EMPLOYMENT - Work to rule

A law that protects staff from exploitative working practices is surely to be welcomed? Not according to critics of the EC's Working Time Directive, who say small businesses will suffer under the new legislation.

The Confederation of British Industry (CBI), the Federation of Smallely to be welcomed? Not according to critics of the EC's Working Time Directive, who say small businesses will suffer under the new legislation. Businesses and players across the channel have hit out at the European Commission's Working Time Directive which came into force last month, fundamentally affecting working practices across the UK.

Its critics argue the legislation has been rushed through, that it is at best confusing and ambiguous and at worst, for smaller companies, potentially crippling.

The directive is designed to protect employees from exploitative working conditions, outlining new statutory rights for limited working hours, paid leave and rest breaks. The regulations also include the long-mooted limit of an average of 48 hours a week that an employee can be required to work (see box, right).

But the Federation of Small Businesses, which has 115,000 members, says the majority of small companies are unaware of the 'far-reaching' implications of the law. It blames the speed with which the regulations have been introduced - the final version was published on 30 July, just one month before its implementation, and not even Parliament has had time to debate it. It also criticises the lack of information and support for corporates from governing bodies.

The CBI argues there are significant 'grey areas' in the legislation.

As a result, it has had 'a great number of calls from members and other companies to clarify and obtain information on how to implement it', says Sarah Welfare, policy adviser at the CBI.

Barry Neil, managing director of reseller Reliance Computer Services, adds: 'I don't know what the EC thinks it's doing, but it's certainly making things difficult for businesses. All the rules and regulations in terms of health and safety, for example, mean there are nine extra layers of red tape every time you want to do something.'

He also criticises the lack of government advice because he has received 'not one leaflet, nothing. But that's normal - I don't care whether it's Labour or the Tories.'

Martin Clarke, sales and marketing director at reseller Lapland, agrees: 'The Department of Trade and Industry makes great efforts to get legislation and to improve business conditions, but I wish it would tell us about it. Even as a registered director at Companies House, you don't get sent anything.' He says levels of awareness of the directive in the channel are 'varied'.

Because of the lack of government information, some businesses are not even aware that the directive is an issue they have to tackle - on paper at least. One medium-sized channel player asked PC Dealer where it could obtain details of the legislation - several weeks after it became law.

Peter Rigby, director of marketing at CHS Electronics, comments: 'I haven't seen it, to be honest. We operate a fully flexible time regime here, but in this business people tend to work longer hours.' He adds: 'I'm not sure what effect something like this would have.'

The legislation will hit at the hearts of the manufacturing industry, warehouse operations, call centres and any company which has complicated shift patterns, or where extended or 'anti-social' hours are worked. And it will affect all industry sectors, including IT, according to Steven Moore, business development manager at Open Business Solutions, which sells tailored business planning software to streamline workforce operations.

For the channel, this means distributors need to sit up, take note and realign their warehousing and logistics operations accordingly. Oliver Grant-Adamson, director of human resources at Computer 2000, says the directive has had an impact across the company, in particular in the warehousing sector where most employees work anti-social hours and overtime.

He too believes the directive was 'cobbled through' and is 'just too confusing'. He adds: 'There's a bit of me that asks, what was it meant to do?'

Companies in the small business bracket, such as Vars and smaller resellers, will also feel the heat, according to Moore: 'In small businesses the hours of work are whatever hours need to be worked, but now there is an onus on these businesses to comply with the regulations.' Lapland's Clarke comments: 'When we started this business, we had to put in all the hours God sent. If you've got to send all your people home at a certain time because you can't risk a lawsuit, it will cripple small businesses across the UK.'

In real terms, the introduction of the directive means a lot more paperwork in most cases and, in some, the need to get more bodies in on the job.

Employers are required to comply with stringent auditing procedures and must draw up agreements with employees before asking them to work extended hours, or delay holiday entitlement. Inevitably it will put the squeeze on the bottom line - the DTI estimates that the cost of compliance will reach almost #2 billion nationally and the CBI backs up this figure.

Where working structures are more complicated, some companies could be forced to upgrade or invest in software systems to do the job for them.

Costs start at #5,000 to #6,000 for a 'starting solution' and reach #20,000 to #25,000 for businesses changing their working practices completely, but vary from company to company, according to Moore.

C2000's Grant-Adamson adds: 'Yes, there will be a cost, but not a my God, it's a six-figure sum cost. It'll have a cost in the logistics side of things because most of this stuff moves around at night.'

Companies that ignore the legislation risk legal action. The CBI's Welfare says the majority of cases 'are going to be enforced by employees going to industrial tribunal', adding that the CBI is 'expecting a fair few' cases once the legislation kicks in.

Grant-Adamson agrees there's 'every chance there are going to be a rush of cases', while Reliance's Neil comments: 'People are going to be held to ransom - there is always going to be the militant.' But he also criticises larger companies that overwork their staff by streamlining operations to keep them 'lean and mean - with the emphasis on mean'.

Neil points out that where companies have maintenance agreements, staff often have to be on call 24 hours a day and he believes the larger resellers, 'where the technicians are removed from the management', could have problems.

In Reliance's case, Neil says staff are aware: 'If you don't do this, we'll lose the customer and you're going to lose your job, not because we would sack you, but we wouldn't be able to pay you.'

