ACS Consultation Response: Modern Workplaces ACS (the Association of Convenience Stores) welcomes the opportunity to submit views to the Modern Workplaces consultation. ACS represents 33,500 local shops across the country including Spar, Costcutter, Budgens and thousands of independent retailers. (Annex 1) Employment in Convenience Stores UK convenience stores account for 48,303 stores, employing around 300,000 staff. These businesses range from large multiple groups to single site independent businesses that number some 35,534. The sector has seen consistent sales growth in recent years as a result of lifestyles changing with a tendency towards more frequent, smaller shopping trips, which supports local shops. The growth of single person households, and the UK’s ageing population have been two of a number of factors behind this trend towards local shopping. Despite positive sales growth, there is a consistent decline in store numbers. Independent Convenience Retailers (Affiliated and UnAffiliated) 41,000 40,405 40,000 40,070 39,487 39,628 39,000 38,000 37,876 37,536 37,448 37,000 36947 Independent Retailers 36,000 35,534 35,000 34,000 33,000 2001 2002 2003 2004 2005 2006 2007 2008 2009source William Reed Know ledgestore This decline can be explained by two key factors. Firstly, growing competition as major multiple retailers move into the convenience sector has meant that independents have found it harder to survive. Secondly, the cost base of operating a convenience store has changed dramatically. Regulatory costs in areas such as alcohol licensing and data protection have eroded retailers’ bottom-line. At the same time, direct costs, notably relating to employment, have risen significantly. There are significant variations between the number of staff employed in small, family-owned convenience stores – where many hours are worked by the owner-operator and their family – and larger stores which employ up to 25 staff. Around two-thirds of staff in convenience stores are employed on a part-time basis, with shifts arranged around other staff commitments, for example childcare or study. Staff turnover is around 40% per year, much of which is accounted for by natural changes in employees’ circumstances. Typically, 60% of staff in convenience stores are female. Employees tend to be drawn from the local area and are attracted to work in their local shop due to ease of travelling and the social element of the job, as well as for the usual economic reasons. There has been a significant increase in the cost of employing staff in recent years. There are a number of factors behind this, including a decade of mainly low unemployment tightening the labour market and naturally increasing the cost of employing capable staff. However, new employment legislation has also played a significant part in these increased costs for example continual national minimum wage increases and pension contributions. The cumulative effect of these added employment costs has been an extremely important factor in the sector’s development over the past decade, and this context is crucial for policy-makers to understand when additional employment regulation is being considered. Parental Leave Flexible parental leave is important for both parents to enable them to spend time with their child at an early age. Retail employment is inherently flexible, based on shifts and part-time work patterns. This allows employees and employers more options for agreeing mutually agreeable work patterns. Proposals for the introduction of flexible parental leave will further support current working structures. However, the need to reduce regulatory burdens on retailers remain important. The Government has made strong commitments to reduce regulation wherever possible; this should be extended to flexible parental leave too. Greater flexibility in the system for parents will ultimately lead to more complex administration procedures for employers. References to exemptions for micro businesses for flexible parental leave are welcome, but small businesses are equally vulnerable to the burden of regulations. Many convenience store operators fall outside of the micro business definition and do not have the benefits of centralised administration functions or a dedicated member of staff to deal with human resources issues. The Government must carefully consider the impact that flexible parental leave will have on small businesses that fall outside the threshold for micro businesses and consider how they can support them to administer these changes. The management of micro and small business regulation is predominately completed by the owner and operator. Therefore, longer notice periods for smaller businesses to comply and manage a request for flexible parental leave would be appropriate. The Government should consider extending the proposed two month notice period to three months for micro and small businesses. As referenced in the Modern Workplaces consultation the Government will consult further on details of parental leave and ACS will respond. Flexible Working Given the significant opportunity for flexibility that already exists the Government must try to reduce regulatory impact for businesses. Our concern is that by exposing retail businesses to form filling processes it will additional burdens on employers that is largely unnecessary. There are considerable employment costs that micro and small businesses will be absorbing over the next three years. Mitigation of further cost and regulation is a priority for industry and the Government and this should be delivered across all regulatory areas. This is particularly true of employment costs as they remain the largest outgoing for retailers with increased national minimum wage, pension reforms and holiday entitlements. Any further cost pressure on employment will lead to cuts in jobs and reductions in staff hours. If imposed the introduction of regulations on flexible working should be as light touch and user friendly as possible. Proposals to introduce a ‘reasonable’ consideration approach to the new system are likely to meet this need. A principle based approach to regulation is more useful than a rigid process that retailers must follow to the letter. The retention of the 26 week qualifying period before application for flexible working is essential for convenience retailers, given the high staff turnover they experience. This time period gives retailers the opportunity to gauge an employee’s commitment to their role and confidence that the benefits of flexible working will be felt across their business. 26 weeks is the minimum period in which employer confidence and employer-employee relationships can be built. This timescale also coincides with other employment benefits such as pensions. Working Time Regulations Holiday leave is a significant cost burden for the retail sector. The costs for retailers are not limited to just paying for holiday leave, they must also pay staff to cover. In the past, employers have been able to cite the WTR as justification for refusing employees on long term sick leave the right to carry over annual leave to the next year. Changes to the Working Time Regulations would constitute significant discrimination against small business owners. Retailers do not have any protection of income themselves from sickness but they must find cover for sickness leave and extra holiday entitlement. Allowing employees to carry over holiday interrupted by sick leave will compound problems with finding additional cover. Further clarification is needed on how many times that holiday entitlements can be carried to the next year. Extensive successive periods of sick leave would enable employees to accrue significant periods of time off. Regulations must be clear on how much time can be carried over each year. Employers could also find themselves with claims for accrued holiday pay – stretching back for several years in some cases. The proposals will ultimately reduce the ability of retailers to create jobs, hampers chances for business investment and a significant threat to business growth. ACS’ 2010 National Minimum Wage survey identified that increased employment costs led retailers to reduce staff hours and business investment, making the business overall less competitive. It is clear that employers will at least have to review their policies on long term absence and probably take measures to dismiss staff somewhat earlier than otherwise might have been the case. As it would appear that some employers could be open to what might amount to fairly substantial claims for accrued holiday pay, the Government should at least press for appropriate “ceilings” to be set on the accumulation of annual leave entitlements over successive years by workers on long-term sick leave (presumably by seeking amendment to the EU Directive) We support giving the employer the right to decline when leave can be taken in line with the reasonable needs of their business. Further consultation is required to define reasonable needs of a business. Given the above background we have to accept that the relevant rulings of the CJEU leave the Government with little choice but to implement the appropriate amendments to the WTR. Limiting the impact of the changes as proposed by the Government is small consolation but nevertheless welcome. What we cannot accept is the Government’s intention to group together the rights of those on sick leave on the one hand and the same rights for those on maternity or parental leave on the other. Having regard to the wording of chapter 5 we are making the assumption that the Government has taken legal advice and that it has been told that it not only has to amend the WTR in regard to relevant workers on sick leave but also in regard to those on maternity and parental leave. If this assumption is correct then we would strongly propose that the Government should seek amendment of the EU Directive to override the decision of the CJEU. For further information on this consultation response please contact Edward Woodall, Public Affairs Executive – [email protected] or 01252 533014.