The EU Working Time Directive was instituted to standardize working conditions across the European Union – it specifies maximum working hours, compulsory rest periods and time off standards. There is an opt-out option which allows employees to agree to working longer hours, an option taken by 2 million British workers.
Small and Medium Businesses (SMEs) have been impacted with additional overhead in the form of requisite forms and documentation to prove compliance, and a lack of flexibility as the directive has been enforced.
There have been a number of attempts to remove or amend the opt-out option, this has been vigorously opposed by SME's stating it would force them to become uncompetitive as they compete with the large conglomerates and the self employed person, who is exempt from the directive. This has also led to uncertainty for small business owners and statistics show that the increased regulation could result in some small businesses being forced to close if no opt-out was available in the future.
The unions have an opposite view, stating that employees are being exploited and they want the opt-out to be abolished, this has been tried on 3 occasions by the EU but to date these attempts have failed.
There are statistics to show that a high number of employees are working 20% additional time as unpaid overtime, a situation that does not benefit the employees in any way. Employees in some industries feel their freedom of choice has been limited and they want the freedom to work longer hours and reap greater financial remuneration as a result of their inputs.
The overall effect to both employees and employers in SMEs is that the employers have a higher administrative and cost overhead in complying with the directive and employees do not feel they have additional benefits and free will to work on terms and conditions that suit their financial and personal requirements. The British government agrees that the increase in regulations places a heavy burden on the small to medium enterprise.
The dissertation will investigate the effect of the European Union Working Time Directive and its effects on UK small and medium enterprises (SMEs). 'The EU Working Time Directive guarantees workers
• A maximum of 48 hours work per week
• At least four weeks' paid annual leave
• A minimum period of 11 hours' rest every 24 hours
• At least one day's rest per week
• A rest break if the working day is longer than six hours'.
Ref The Morning Advertiser, http://www.morningadvertiser.co.uk/news_detail.aspx?articleid=23797
The directive was legislated in 1993 and brought into effect in the UK in Oct 1998. Like all European Union directives, this is an instrument which requires member states to enact its provisions in national legislation. 'Although the directive applies to all member states, in the United Kingdom it is possible to "opt out" of the 48 hour working week in order to work longer hours. In contrast, France has passed more strict legislation, limiting the maximum working week to 35 hours'. Ref http://en.wikipedia.org/wiki/Working_Time_Directive
The Working Time Directive is a piece of EU legislation designed to prevent damage to the health of workers through working excessive hours and ensuring they have sufficient breaks during the working day and appropriate days off. Self employed people and volunteers are exempt from the legislation.
This paper will look into the Working Time Directive as it affects both small business owners and employees.
2. Research Objectives
The objectives of the paper are to document the impact of the European Union Working Time Directive, and any significant changes and updates, and assess both the positive and negative impact on employers and employees in Small and Medium Enterprises (SME's). The directive has been in force in the UK since October, 1998 and a number of proposals have been tabled to amend it in the subsequent period.
3. Research Methodology
Background on SME's will be briefly looked at to identify the scope of the issues within the Small to Medium Enterprises in the UK and the magnitude of their collective effect on the UK economy. The overhead in ensuring a company is in compliance with the Working Time Directive will be investigated and the effect on SME's in particular, in the UK. In addition, the effects of the changes on employees in this sector to be analyzed, views of the unions will also be commented on, if appropriate as inputs.
The application of the opt-out by British companies in general will be analyzed, this is a vital element of the directive for SMEs and widely used by business in the United Kingdom.
As the directive was enacted 9 years ago, updates to the directive and the responses of UK SMEs and other companies will be studied.
4. Literature Review & Findings
Background on UK SME's
Soon after the enactment of the directive, Johan Fairhurst, a senior lecturer at the University of Huddersfield wrote the paper, The Working Time Directive: A Spanish Inquisition, http://webjcli.ncl.ac.uk/1999/issue3/fairhurst3.html#Heading23
He defined an SME as 'an employer with fewer than 250 workers. SMEs account for 99% of businesses and provide one third of all jobs within the EU - see Johnson (1998) p 231). Johnson reviews the impact of the Directive on SMEs within the UK. She concludes that " ... the new legislation will increase staff costs for the SMEs ... However, those employees who are covered by the new proposals will enjoy the benefit of increased protection for their health and safety in a working environment, which is the very objective the legislation was designed to achieve" (Johnson 1998, p 237).'
