The Joy of Flex

What could be more sensible than a system of work so flexible that any hours worked beyond those normally contracted would give rise to an entitlement to time off in lieu to be taken at less busy periods when customer demands allow it ? The answer to the question posed would appear to be……not much. Such a system exactly accommodates the customers’ requirements even where they change without warning, it maximises the business opportunities for the employer, and the employee can build up a bank of flexi-time hours to be drawn down by way of additional “holiday”. But the “we’re all in this together” tune can strike a discordant note for the employee when the music [or rather the employment] stops.

An employee with a healthy credit balance in his flexi-hours “bank” has no automatic right to turn those hours into time off or to re-convert them back into cash when the employment ends. Unless the contract of employment expressly addresses the point, no term will be implied into the contract to enable the employee to realise the benefit of any flexi-hours bank balance with the effect that no compensation for the worked, but unpaid, hours is recoverable.

This was the conclusion reached by the Employment Appeal Tribunal in the recent case of Vision Events (UK) Limited v Paterson. Mr.Paterson had accumulated well over 1,000 hours in his flexi-hours “bank” but his contract of employment was silent as to how any credit balance was to be realised when the employment ended. When he was made redundant Mr.Paterson asked for the “credit” to be converted into cash [some £12,500]. His employer refused but as a gesture of goodwill offered to convert half of the benefit into cash. Mr.Paterson succeeded in obtaining judgment for the full £12,500 before the Employment Tribunal, who agreed that a term to convert the value of the banked hours into cash could be implied into his contract. Unfortunately for him, his employer then successfully appealed.

The Employment Appeal Tribunal (EAT) rejected the earlier judgment and refused to imply a term into his contract of employment entitling him to the cash-value of the banked hours. The EAT was also satisfied that the goodwill gesture of offering half of the amount claimed did not amount to any acknowledgement of liability on the employer’s behalf. The employer was also entitled to require Mr.Paterson to reduce the balance of his accumulated flexi-hours by taking leave during his 7 weeks’ notice period.

The lesson here is clear -  if you are an employee who regularly banks flexi-hours you should ensure your contract contains a term which allows the conversion of banked flexi-hours to cash or some other tangible benefit upon the termination of the contract. From an employers’ perspective, while no doubt one view would be to allow the contract to remain silent, the mutual co-operation and benefit described at the beginning of this brief note would quickly evaporate amongst its retained employees were employers to cynically exploit this loophole and fail to compensate the departing employee, in cash or kind, for the full value of the banked flexi-hours upon the cessation of the employment.