A Guide to New Flexible Working Rights for Crypto and FinTech Firms: PART II (EMPLOYERS)

By Rodrigo Zepeda, CEO, Storm-7 Consulting

INTRODUCTION
The Employment Relations (Flexible Working) Act 2023 (2023 Act) is statutory legislation that sets out new ‘flexible working’ (FW) rights for firm employees. The new statutory right to request FW essentially covers any request to change an employee's existing employment terms and conditions (T&Cs) relating to hours, times, and place of work.

In this four-part blog series, I will seek to help guide crypto and financial technology (FinTech) firms by setting out the new FW legal framework, as well as identifying a range of issues, problems, and pitfalls that may potentially arise in practice. In PART I, I set out the new legal framework applicable to FW rights, and summarily identified a range of issues, problems, and pitfalls that may potentially arise in practice.

In PART II, I will set out guidance for employers (crypto and FinTech firms) regarding FW rights. The legal frameworks referred to in PART II include:

1. the 2023 Act;
2. the Employment Rights Act 1996 (as amended) (ERA 1996);
3. The Flexible Working Regulations 2014 (S.I. 2014/1398) (FWR 2014);
4. the 'Advisory, Conciliation and Arbitration Service' (Acas) ‘Code of Practice on requests for flexible working' (6 April 2024) (FW Code); and
5. the Equality Act 2010 (EA 2010).

The FW Code sets out guidance for both employers and employees on legal rights, responsibilities, and good practice (GP) with regards to making and handling FW applications (FW Code, Foreword). FW types cover inter alia annualised hours; compressed hours; flexitime work; hybrid work; job sharing; part-time work; remote working; team-based rostering; and other ‘working from home’ (WFH) arrangements (FW Code, Foreword).

FW AND CRYPTO AND FINTECH FIRMS
FW is a highly divisive topic. On the one hand, many firms and people believe that it can provide employees with significant advantages, a better work-life balance, and improved well-being and productivity at work. On the other hand, many firms and people believe that it simply does not work in practice, as employees are not able to maintain disciplined practices when WFM, productivity decreases, and people end up prioritising their own interests over the firm’s interests.

For example, a firm may end up paying for people to sunbathe at home, to look after their own children during work hours, or to take time off whilst pretending to work. Larger companies within banking and financial services have often invested heavily in rolling out a suite of FW and WFH tools to monitor employee performance. These include employee screen monitoring, time-tracking software, user activity monitoring tools, and other performance tracking and analytics tools.

The problem is that these types of tools are often very costly, in terms of both investment and running costs. As a result, they may not always be suitable for smaller-sized crypto and FinTech firms that feature a much smaller workforce (e.g., less than 50 employees - in 2019 73% of FinTech firms in the United Kingdom (UK) had between 1-50 employees (Statista, 2022)).

It should be recognised from the outset that FW is not a legal right under the new FW framework, rather, it is simply a right to request FW. Nevertheless, in many ways the new FW framework may force smaller-sized crypto and FinTech firms to address the issue of FW head on. It is no longer an issue that can be pushed aside and labelled as ‘non-viable' across the board. That is why such firms would be advised to adopt a pro-active rather than a reactive approach to complying with new FW obligations.

PROPOSED FW ACTIONS FOR CRYPTO AND FINTECH FIRMS
I have identified a number of FW actions that crypto and FinTech firms could take to help to implement FW rights in practice. Crypto and FinTech firms can:  

• identify the types of persons in the firm that are recognised as ‘qualifying employees’;
• identify which persons and departments will be dealing with FW rights and requests;
• update existing policies, practices, and rules (PPRs) to reflect new FW rights;
• notify all employees of their statutory FW rights;
• notify all employees of FW request procedures;
• notify all employees of FW request appeal procedures; 
• create and provide detailed interpretations of key FW concepts and terms;
• decide how FW request employee consultations will be run, and who will be in attendance;
• create rules and/or guidelines as to how the FW grounds upon which firms can refuse FW requests (FW Grounds) will apply, and/or be interpreted;
• ideally, consider developing and creating a FW handbook (FW Handbook) that can be given to all employees which comprehensively covers FW rights; and
• ideally, consider developing and implementing an automated system to track FW applications, application appeals, dates, decisions, evidence, and notifications.

I will explain and discuss all of these in more detail below. 

QUALIFYING EMPLOYEES
The three main types of employment status that exist are: (1) employees; (2) workers; and (3) self-employed. In order to be eligible to exercise FW rights, an individual working for a firm must:

1. fall within the statutory definition of ‘employee’ (i.e., not a worker or self-employed); and
2. fall within the additional definition of ‘qualifying employee’. 