At the time of writing, it was felt that there would be an increase in overheads for SME's but that the employees would enjoy improved protection in the workplace in regard to their working times and conditions. The overall purpose was to improve the working/home life of individuals as a result of the directive's implementation. The statistics on the scope of SME's and their tremendous value to the economy should clearly indicate that any changes to legislation should consider the impact of such amendments to this economic sector in order to retain their valuable contribution to the entire European Union economy.
Article 18 of the Working Time Directive, article 18 does allow member states to opt-out of the directive and not apply the mandated 48 hour working week if the following conditions are met
Ref EU Working Time Directive, UK Advisory, http://www.eu-working-directive.co.uk/
• 'workers must sign individual opt out agreements, and must not suffer any penalty if they refuse to do so;
• Employers must keep records of staff that work more than 48 hours a week, and make them available to the appropriate authorities.'
The opt-out is not specific to the UK; however, the UK has made use of this provision extensively. The reason cited being 'Ever since it's inception in 1993, the Working Time Directive has caused disruption within European and British industry, and often finds itself in the news following trade disputes or breaches of the legislation.'
It is estimated that approximately one third (1/3) of British employees have invoked the opt-out, this equates to 2 million workers. The unions state that people are being unfairly coerced into signing agreement to the opt-out; they cite that the form to be completed is given to employees when they receive their employment contract plus they state that some employees are unaware of the fact that there is legislation limiting the number of hours that they have to work. During the course of producing this paper, I would disagree with the statement that people are unaware of the legislation; such information is readily available in both the print and electronic media and has been since 1998.
There have been increasing calls for the opt-out option to be abolished, and this has been discussed a number of times – to date no agreement has been reached and the UK still have this option. This is the single change that would impact the most on small businesses in the UK.
The 2 million workers who have opted out are not limited to SME's but the feedback received from SME's indicates that they are totally against it being abolished and that the very nature of their companies finds its inclusion vital to the future of many companies.
The Centre for European Politics, http://www.eupolitix.com/EN/ForumBriefs/200405/23de3582-833e-49b0-866c-73ba2420c36f.htm, 27 May 2004 reported that the Forum of Private Businesses (FPB), in collaboration with the European SME Employers Organisation (UEAPME) was opposing certain changes to the directive.
They stated 'The abolition of the opt-out could have a disastrous effect on many firms, impacting on their bottom line and forcing many companies to close. Costs could rise drastically as will the red tape and paperwork certain changes in legislation will impose. FPB considers that the opt-out must be maintained with the option of an independent opt-out agreement.'
They also cited that removing the opt-out option was against the small business ethos and freedom of choice for both employers and employees. Any closure of companies would have a direct impact on the economy and raise unemployment.
A survey carried out in April 1994, refer appendix 1, shows that 56% of the respondents expected any change to the opt-out option to increase the already burdensome costs for SME's. Due to the limitations of resources, both staff and money, within small businesses such companies cannot afford to do without the opt-out option. It is noted that in order to allow staff to opt-out, the burden of administration and record keeping falls to the SME in order to make this available to authorities.
In June 2005, the EU ministers met to discuss changes which could have resulted in an end to the opt-out by 2012. The ministers could not agree on the change and it again failed, with the British government stating that 'scrapping the opt-out would have been unhelpful to Britain and the other member states' (BBC)
The information technology sector sees particular problems for IT contractors which would adversely affect the sector.
Infromatics, ref nvunet.com, 01/10/2004, quoting James Mortimer from the Association of Technology Staffing Companies, ATSCo, in the article EU directive could choke IT skills 'proposed amendments to the EU Working Time Directive could trigger a serious skills crisis in the IT sector.' Ann Swain, the CEO said this legislation is designed to protect workers, but contractors want the flexibility to choose when, where and how they work. Flexibility is vital for contractors as well as for the organizations that employ them.
"Where problems need to be solved quickly they may have to put in a lot of hours in a short space of time. It's not for anybody to tell them they cannot do that."
Any attempt to limit IT contractors' rights to opt out of the directive could also lead to a serious IT skills shortage, added Swain.
Typically, IT contractors work intense hours to meet business critical deadlines, for this, they are well paid and work for their above average hours. They tend to enjoy a high income for their efforts and many will also take extended time off when it suits them. If the opt-out was abolished on the WTD, ATSCo see this as resulting in a possible skills shortage as there would be no incentive for IT personnel to take on contract work.