But others in the IT sector are bullish and shrug off the threat. Luke Ireland, operations director of Evesham Micros, comments: 'The workers rule in some countries and, while we're not a harsh employer, the British mentality is more like that of America. People work hard tend to get rewarded for it. For certain sectors it's going to be quite a culture shock. In the computer industry we're of a different mindset - staff work overtime because they want to get their job done.'

As the directive was implemented last month, Ian McCartney, minister of state at the DTI, said: 'In drawing up these regulations, we have taken particular care to ensure they are flexible enough so employers and employees can put into place arrangements that best suit their company, in order to minimise bureaucracy and maximise productivity.'

A lot of companies in the channel are unsure how the directive will affect their business. Some, like Clarke, believe it will have a limited impact on smaller resellers, at least in the short term.

But he warns against complacency: 'I think it will affect the majority of resellers as we all move forward. The days of five-day opening are numbered. As the market becomes more competitive, people want to buy when they feel like it, not when we're open. We're moving heavily into e-commerce packages because of all these implications.'

In the meantime, many businesses are burying their heads in the sand over the issue. One channel player says he believes a lot of companies are adopting a wait and see policy: 'People are waiting for the first case to be brought before the courts by employees. The law has come into effect, but has anything really changed?'

Confusion is further fuelled by grey areas in the legislation. Welfare says one particular sticking point is a clause which exempts employees who have 'unmeasured' working time. 'Everyone is trying to figure out who falls in that category,' she says.

There is also a question mark hanging over which levels of management qualify and which do not. Increased teleworking also throws up a number of unresolved issues. 'What about people who work from home - how on earth do you record their hours?' Welfare asks.

The other big issue is the annual leave requirement of three weeks, which rises to four weeks in 1999. In the cases of companies where workers traditionally accrue leave retrospectively, and in some cases are required to work a full year before taking holiday, there will be problems. 'It's going to be very costly to rearrange these systems,' Welfare says.

Since the directive has already become law, such grey areas will have to be ironed out in expensive courtroom battles. 'It'll be business, unions, the court and the lawyers who will sort out what the legislation means and it'll probably end up different in different European countries,' Grant-Adamson predicts.

Businesses need more time to try to get their respective houses in order.

This is why the Federation of Small Businesses is calling for a lenient approach from compliance officers in policing the legislation in the first six months of its implementation. It argues that small business employers in particular will need additional help and advice in the initial stages with the record-keeping that the directive requires.

The CBI too has voiced its concerns, although Welfare says the organisation has been encouraged by the recent statement from Peter Mandelson, secretary of state for trade and industry, that the directive will, at least initially, 'be enforced with a light touch'.

THE MAIN POINTS OF THE DIRECTIVE

- A limit of an average of 48 hours a week which an employee can be required to work

- Three weeks' paid annual leave, rising to four weeks in November 1999 (a pro rata entitlement for the proportion of the year worked)

- Eleven hours' consecutive rest in 24 hours A minimum rest period of one day a week (two days for adolescents)

- A break where the working day is longer than six hours

- A night shift limit of eight hours' work in 24 hours

- Employers must recognise collective representation under workforce agreements (firms of 20 employees or less are exempt)

- Employers, where possible, must transfer employees from night work to day work where their health is affected by night work

WHAT SHOULD EMPLOYERS BE DOING NOW?

Solicitors Thomas Eggar Church Adams says employers need to ensure they are complying with the regulations and then monitor their compliance.

It recommends that employers consider appointing a senior person to take responsibility for this.

The company has put together a list of preparations employers should be making. These include:

- Identifying workers to whom the regulations apply

- Identifying workers who fall within exceptions, for example those with no predetermined working hours

- Reviewing and assessing their contracts of employment in the light of obligations imposed by the regulations

- Considering and negotiating relevant agreements where appropriate, to ensure maximum flexibility

- Identifying which workers need to enter into a written agreement to disapply the weekly working limits and concluding such agreements

- Setting reference periods to suit the employer for monitoring purposes, including determining start dates

- Identifying workers who will be entitled to additional annual leave and negotiating the terms of that leave, if such terms are to be more generous than the statutory entitlement

- Identifying any adjustments which need to be made in relation to night workers

- Putting into place the necessary arrangements for records to be kept (in accordance with the requirements of the regulations) to be able to demonstrate that the working time limits have been complied with

THE STRESS FACTOR

In the DTI's official response to the implementation of the Working Time Directive last month, Ian McCartney, DTI minister of state, said: 'With the CBI estimating up to #25 billion lost in 1996 due to absenteeism, these measures make good business sense.'

The CBI's latest report on absenteeism, published in September, reveals that absence cost British business #11 billion in 1997, an average yearly cost of #478 per employee. It estimates that 197 million working days were lost through absence in 1997 - an average of 8.4 days for each employee.

Manual workers took off an average of four more days than non-manual workers. Absence for manual workers averaged 10.8 days a year, compared with an average 6.8 days for non-manual employees.

The report cited family responsibilities as an important cause of absence, but it was considered less important than minor and serious illnesses. Work-related stress was not one of the highest causes of absence. Workload pressure was a higher contributor to the absence of non-manual workers than manual employees.

But the CBI points out: 'Given the current interest in working time, it is interesting to see that long hours were not considered to be a significant cause of absence.' Full-time employees working a standard 40-hour week had the highest levels of absence with an average of 8.6 days a year.