Employee
An employee is statutorily defined to mean “an individual who has entered into or works under… a contract of employment” (ERA 1996, s. 230(1)). Contract of employment is defined to mean a contract of service or apprenticeship (express, implied), and whether made orally or in writing (ERA 1996, s. 230(2)). Firms must ensure that they clearly identify an individual’s employment status, because some individuals may be classified as workers instead because of their different working conditions (e.g., fixed-term contracts, gig economy staff, zero-hours staff) (ERA 1996, s. 230(3)).

Qualifying Employee
An employee is a qualifying employee if:

1. they satisfy employment duration conditions specified by the Secretary of State (SoS) (none at present as the previous 26-week qualifying period for employees has now been removed); and
2. they are not an ‘agency worker’ (ERA 1996, ss. 80F(8)(a)(i)-(ii)).

An agency worker is defined to mean an individual who 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 (ERA 1996, s. 80F(8)(b)). Agency workers may be somewhat tricky for crypto and FinTech firms. This is because they may potentially cover individuals supplied by employment agencies, as well as individuals supplied under certain types of intra-group arrangements (e.g., to cover regulatory compliance, risk, or technology advice, consulting, or projects).

FW RESPONSIBLE PERSONS
FW rights is not an issue that can simply be delegated to the human resources (HR) department. This is because it involves more than simple administration of FW PPRs. HR managers may need to confer with legal to discuss interpretation and application of a firm’s FW PPRs. Line managers may need to be present in employee consultations to discuss and assess the viability of a FW request (including the exploration of alternative options).

Acas states that managers should (i.e., constitutes GP) be trained to handle FW requests fairly and reasonably, as well as ensuring compliance with additional legal duties under the EA 2010 (FW Code, Foreword). This means that crypto and FinTech managers should be trained to handle FW requests, in addition to ensuring the firm does not unlawfully discriminate against the employee with regards to ‘protected characteristics’ under the EA 2010 (i.e., age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, sexual orientation) (FW Code, para. [10]).

At present, employees do not have a statutory right to be accompanied to FW request meetings. However, Acas does recommend that employees be allowed to be accompanied to FW request meetings (FW Code, Foreword; para. [31]). Firms may wish to appoint neutral FW representatives to provide such support if requested by the employee (e.g., fellow worker, trade union representative) (FW Code, para. [32]). It therefore makes sense for firms to identify and map out which persons and departments will be dealing with FW rights and applications, to facilitate an efficient and transparent FW request application process.

UPDATING PPRs
Acas states that “Having a clear policy and procedure for handling statutory requests for flexible working can be helpful in making everyone aware of what is expected” (FW Code, para. [2]) Crypto and FinTech firms would be advised to review and update existing PPRs to reflect new FW rights. This process should involve input from all relevant stakeholders (i.e., FW responsible persons) identified, in order to streamline the process and avoid wasted time (e.g., if legal or compliance initially updates PPRs without input, but they end up being heavily amended by other departments afterwards). This may require the creation of new FW request template forms, to simplify and standardise the FW application process, and to ensure that all information required by statute is provided within the FW request.

EMPLOYEE NOTIFICATIONS
Crypto and FinTech firms would be advised to notify all affected employees of their statutory FW rights, of the FW request procedures, and of the FW request appeal procedures as early as possible. This may help firms to identify and fix any issues or problems raised by employees before FW requests become more routinely established. One way of helping to accelerate this process might be for firms to send out a FW survey internally (e.g., using Jotform, Typeform, SurveyMonkey), so that employees can raise any issues or concerns they may have early on.

FW CONCEPTS AND TERMS
Firms would be advised to create and provide detailed interpretations of key FW concepts and terms. Clearly defining and explaining key FW concepts and terms, as well as procedures, can help firms to provide their employees with procedural transparency, and help avoid subsequent interpretation disputes. This may include both legally defined terms such as ‘qualifying employee’, ‘proceeding’, and ‘decision period’, as well as internally defined terms such as ‘without good reason’ and ‘reasonable manner’.

Legally defined terms are terms that are statutorily defined, but which firms may subsequently simplify and explain so that employees understand what they actually mean in non-legalese. Internally defined terms are terms that are left undefined at law, but which firms may choose to interpret and apply within the firm. For instance, what the given meaning of without good reason is within the firm.

Acas states that “Employers must handle every request in a reasonable manner” (i.e., constitutes a legal requirement (LR)) (FW Code, para. [8]). It further notes that this should (i.e., constitutes GP) include a careful assessment of the effect of the requested change for the employer and the employee (e.g., the potential benefits or other impacts of accepting or rejecting it) (FW Code, para. [8]). In practice, the more detailed the information the firm provides about what constitutes a reasonable manner, the easier it will be for a firm to show and evidence that it has actually dealt with a FW application in a reasonable manner.  