Although this example refers to technological workers, the same situation would apply for many projects related workers who have one off projects with tight deadlines such as construction, catering and events personnel, etc.
Certain industries, such as IT, actually have been proven to attract people with a particular work profile – in general they are very work orientated, goals driven, often high achievers and they want the flexibility and options to be in control of their own working environment and income stream that consulting and contracting provides. They take the risks of work downtimes between jobs in exchange for the above average rewards and personal satisfaction of seeing a project successfully completed. Such employees would feel frustrated and limited by the imposition of the Working Time Directive and would probably become self employed to circumnavigate the legislation if the opt-out option was removed or limited.
Cost of Working Time Directive
In 2003, Management Issue news, ref http://www.management-issues.com/display_page.asp?section=topics&id=623, reported that the additional cost of regulations to UK business was nearly £6bn a year.
The article, titled, Bad for business, Bad for Enterprise and Bad for Jobs illustrated that the most expensive of the regulations to business was the Working Times Directive at an overall cost per annum at £2.3bn per annum.
In practical terms the Institute of Directors, in a report stated that 'members with small businesses spent an average of 6 hours a week on red tape. Some have taken on extra staff to cope with the increased paperwork.'
It appears that the hardest hit sector of business is the SME that have to cope with a tremendously time and cost consuming overhead in order to comply with European Union rulings. The WTD accounts for a staggering 39% of all regulation costs in the UK, the highest of all regulations in force. This is a total figure for UK business, based on the fact that small businesses are the most burdened by the overheads of such regulations, it is fair to state that there is a huge financial burden carried by SME's that could be better spent to grow and expand their businesses and provide both company and country wide economic growth and improve the financial situation for their employees..
It was reported in the Financial Times ref, http://search.ft.com (John Willman) – Sept 06, 2006 that 'Complying with regulations costs five times as much and takes five times as long for small businesses as it does for large firms'
The Federation EU chairwoman said 'Our research has found that two-thirds of small firms want to grow in the next five years but half of all small businesses see excessive regulation as a serious barrier to that growth.'
The excess of regulations and the negative effect on SMEs has the potential to stifle the sector and limit the growth with serious consequences. Considering the financial contribution they make to the UK economy and the number of employees involved, any cut back in their growth or reduction in income would result in increasing unemployment and rising cost for consumers if they were forced to close their companies due to them becoming increasingly uneconomical. Particularly worrying is the fact that self employed people are exempt from the directive – entrepreneurs who currently have a small business, could consider working alone to avoid the red tape and administration overhead, particularly costs.
The burden to SME's has also been recognized by the government ref http://www.cabinetoffice.gov.uk/regulation/faqs/index.asp#2 where they produced a document titled 'Does regulation discourage small businesses?' This goes on to state 'Government recognizes that red tape can have a disproportionate impact on smaller businesses and is looking at ways to reduce the amount of bureaucracy they have to deal with through the better regulation agenda.'
The Federation of Small Businesses (FSB) reported in February 2007 that 'The average small business owner in Northern Ireland spends 28 hours per month filling in forms for government'
SME's - examples
In practical terms the SME's have stated their case against the Working Time Directive and identify the need to retain the opt-out option in order to survive. The following example appeared in The Guardian, ref http://technology.guardian.co.uk, Counting the hours when the truck drivers were to be included into the Working Time Directive regulations, March 25, 2004. The directive does not apply to self employed who, at this time, were still exempt. Gary Hoarth, MD of the transport company Sameday stated 'if his company wants to offer a service for 50 hours in a week, then legally it will need to employ a second person - whereas a self-employed driver could make up the time themselves. If you look at the sort of person we employ, which are semi-skilled individuals, they would tend to increase their earning capabilities through the provision of overtime or additional shifts. If their working time is restricted they need to look at increasing their hourly rate to get them back to where they are currently in terms of take-home pay.'
He forsees a potential problem for employees who wish to maintain or raise their standard of living and require a level of income in order to do this. He believes that skilled employees will go out of the door after their official working week and supplement their incomes with additional, paid part time work outside their regular job. The SME, when faced with additional work load, will have to take in inexperienced part time workers to do any additional hours while the employees who are skilled in the position will be working elsewhere on a part time basis to supplement their income, a complete lose/lose situation.
