Employment Rights Bill unpacked: will flexible working really be the “default”?

The Bill includes a range of measures aiming to improve family friendly rights. Reforms range from strengthening protection for pregnant workers and those returning from family leave to making paternity leave and parental leave a day 1 right.

One of Labour’s big commitments has been to make flexible working the “default from day one for all workers, except where it is not reasonably feasible”. Labour’s Plan to Make Work Pay promised to ensure all workers can benefit from flexible working arrangements, including flexi-time and term-time working. 

We look at whether Labour have delivered on their promise and what changes employers could see in practice.

What is the law now?

Flexible working is already a day 1 right thanks to legislation introduced by the former Conservative government, which came into effect from 1 April 2024. This means employees can request flexible working from their first day of employment, instead of needing to wait for 26 weeks’ service. 

Employers can refuse a request based on one or more of the eight business reasons listed in legislation. These are:

• the burden of additional costs;
• detrimental effect on ability to meet customer demand;
• inability to re-organise work among existing staff;
• inability to recruit additional staff;
• detrimental impact on quality;
• detrimental impact on performance;
• insufficiency of work during the periods the employee proposes to work; and
• planned structural changes.

Employers must respond to requests within two months (unless agreed otherwise). 

The right to make a flexible working request is underpinned by a statutory Code of Practice produced by Acas which Tribunals must take into account. 

What is going to change?

There are two key changes in the Bill:

• An employer can only refuse a flexible working request if it is reasonable for them to do so. 
• An employer must state the ground for refusal and explain why it is reasonable to refuse the request on those grounds. 

Draft regulations may also set out steps to be taken when consulting with an employee before refusing a request.

What isn’t going to change?

There are some fundamental parts of the regime which will not be changing:

• The eight business reasons for refusal

These are broad and already give employers a lot of scope to refuse a request. The Bill reiterates a broad power in the underlying legislation for regulations to include other grounds for refusal. We are not expecting other grounds to be added; it would be counter to Labour’s goals to further broaden possible grounds for refusal.

• The penalty 

The maximum penalty for breaching the statutory flexible working regime will remain at eight weeks’ pay (currently capped at £5,600).

Another notable absence from the Bill was a new right to disconnect. This will form the basis of a new Statutory Code of Practice, which will be subject to consultation in 2025.

So what?

In our view, the announced changes currently fall short of making flexible working the “default”, but it will become harder for employers to refuse requests outright. 

Reasonableness is already part of the existing regime – but is currently focused on the procedure. Employers must deal with all requests “in a reasonable manner”. On the face of it, a “reasonableness” test focused on the substantive reason for refusal does bolster protection for employees and require employers to more carefully explain their reasons for refusal.

However, in practice this may not make a significant difference, particularly for more sophisticated employers. As the eight grounds for refusal are not changing, employers will still have quite a broad discretion to refuse a request. For example, term time working (referred to in Labour’s Plan to Make Work Pay) will be difficult to accommodate in many businesses because of the difficulties re-organising work amongst colleagues (who may also want leave during school holidays). 

The Acas Code of Practice already recommends setting out any decision in writing, and in practice, most employers will often already be explaining in writing what refusal ground (or grounds) they rely on and why. For this reason, the need to state and explain the ground for refusal is also unlikely to be significant in practice.

What will be more impactful is the approach that will be taken towards interpreting reasonableness by an Employment Tribunal. Could we see a band of reasonable responses approach like the Tribunal apply when considering unfair dismissal claims? The extent to which employers will need to prove their ground for refusal is unclear but employers will want to have clear evidence that their refusal is genuine and reasonable.    

Without addressing the low penalty for non-compliance, it really is questionable what impact any of this will have in practice. Perhaps the biggest criticism of the current regime is that it lacks any real teeth. Financial liability under the flexible working regime is limited. The risk of discrimination claims (for example for indirect sex discrimination or failure to make reasonable adjustments) remains the much greater legal risk when turning down a flexible working request. 

Given reasonableness will now be a requirement, employers may now find employees adopting a more tactical approach of asking for smaller changes which may be harder to turn down under the new regime. Employers who are currently engaged in return to office debates or considering mandating increased office attendance may also wish to consider adopting a clear position before the changes come into force in 2026. Employers mandating office attendance can expect to receive an increased number of flexible working requests and may prefer to deal with those under the current regime where the reasonableness of their refusal will not be a factor. 

Could more impactful changes be on the horizon?

It is possible the awaited regulations could make a bigger impact. 

Employers already need to consult with an employee before refusing a request, but the regulations could specify what steps an employer must take as part of that consultation. For example, it could make it a legal requirement to provide reasons for refusal in writing (rather than just a recommendation in a statutory Code). 

It is also possible more novel steps could be set out in regulations. For example, they could mandate that employers need to offer a trial period before refusing a request. That could be a considerably bigger change in practice, giving employees an opportunity to show they can perform their role flexibly (making it harder for the employer to then reasonably refuse a request).

Finally, it is notable that the government still intend to remove the distinction between “employees” and “workers”, but this will be consulted on separately. At the moment, only employees can make a flexible working request. Extending the right to the broader category of workers could add to the number of requests employers are having to deal with. As more employers are pushing for higher office attendance, this could create a real headache! 

For more information about what’s in the Employment Rights Bill (and what’s not), see our What’s in the Employment Rights Bill dashboard and, for more information on the Labour government’s reform agenda, visit our Labour Policy Impact Hub.