Memorandum by Working Time Solutions Limited
Prepared by: Kevin White, Managing Director
with the advice and assistance of James Whittam, Director of Consulting
1. Working Time Solutions Ltd has wide
experience of working time change, flexible working, annual hours
and supporting planning and administration systems, having worked
with public and private sector organisations across a broad range
of industrial environments and sectors, including SMEs and blue-chip
companies in the UK and overseas. We are regularly involved in
initiatives to assist organisations to change their working time
arrangements, gain greater flexibility of labour, improve labour
scheduling, and change contractual arrangements to support flexibility
and improve workplace cultures.
2. Since the Working Time Directive was
implemented in October 1998 we have worked with a number of organisations
on the reduction of working hours to levels below the stipulated
average maximum hours of 48. These industries include food and
drink manufacture and distribution, industrial and plant maintenance,
dairies, and drink retailing (public houses). In the majority
of cases the employer's key objective has been to comply with
the legislation, give consideration to Health and Safety issues,
and demonstrate corporate social responsibility. In some cases
they have combined these initiatives with moves to improve productivity
and effective labour utilisation in the workplace, and move away
from overtime dependence. In doing so these clients have avoided
extensive use of the opt-out option, and instead, having understood
the sense and forward drive of the legislation, have sought to
achieve compliance.
3. We believe that many other companies
and organisations, rather than seeking compliance with the legislation,
have made maximum use of the opt-out facility to maintain traditional
working time practices. From our experience, the sectors where
opt-out use is most prevalent are those in which high overtime
and long hours are an accepted part of their industry's working
culture. This has traditionally been supported by the workforce
as a means of increasing earnings, and seen by management as the
main means of securing workforce flexibility to cover additional
labour requirements. This mutual dependence on overtime suggests
a collusion, which, in our opinion, may not necessarily be in
the best interests of productivity and motivation in the workplace.
The sectors and work areas where this is most evident include:
4. Hotels and catering, rail, plant and
engineering maintenance, security (public and private sector),
manufacturing machine operatives, construction, warehousing and
logistics and food manufacturing. Characteristically these environments
or functions are often subject to the volatility of underlying
demand and/or seasonal business cycles, which makes the deployment
of labour a more complex task than in a continuous or stable demand
environment. This complexity has been exacerbated by the move
to seven day trading and 24 hour delivery receipts by retail operations,
demanding supply-chain strategies from retailers, and stock reduction
initiatives such as "just-in-time" in manufacturing.
5. Overtime dependence and overtime "cultures"
appear to be endemic in some of these industries and are defended
by workforce, management and local union representation alike;
a situation, by definition, associated with long-hours and the
usage of the opt-out facility. These environments are often characterised
by low basic rates of pay, poor productivity and very traditional
working time structures, and not surprisingly, can result in poor
morale and worklife balance, low motivation and empowerment levels,
high stress and fatigue.
6. We have referred to collusion between
management, workforce and, to a degree, trade unions, that supports
this type of working practice in the UK. But a further level of
collusion exists in the boardroom where often a key performance
indicator is "headcount" rather than absolute levels
of labour cost. Crude measures of labour cost in terms of workforce
numbers tend to ignore costs involved in overtime and the use
of agency. So, whilst appearing to have efficient staffing numbers,
the inefficiencies and additional costs are concealed by the additional
use of peripheral labour to cover peaks in demand, labour supply
difficulties, and volatility in the supply chain. The use of peripheral
labour supply can also give rise to cost inefficiencies in terms
of wastage, labour turnover, quality, training and recruitment.
7. Contractual arrangements in the UK are
often stated in terms of hours per week. These uniformly prescribe
the number and length of shifts each week or hours per day that
must be worked. Such contracts are inherently inflexible in that
they determine labour hours "bought" by the employer
without reference to the company's underlying profile of demand
for labour. As industry and consumer habits have changed these
contracts have fallen increasingly out of line with patterns of
labour demand. This mismatch and contractual inflexibility therefore
gives rise to demands for labour outside of the contractual arrangement,
such as overtime and agency, leaving the company overstaffed in
times of low demand therefore underutilising or wasting labour
hours.
8. We believe that the end of the opt-out
facility would ultimately prove beneficial to British industry,
although for some organisations this would involve a difficult
period of alignment in terms of revised working practice. The
benefits of ending the opt out facility, and therefore overtime
dependency, include:
Safer, healthier workplaces.
Improved labour planning.
Better management of labour.
Greater balance between work and leisure time.
Higher levels of motivation.
More flexible workforces.
9. Statutory reference periods currently
set at 17 weeks are too short to provide sufficient flexibility
to meet sustained seasonal peaks of demand. We would prefer to
see a statutory 52 week reference period. This could support moves
towards "Annual Hours" contracts which provide an inherently
more flexible contractual basis for engaging labour. Given a significantly
longer reference period the 48 hour maximum average is, we believe
more than adequate for most industries to operate with an average
48 hour limit. For example a reference period of 52 weeks would
allow a seasonal business to operate at 40 hours per week average
for six months of the year and at 56 hours per week average for
a further six months. A 26 week reference period would be an improvement
on the current 17 week period. Currently both 26 week and 52 week
reference periods may be utilised by agreement with the workforce.
10. We believe that the Health Service and
specifically hospital doctors rostering, to be a special case,
the nuances of which are not generally applicable to most working
time environments. We have not worked in this area and would not
wish to comment on the judgement.
11. There will always be competing demands
between work and family life and inevitably times when business
demands or personal demands are at the forefront. Compatibility
between the two will derive from the achievement of an overall
balance between time in work and leisure time. We believe that
the greatest threat to compatibility derives from a culture of
long hours working and high overtime usage. This type of environment
means that people are motivated to put in more time by the opportunity
of increased overtime earnings. There is little in the way of
motivation to get the job completed effectively and quickly and
to get home to enjoy the leisure time available. 48 Hour maximum
averages with reasonable duration of reference period, should
provide more than adequate latitude for compatibility of working
and leisure time.
12. Working Time Solutions has been providing
advisory and consultancy services in working time change since
1994. The company also provides a range of software for planning
and management of shifts, rosters and annual hours schemes within
the workplace. Jim Whittam the company's founder, Director of
Consulting and Chief Executive was instrumental in one of the
first implementations of annual hours, a form of flexible working,
at the Fort Sterling soft tissue paper mill in Bury in 1982. Jim
has worked as a consultant in this field since that time. Jim
is a Fellow of the Chartered Institute of Personnel and Development
and a Fellow of the Institute of Management Services and has been
involved in the government consultations on the Working Time Regulations.
Kevin White is the Managing Director of Working Time Solutions.
A graduate from UMIST School of Management, Kevin has worked extensively
in Human Resource management in the UK and is a specialist in
IT for working time planning and management applications.
Time has prohibited the inclusion of statistical
evidence to support the submission, however, we would refer the
committee to the following publications:—
| Annual Hours | Incomes Data Services
| Study 767 | February 2004 |
| Overtime | Incomes Data Services
| Study 727 | April 2002 |
There is of course useful information to be gained from the
recent Labour Force Surveys and other recent research by Cambridge
University of which the sub-committee will be aware. We also provide
attached some client overviews which give anecdotal evidence on
the subject which may be of interest.
We trust that our submission is of interest and look forward
to being further involved.
23 February 2004
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