Working Time Regulations - Opting Out

Can an employer require an employee to opt out of the Working Time Regulations?

Good news!

A recent case has confirmed that Employers will not be acting unlawfully if they refuse to provide overtime to employees who refuse to sign Working Time Regulations opt-out agreements.

The law…

The Working Time Regulations 1998 (“the Regulations”) provide that an employee's working time cannot exceed an average of 48 hours a week, unless that employee agrees in writing not to be bound by this limit (commonly referred to as an "opt-out agreement").  A breach of the Regulations can result in criminal sanctions and therefore employers are understandably anxious to ensure that opt-out agreements are signed wherever the 48 hour limit is going to be exceeded.    

Freedom of choice!

Employees can choose whether they want to opt out or not.  Employees who refuse to sign opt-out agreements are protected from being subjected to a detriment by the Employment Rights Act 1996.  In addition, the Equality Act 2010 also says that it is unlawful victimisation for an employer to treat an employee less favourably because of a protected act (such as refusing to sign an opt-out agreement).

The case

In Arriva London South Ltd v Nicolaou the Employment Appeal Tribunal considered in what circumstances an employer could require an employee to sign an opt-out agreement and what might constitute a detriment if that employee refused to sign that agreement.   In that case, Mr Nicolaou had been employed by the bus company, Arriva.  He regularly used to work overtime on his days off.  Arriva asked him to sign an opt-out agreement and he refused.  In 2008, Arriva introduced a new policy which stated that any employee who had not opted out of the Regulations would not be offered overtime.  Mr Nicolaou brought a claim in the Employment Tribunal that Arriva’s policy denied him the opportunity to work overtime and that this effectively subjected him to a detriment contrary to the Employment Rights Act.

What did the Tribunal say?

The Tribunal found that there was a detriment and that, had Mr Nicolaou signed the opt-out agreement, he would have been able to work the overtime.  The Tribunal held that the cause of the detriment was Mr Nicolaou's refusal to sign the agreement.  However, the Tribunal also held that Arriva's policy was reasonable in the circumstances and that this in turn would have an impact on how much compensation Mr Nicolaou should be awarded.   Arriva appealed the Tribunal’s decision and it was referred up to the Employment Appeal Tribunal (“the EAT”).

The appeal

Arriva argued that, as its policy was found to be reasonable, the Tribunal should have also held that the reason why Mr Nicolaou's overtime was withdrawn was because of that reasonable policy.  Arriva maintained that the policy was not designed to penalise Mr Nicolaou for not opting out.  Arriva claimed that the withdrawal of overtime working was simply so that they could comply with their obligations under the Regulations and, importantly, avoid any criminal sanctions.

The EAT allowed Arriva’s appeal and dismissed Mr Nicolaou's claim and concluded that Arriva withdrew overtime working because it needed to enforce its policy.  That policy was reasonable and necessary to ensure Arriva’s compliance with its duties under the Regulations and that aim could be viewed separately from Mr Nicolaou’s refusal to sign the opt-out agreement.  Therefore, the necessary link between Mr Nicolaou's protected act (of not signing the opt-out agreement) and the treatment complained of had not been established.  In the circumstances, the EAT held that it was irrelevant that the withdrawal of overtime amounted to a detriment from the Mr Nicolaou's viewpoint.

Learning points

Employers will be reassured to know that employees will not be found to have been subjected to a detriment if they refuse to sign an opt-out agreement and as a result are denied overtime.

However, Employers should also closely look at the hours that employees work (and will work if they work the overtime) to determine whether it is reasonable and necessary to require employees to sign opt-out agreements in the first place.  If employees’ working hours are not going to exceed the 48 hour limit then opt-out agreements will simply not be necessary.

 If you have any questions regarding Working Time Regulations please contact Follett Stock's expert Employment Team.