working from home
This method is not widely used, however it has benefits for the business and the community as a whole. In this case, staff are able to access their emails and potentially other applications from their home computer or laptop so that they can work from home. Companies can arrange for employees to work from home on certain days or they can give the employee the option to work from home if they need to, for example if they are caring for a sick child.
- this option is a great cost-cutting mechanism and it can reduce the office space required to house all of your employees. Furthermore, it can reduce the number of cars on the road and carbon emissions; and
- of particular advantage to primary caregivers is their children or elderly parents can remain at home with them while they work which cuts down the cost of child care/elder care.
- the initial outlay to set up a home office for your employee may be costly, however these expenses should be negated by the savings made from reduced office space; and
- productivity may be reduced due to distractions at home.
- employers should word their policy on working from home to ensure it covers all situations and that this is an added benefit that could be withdrawn at any time. This protects the employer from those staff that take advantage of the entitlement and are not completing the required working hours that are needed to get the job done;
- there may be occupational health and safety risks in the home office and concerns over workers compensation insurance coverage; and
- people management issues such as ensuring the employee has sufficient management contact, effective communication with other employees, training and notification of meetings and announcements.
Job sharing/part time work
Job sharing involves two or more part time employees sharing a full time job on a permanent basis. Job sharing can work in a number of ways. The employees can do a proportion of a day each day or work alternating days each week, depending on their personal commitments with children etc. Job sharers/part time workers are entitled to all of the benefits full time workers enjoy, but on a pro-rata basis.
- effective in attracting parents wanting to return to the workplace after having children and who no longer wish to work full time;
- great for mature age employees who would prefer to work part time rather than completely retire from the workforce; and
- the biggest advantage to business in a tight labour market is greater access to a wider range of applicants to choose from and increasing prospects of filling a full time position. Furthermore, it can lead to the retention of staff that may be moving on to retirement, retaining valuable knowledge and experience.
- the success of a job share arrangement largely depends on the process used to establish it. A thorough consideration of the skill sets of each of the employees, the set hours to be worked, whether they can cover each other for sick and annual leave, the process of communication between the employees if their hours don’t overlap, the division of work and whether their performance is reviewed on an individual or team basis will impact on the success or failure of this work method.
- it is important to ensure that they are included in any ongoing training and career development that you ask your full time workers to partake in as their contributions to the business are just as important, and maybe more so, in the future with an ageing population; and
- when organising meetings, events and projects it is important to time these for when the job sharers/part timers would be available to attend or their hours can be rearranged so that they are included.
Phased retirement is rapidly becoming an enormous area of interest for employers. In today’s market with many baby boomers moving into retirement there is a huge need to retain their knowledge and expertise, especially since there is a much smaller population of employees emerging in the younger generations that are available to choose from.
Phased retirement is different from flexible work practices in that it is often for a set period and it has phases of incremental reductions in hours until the employee eventually retires.
Generally phased retirement means using some of the flexible work practices previously outlined such as part time work, job sharing, or returning to work as a contractor on an ‘as needed’ basis. However, many employees nearing retirement may no longer wish to do their current job due to the high stress and responsibility involved. A better option could be to entice the employee to stay by offering them a position in an advisory capacity, such as on strategic initiatives or mentoring up and coming staff as part of the business’s succession planning.
- valuable staff are retained in the workforce where their knowledge can continue to be utilised; and
- employers save money from not having to recruit new staff to replace retiring employees and they don’t lose productivity while training new staff up to the same level of expertise.
- this work practice may operate better in larger organisations that can afford to have a staff member being paid purely for mentoring or strategic operations.
- be sure to check with the Australian Tax Office and the superannuation fund for any impact phased retirement may have on superannuation.
Family friendly workplaces
Family friendly workplaces combine a number of the flexible work practices previously listed such as job sharing/part time work, working from home and school-term employment.
There are a number of other initiatives that an employer can implement to make their workplace more family friendly to become an employer of choice. This could include assisting with child care costs, establishing an in-house child care centre or providing an employee-assistance scheme whereby the employer reserves a number of places at a nearby day care centre and negotiates a bulk rate that the employee then pays.
- a big hindrance to parents returning to the workplace is finding a child care centre that is close to work so this could be a very attractive recruitment and retention strategy in today’s market; and
- attracting primary caregivers back into the workplace may be the only way to fill job vacancies.
- this strategy does include a cost, however it may be negated by a reduced staff turnover due to improved employee loyalty. Organisations in an industry dominated by parents may find that costs incurred are far outweighed by the benefits.
Flexible leave arrangements
Like flexible hours, flexible leave arrangements enable employees to more effectively manage their work and personal commitments. The main types of flexible leave encompass annual leave, long service leave and purchased or self-funded leave.
Flexible annual leave arrangements enable staff to take time off at short notice, reduces the need to provide cover for employees on longer term annual leave and can lead to less annual leave accruals being rolled over to the following year, minimising an employer’s liability.
Flexible long service leave allows employees to take long service leave in single weeks or days rather than two weeks at a time. This system can be very beneficial on both sides as it can sometimes be difficult to find a mutually convenient time for your employee to take extended time off work. Using this method may mean that the entitlement is used earlier than normal which can reduce future costs and may also reduce the need to hire and train a replacement while they are on extended leave. It is important to check the provisions of the applicable legislation to ensure you are compliant with its conditions.
Purchased or self-funded leave occurs when an employee works their normal hours but on reduced pay to compensate for the extra time off they wish to take over the year. For example, the employee may wish to have eight weeks off per year to cover some of the school holidays, this includes four weeks of normal annual leave and four weeks of purchased leave. The employee is therefore paid for 48 weeks instead of 52 weeks but this salary is averaged over the 52 weeks so the actual income is reduced when paid on a weekly basis (an employee would earn approximately 92.31% of the full time salary/wages over the course of the year).
- reduces the occurrence of unplanned absenteeism and enables you to plan the working year ahead of time as employers have advanced knowledge of when the employee will be taking time off.
- this scheme does require more administration as the salary earned and the annual leave taken needs to be averaged and paid over the full year. If the employee resigns or is terminated then this will throw out any calculations made and a reconciliation will need to be done.
- employers should check all awards and contracts/agreements to ensure they are not breaching any requirements and implement a policy that clearly outlines the procedure for accessing and using these entitlements.
Family friendly working arrangements in Modern Awards
In addition to the statutory requirements, effective from the first full pay period on or after 1 December 2018, new family friendly working arrangements inserted into all modern awards require employers who employ award covered employees, to take additional steps in accordance with section 65 of the FW Act, including:
- responding to requests;
- providing further details of the reasons for the refusal;
- providing further details of the changes agreed; and
- dispute resolution.
The model clause does not give the employee the ability to dispute whether the employers right to refuse was reasonable or not, as it is currently not possible under section 44(2) of the FW Act which precludes court challenges to an employer’s refusal under section 65(5) of the FW Act.
For further assistance on drafting policies or implementing flexible work practices please contact the Employee Relations Advice Centre on (08) 9365 7660.