EMPLOYEE CONSULTATIONS
Crypto and FinTech firms would be advised to decide and plan out in advance how FW application employee consultations will be run, and who will be in attendance. However, as noted previously in PART I, some firms may be tempted to gloss over the new FW requirements, or to deal with FW applications on an ad hoc basis. To illustrate why such approaches are not advisable, we will set out some of the consultation recommendations provided by Acas.

These highlight why advanced planning of FW request consultations is to be preferred. The starting point is that firms shall NOT refuse a FW application unless the employee has been consulted about the FW application (ERA 1996, s. 80G(1)(aza)). In theory, this means that firms cannot automatically point blank refuse a FW request. Such a response would breach the statutory consultation and reasonable manner requirements.

Firms can only skip the employee consultation if the firm has already agreed to the FW request in full (FW Code, para. [12]). However, the problem that exists is that a consultation does not necessarily equate to a consultation meeting. Nevertheless, Acas recommends that holding a consultation meeting constitutes GP for firms (FW Code, para. [12]). In terms of procedural considerations, Acas recommends that: 

1. the meeting is held without unreasonable delay;
2. the employee and employer have reasonable time to prepare for the discussion;
3. the employee be notified in advance of the time and place for the meeting;
4. the meeting should (i.e., constitutes GP) be held privately (e.g., not in a quiet area of an open plan office where people may still be able to overhear conversations);
5. the meeting can be held in person, remotely, or via telephone (but only if in person or remote options are not available);
6. the meeting content, and the way the meeting is conducted, should (i.e., constitutes GP) allow for a reasonable discussion and consideration of the request;
7. if the FW request cannot be accepted in full, the possibility of securing some of the FW benefits sought may be discussed;
8. the individual in charge of the consultation meeting holds sufficient authority to make a decision; and
9. the firm keeps a written record of the meeting (to provide an accurate reflection of discussions) (FW Code, paras. [14]-[19]).

FW GROUNDS
Acas states that employers must (i.e., constitutes LR) agree to a FW request UNLESS there is a “genuine business reason not to” (FW Code, para. [9]). The statutory listed FW Grounds to be considered are: 

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

Given the central importance of the FW Grounds and their inherent subjectivity, they will be discussed in detail in PART IV. However, here, in terms of employer procedures, it is recommended that, at a minimum, firms create rules and/or guidelines as to how the FW grounds will apply and/or be interpreted in practice. Without such standardised rules or guidance, crypto and FinTech firms may continue to perpetuate a lack of transparency in FW rights within a firm.

There may also be an increased probability that different FW application requests lead to conflicting FW decisions being made. For crypto and FinTech firms, this is not simply about avoiding FW disputes from arising. It is also about facilitating higher staff retention levels and avoiding increased staff turnover. If firms use FW Grounds as a cover for refusing FW applications, they run the risk of employees leaving for other crypto and FinTech firms that have come to be recognised as featuring better FW environments.

FW HANDBOOK AND AUTOMATED SYSTEM
By this point, it has perhaps become clearer to crypto and FinTech firms that the new FW rights framework is a great deal more complex than appears at first sight. Although this is not a requirement set out in the FW rights framework, creating a comprehensive FW handbook that can be regularly updated is recommended for firms.

This would provide the firm with a centralised reference point to deal with all FW rights and requests, and it is also something that employees would be able to quickly look up and reference. In addition, firms would be advised to consider developing and implementing some type of automated system to track FW applications, application appeals, dates, decisions, evidence, and notifications. This type of system can not only help to avoid communications and timing disputes and issues, but it can also help to streamline FW requests to maximise internal operational efficiencies, and to help reduce FW related costs.

SUMMARY
The preliminary guidance I have provided for crypto and FinTech firms is not comprehensive because of space constraints. Nevertheless, I hope it illustrates the areas which such firms may need to think about and address from legal, HR, and operational perspectives. At a minimum, there needs to be some way of identifying and differentiating employees from contractors and workers. Firms need to analyse who will be responsible for dealing with FW requests, and how FW request employee consultations will be run.

They will also need to update existing FW PPRs, and notify employees of FW rights as well as request and appeal procedures. At a more advanced level, firms have been advised to create and provide detailed interpretations of key FW concepts and terms, and to create rules and/or guidelines as to how the FW Grounds will apply, and/or be interpreted. Ideally, firms should also consider developing a FW Handbook and implementing an automated system to track FW applications, application appeals, dates, decisions, evidence, and notifications.

TO BE CONTINUED