Suzanne Gallagher, head of UK payroll at Employment Hero

In July, the UK parliament passed a new law regulating how employees request flexible working, giving them significantly more power to push for new working arrangements.

While the changes won’t come into effect until the middle of 2025, it is key that payroll staff get their heads around them ahead of time. This way, they can be well prepared when they do go into effect, give advice to management teams who need to plan themselves, and field requests from confused employees who might not realise that the rules haven’t changed yet.

The new law does not stipulate an exact definition of flexible working

New process

The new law mostly changes the process for employees requesting flexible working, rather than flexible working itself.

Flexible working can include a variety of changes to hours of work and places of work; a classic case is someone leaving early to pick up their children from school and filling in some extra hours at home. The exact parameters of how this all works is up to employees and employers to negotiate – the new law does not stipulate an exact definition of flexible working. It’s flexible, after all.

This is not a right to flexible working itself, just a right to ask for it

Employees were given a right to these requests in 2003 but only after six months with an employer, leading many to see it as an underused ‘perk’.

Importantly this is not a right to flexible working itself, just a right to ask for it without any ill treatment because of the request itself.

The changes to flexible-working requests are:

  • Employees can make these requests on day one rather than six months in. (This change is not actually contained in the law but the government will make it at the same time.)
  • Employees can make the requests twice a year instead of once.
  • Employers must respond within two months, down from three months.
  • Employees no longer have to explain in their request how the change might impact the wider business.
  • Employers must consult with an employee on a request not dismiss it out of hand.

While this last requirement to consult is new, employers retain the exact same legal reasons to reject a request as they had before. The list mostly includes what you might expect: for example, an employer can reject a request because it will cost too much for the company or stop it being able to meet customer demand.

Additional implications

Employers are likely to ask payroll teams or bureaus for advice about whether to grant requests or not. When you are asked for this, there are some key things to check.

Employees who are working fewer hours may still be paying into salary sacrifice schemes. You should double-check that these payments, in combination with the lower overall pay, do not put them below the national minimum wage or some other contractual floor, perhaps from a collective agreement.

They may also lose eligibility for schemes like the cycle-to-work scheme. This might be a price they are happy to pay, but they should know about it.

Indeed, informing the employee of all the things that might change is crucial. For example, they might lose some portion of their holiday leave entitlement.

Payroll teams are likely to need some extra resource to handle the volume of requests

Through the consultation process, managers might be looking for alternatives to what an employee has requested that are not outright rejections. Payroll will have a role to play here, too, explaining exactly why a proposed solution from an employee might not work and preparing alternatives.

If an employee is looking to work from home more rather than do different hours, another thing to consider will be the working from home tax credit, worth up to £6 a week and sometimes paid out directly by employers.

Some employees might think they are eligible for this, but the tax relief only applies for people who have to work from home, not those who have chosen to. This means the vast majority of those requesting flexible working are likely to not be eligible; they should be told this.

Admin burden

If you’ve got a bit of a headache thinking about this new normal, you won’t be alone. Payroll teams are likely to need some extra or redirected resource as the new regime comes in to handle the volume of requests. If a proposal would be especially administratively burdensome on the team, you should let employers know so they can take that into account when ultimately making the decision; after all, if a request is simply unworkable, then it shouldn’t be granted.

Make sure your software is up to the task

That said, payroll teams should look for ways to help employees to go flexible when they want to. Often these arrangements are crucial for keeping young parents or others with caring responsibilities in the workforce. A few simple changes can make all the difference here. Try to find ways to say ‘yes’ instead of ‘no’.

Finally, make sure your software is up to the task. A good way to test this is to cast your mind back to the pandemic. If you had a lot of staff issues throughout the working-from-home period and furlough payments, it is likely that this new flexibility will be problematic, too. Upgrading your software package ahead of the changes to flexible working will be much easier than doing it in the middle of the process.