'Why would you want to put a limit on what someone could earn? People have different levels of capacity and different appetites for work.'
Study of the UK Working Conditions
This section looks at the current state of working conditions in the UK for employees. With the Working Time directive in place, still with the opt-out option available, one would expect the working lives of British workers to have become easier since its inception.
The book, Working Time and Workers' Preferences in Industrialized Countries: Finding the Balance, Jon C. Messenger; Routledge, 2004 states 'within the EU there are still around one in five employed men working hours at or in excess of this 48-hour limit, as are 9 per cent of employed women, with the incidence of long working hours particularly prevalent for men in Ireland, Greece and the UK and for women in Greece, Spain and Portugal'
The book does not identify if these statistics refer to workers who have opted-out of the directive, or not.
Statistics in the Guardian, ref http://money.guardian.co.uk/work/story/0,1456,1092148,00.html identify a huge trend in longer working hours actually being unpaid overtime. Based on these statistics, it appears that the directive itself is not benefiting the employees and is being completely undermined. The employees are not gaining additional quality time outside of the work environment and neither are they being financially compensated for the total time spent at work. Such statistics imply that the work force supply and demand is out of balance somehow; if overtime is required but cannot be paid due to regulations that impose a limit on the work week; this is serving no useful purpose to the employee who will have to work the extra hours anyway in order to fulfill company requirements. These statistics would be based on the actual reported unpaid overtime, if the practice is so prevalent in the UK work place, one can assume that the report is based on only known and report occurrences of this practice and that there are likely to be many unreported cases of additional unpaid overtime being carried out.
Unpaid overtime soars in the UK, John Carvel, November 24, 2003
'British workers will do unpaid overtime worth £23bn this year, according to a TUC survey today which showed that millions of people are putting in the equivalent of an extra day's work every week for no additional financial reward.
The survey found that more that five million workers average seven hours and 24 minutes of unpaid overtime a week.'
The Chartered Institute of Personnel and Development ref http://www.cipd.co.uk/subjects/wrkgtime/wrktmewrklfbal/worklifeba.htm?IsSrchRes=1 did a survey in March 2001 and asked if the UK has a culture of long working hours. Respondents stated that working longer hours was 'totally [their] own choice – doesn't mind working long hours' – up from two out of five respondents saying the same thing in the previous survey conducted in 1998'.
The above reports indicate that the WTD is not having a positive effect on the working lives of UK employees in general. If one has chosen to not opt out, an employee could find themselves working additional time with no compensation and workers themselves often choose to work longer hours, based on their financial requirements and the company's workflow needs. It is fair to say that such effects would be heightened in an SME where they have the additional constraints of limited resources and variable workloads. The statistics for unpaid overtime are exceptionally high, with 5 million workers putting in an additional 22% of work each week without any reward or additional time off in lieu. Although the report does not state this, it can be assumed that workers are likely to undertake this high level of unpaid work for one of the following reasons.
1. To keep their job in a competitive market as they do not see better prospects being available elsewhere working standard hours – probably leading to a high level of frustration and work dissatisfaction
2. The employee is within an environment where this is considered the standard and they accept this in order to gain future advantages or simply because they want to be part of a successful team.
3. The employee chooses to work longer hours and does not resent the fact that it is unpaid.
Changes and their outcomes
The latest attempt by the European Union to do away with the Opt-out option occurred in Nov 2006. In the Morning Advertiser, ref http://www.morningadvertiser.co.uk/news_detail.aspx?articleid=23797, 07/11/2006
The Federation of Small Businesses (FSB) said, prior to the meeting in Brussels, 'Surrendering the opt-out would be equivalent to abandoning British businesses but so would allowing it to be watered down with tons more red tape'
The European Union not only discussed scrapping the opt-out option it also wanted to reduce the maximum number of working hours per week from 78 to 60 for those countries that had the opt-out option; primarily this would affect Britain who are the country who have used the option most frequently.
The talks failed and the outcome was met with varying responses from the FSB and the unions. The FSB hailed the results as a success and praised the government for fighting to retain the opt-out; in contrast, the unions felt that workers would continue to be exploited. Both aspects were not passed, the opt-out option remains as does the current maximum hours of 78 hours. Ref http://www.newbusiness.co.uk/news/working_time_talks.html 08/11/2006
'The collapse of discussions may be bad for relations between EU member states but for UK small businesses this is great news,” said Matthew Knowles, spokesman for the FSB. 'The status quo is much better than either the Finnish proposals or the loss of the opt-out. The UK government has again defended small businesses and their 12 million workers from both the loss of the opt-out and from a huge rise in red tape. Small business owners will be breathing a sigh of relief that the average 28 hours a month of form-filling they already have to do won't go any higher for the time being,' he added.'
The Trade Unions Congress (TUC) felt the outcome was a 'missed opportunity to ensure that UK workers are properly protected against the dangers of overwork,” said Brendan Barber, TUC general secretary. “The trend in the UK is now towards a slow decline in long hours working.
The Union Views on Time Working Directive
The TUC feels that the UK's opt-out from the directive is being abused. As reported by the BBC, ref http://news.bbc.co.uk/2/hi/uk_news/3254940.stm Tuesday, 2 December, 2003.
'An unpublished European Commission report, obtained by the BBC, found that British workers were being pressurized into signing opt-out clauses and giving up their rights to take rest breaks.
TUC General Secretary Brendan Barber said the report showed the UK's opt-out policy was failing to protect workers' rights and needed to be scrapped.
The research, based on 13 case studies, was compiled by three Cambridge University academics and involved interviews with staff at several companies.
The report also found low productivity in businesses where staff worked very long hours, with stress and burnout being a major factor.
The research, which was asked for by the European Commission last year ahead of a review of the UK opt-out, was never published but a copy was obtained by the TUC.
It follows publication last week by the TUC of its own report that claimed UK workers put in more than £23bn of unpaid overtime this year.
Using official statistics, it was calculated that around five million people work an average of seven hours and 24 minutes without pay every week, worth £4,500 a year.'
The European Trade Union Confederation agrees with their British counterparts, as reported in 2005, ref http://www.etuc.org/a/504 stating 'over the last ten years, the opt-out has been widely abused in the UK. Research indicates that two-thirds of British workers are unaware of the 48-hour limit. In addition, two-thirds of long-hours workers say they have not signed an opt-out, and one-third of those who have, say they were given no choice. Far from boosting British competitiveness, long-hours working leads to reduced productivity and poor management. The UK is only tenth in the EU-15 in terms of productivity per hour, and studies show that long hours create tired workers, producing lower, poorer quality output, and more mistakes. They are also a barrier to workers' education and training, perpetuating an under skilled and underproductive workforce'
Collective Feedback from SMEs
The Federation of Small Business (FSB) reviewed the Working Time directive on behalf of their 185,000 members in March 2004 ref
Regarding the retention of the opt-out option, they see it as vital for their members 'The opt-out of the 48 hour week is essential for small businesses. Empirical and anecdotal evidence indicates that there are two main groups of people where opt outs are being used. These are the comparatively low paid hourly paid workers who get overtime and the comparatively highly paid professional and managerial workers for whom long hours mean significant rewards. These groups of people tend to fit the dynamics of small business '
They suggest a reversal of the current system 'A more appropriate way to give full effect to the second recital of the Directive would be to have a small employer exemption for employers with less than a given number, perhaps 20 employees, with a right for such employees to opt in to the 48-hour working week.'
They also feel that employees want to retain the flexibility that the British working environment has always encouraged in the past 'Employees may want or need to work longer hours to gain extra qualities of family life, an expensive holiday, a nice home etc. Removal of the opt-out would limit an employee's right to do so by and could potentially have a devastating effect on the work/family life balance. Flexibility is important for employees too. It is clear from within our membership that employees want the freedom to adopt their working practices to their needs, both in the amount of hours and organisation of those hours'.
The Forum of Private Business, ref fpb.org used even stronger wording in a statement on their web site. 'The WTD is one of the worst pieces of legislation to hit our industry, which is reliant on operating 24-hours-a-day, 365-days-a-year. It's a nightmare. If the opt-out was amended or deleted, we would have to employ four new operatives at £25,000-a-year each. In addition, there would be enormous costs in training each new operative and buying uniforms, tools, laptops, mobile phones and company business cards, and that's just for starters. Moreover, our staff, with families and mortgages, thinks it's ludicrous, as they will be unable to earn valuable overtime.'
The recommendation that workers should automatically be opted-out of the WTD but would have the option to opt-in, as stated by the FSB, would reduce the administrative and financial overheads this directive is currently imposing on SMEs and do away with the possibility of employees being unfairly coerced into signing for the opt-out, as stated by the unions. Assuming that workers would not be penalized for opting in, this solution appears to offer a win-win situation for small businesses and the employees involved.
The FSB also highlighted another aspect of the directive in their report issued 30 March 2007, 'EU Commission Missing Chance to Slash Unemployment' A
Alan Tyrrell, FSB Employment Chairman, said: 'Decision-makers in the European Union need to bear in mind that if every small business in the EU created one new job there would be no unemployment in all 27 member states. That is the priority for employers and employees alike – small business growth leading to new jobs. The Commission must ensure flexible labor markets are restored in the EU in order to achieve this. The current Green Paper misses an opportunity to slash unemployment in the EU.
“Diversity in labor markets in different EU member states is not a 'problem' to be fixed in Brussels. It is a strength from which each country benefits. A uniform labor market across 27 countries is neither desirable nor practical.'
This statement emphasizes the impact that growth within small businesses could have on unemployment. However, it has been stated that the WTD is inhibiting growth in this sector, and already causing unnecessary overheads for SME's in order for them to comply with the ruling, even with the current opt-out option still in place. It is safe to assume that the British government should undertake an in depth investigation into this – looking at future growth and the probable economic results and the increasing overhead of compliance with European directives. Diversity and flexibility vs. a standard across the European Union should be debated, particularly if the overall effect could result in a slowdown of growth in such a vital area of the economy. In addition, there appears to be an ongoing attempt my both the unions and the European Union in Brussels to eventually get the opt-out option amended or removed, certainly a cause for concern and a source of uncertainty for the owners of SMEs going forward. To date the British government has backed the call to retain the option but there is no guarantee that this can be maintained over time.
4. Research Findings Summary
The small and medium enterprises in the UK are clearly feeling negative effects of the Working Time Directive. The administration and financial burden generally falls to the owner as they do not have the extra resources to specifically employ staff to handle these matters.
In recent years there have been 3 attempts to scrap the opt-out option and this is the single biggest concern for SME's, particularly as they feel it will stifle future growth. In order to remain competitive, in a market where they are competing with major corporations who have more resources and single person owners who are exempt, the removal of the opt-out could squeeze some companies out of business. Typically SME's workload has peaks and troughs and they are not in a position to supplement the staff compliment and therefore service their clients during peak periods. This is currently handled by working overtime by current staff, when necessary. They also identify that, by the very nature of their staff, employees enjoy flexibility and want to increase their take home pay by taking on additional working hours.
Employees, the very people who are supposed to be protected by the directive, are frustrated and feel their freedom of choice regarding their working hours have been taken away. Many people want the option to earn more money by taking on additional hours, if this cannot be achieved in their normal place of work, the option is to go and work on a part time basis elsewhere. This is counterproductive, particularly when unskilled workers would have to be brought in to take the place of skilled, permanent workers if the workload peaks.
Although the unions have stated that many people were coerced into signing an opt-out, and this could have possibly been true initially, there is no proof that this is currently a wide spread practice and there are certainly adequate resources available for workers to be well aware of their rights in this regard.
The overall effect of the EU Working Time Directive is that it has not produced positive effects for either the small business owner or the employees. Although the purpose of the directive was to enhance the working/home life balance for staff members, employees feel they have been deprived of their freedom of choice as to whether they want to have extra time off or work longer and enjoy the financial rewards that overtime brings. In certain cases this is a necessity due to personal commitments and the result is that people will take on additional work elsewhere, probably leaving their employer to take on part time unskilled workers if the company is experiencing a heavy work load at the time. Currently there is unpaid overtime being worked by employees, a situation which does not provide the employee with either an improvement in their work/life balance or additional income.
The small business owner is already burdened with increase administration and human resources requirements as a result of the directive. Since its inception, they have been fighting against the possibility of the opt-out option being withdrawn which they see as a particularly negative change and one that has been tabled unsuccessfully three times, although the motion has had strong backing from the unions. SME's feel that any move to amend or withdraw the opt-out will reduce their ability to grow and prosper and inhibit their potential, both for the company as a whole and for the workforce they employ. Small businesses feel they are unfairly placed as they try and compete against the large conglomerates with huge resources and the self employed person who is exempt from the directive. There is also a strong feeling that Brussels cannot apply a blanket policy throughout the EU which removes the options for flexibility and free will in British working society, something they see as a cornerstone for them to remain competitive in a global market. The ongoing situation to get the opt-out scrapped or amended is adding uncertainty to the SMEs environment and growth is being hampered in the current situation.
SME's have recommended that the opt-out option is amended to be an opt-in for Small Businesses – this would require employees to opt-in to the 48 hours working week and reduce the administrative burden to comply with the current regulations for the opt-out, which generally fall to the business owner. This would ensure that overtime was paid, when required, and improve the take home salaries of employees based on their work inputs. There has not been an official response to this proposal.
6. Limitations of the Research
The research has is limited due to the lack of information on employees and individuals feedback on the directive. It is difficult to conclude if employees are actually being abused and taken advantage of, as claimed by the unions, or if there simply is a culture of working longer hours than their counterparts within the EU. AS the data relates to workers in SME's, it is unlikely that the majority of their employees are unionized.
There is no evidence to support the stance of the unions that workers are being unfairly treated and being inappropriately persuaded to sign an opt-out against their will.
The research has not included the recent controversy over junior doctors, which implies a drop in medical services due to doctors having to take requisite work breaks regardless of a current emergency, although serious consequences have been recorded, as they generally work for the NHS, this is not relevant to SME's.
7. Recommendations for Further Research
It is recommended that an in depth study is taken of employees within a sample of small businesses. The purpose of the investigation would be to quantify and understand their current working conditions, their knowledge of the Working Time Directive and identify what percentage of staff have agreed to the opt-out clause and under what circumstances. The sample businesses should be a cross section of companies with different products and services to get a full simple of companies that are small enterprises. Once this is completed, interviews with owner/managers of the SME's should be undertaken to understand their viewpoints and concerns over the future of their business and the overhead imposed by regulations, plus identify the actual working hours owners are committing to keep the regulatory requirements current and still run their business successfully.
In addition, to get a clear picture of the situation, a financial analysis of these specific companies would show if the resources within SME's are as limited as stated or if they could possibly expand their workforce, etc if necessary and still remain profitable.
• Association of Chartered and Certified Accountants, http://www.accaglobal.com/poll_archive/
• Centre for European Politics, http://www.eupolitix.com/EN/ForumBriefs/200405/23de3582-833e-49b0-866c-73ba2420c36f.htm
• Chartered Institute of Personnel and Development ref http://www.cipd.co.uk/subjects/wrkgtime/wrktmewrklfbal/worklifeba.htm?IsSrchRes=1 EU Working Time Directive, UK Advisory, http://www.eu-working-directive.co.uk/
• European Trade Union Confederation ref http://www.etuc.org/a/504
• The Forum of Private Business, ref fpb.org
• Federation of Small Businesses, http://www.smallbusinesseurope.org/en/upload/File/Issues/Working_Time_Directive_Reviews/FSB_Response.doc
• Financial Times http://search.ft.com/ftArticle?queryText=%27small+business+UK%27+%2B%27eu+working+time+directive%27&y=8&aje=true&x=17&id=060906010800
• United Kingdom Cabinet Office website, http://www.cabinetoffice.gov.uk/regulation/faqs/index.asp#2
• Management Issue news, ref http://www.management-issues.com/display_page.asp?section=topics&id=623
• New Business, http://www.newbusiness.co.uk/news/working_time_talks.html
• The Morning Advertiser, http://www.morningadvertiser.co.uk/news_detail.aspx?articleid=23797
• The Guardian, http://technology.guardian.co.uk/online/businesssolutions/story/0,12581,1176763,00.html
• The Working Time Directive: A Spanish Inquisition, http://webjcli.ncl.ac.uk/1999/issue3/fairhurst3.html#Heading23
• Wilkipedia, http://en.wikipedia.org/wiki/Working_Time_Directive
• Working Time and Workers' Preferences in Industrialized Countries: Finding the Balance, Jon C. Messenger; Routledge, 2004
Appendix I - Survey on Costs if Opt Out Option Scrapped
The following survey was carried out by the Association of Chartered and Certified Accountants Working Time Directive (WTD) Review - March/April 2004
The EU is reviewing the WTD and is considering ending the individual 'opt-out' from the average weekly 48-hour limit. Do you think this would increase business costs?
No (62) 32%
Yes - a little (65) 34%
Yes - a lot (43) 22%
Don't know (23) 12%