Escape from the 9 to 5
Judith Dow has found the perfect work-life balance. Not only does she enjoy a fulfilling career as a public relations manager with accountancy giant KPMG, but since switching to working part-time, she also gets to spend more time with her family.
The 42-year-old, who lives with her building surveyor husband, David, in St Albans, Hertfordshire, stays at home with their 21-month-old son, Thomas, at the start of the week, and then goes into the office from Wednesday to Friday.
“It was important for me to be back in the workplace, but I didn’t want to miss my son’s big moments either,” she says. “It has worked out really well.”
Judith, who changed her hours after returning from maternity leave, relishes the variety of her new lifestyle and sees herself as fortunate to have an understanding employer. “One day I’m at a toddler group running after my son; the next, I’m back in an office environment. I find it’s a good mix and like being able to structure my week in different ways.”
That’s not to say that Judith hasn’t found switching from full to part-time employment without its challenges. She has been forced to be extra disciplined and organised, as well as realistic about what can be achieved during the working week.
“You need to be a good communicator and keep colleagues in the loop,” she says. “There’s more work involved in making sure things are happening in the way you want, but it’s certainly possible.”
On the downside, there’s the drop in salary and pro-rata decrease in holiday entitlement that comes with working part-time, but Judith insists the positives far outweigh the negatives and that such sacrifices are definitely worth making. “I have the best of both worlds,” she says.
Judith is part of an increasing number of part-timers, freelancers, contractors and agency workers who have realised there is more to life than simply working and earning money, according to Tracey Smith, author of The Book of Rubbish Ideas.
“Many people now see time as a precious commodity, and understand that working flexible hours means they can share irreplaceable moments with children and partners that would otherwise be lost,” she says.
A GROWING ARMY
The number of flexible workers in the UK has soared almost 60% over the past decade, from 3,462,000 to 5,500,000, according to a survey of the labour force by the Office of National Statistics (ONS). And this is a trend that’s expected to continue for the foreseeable future. The global recession and credit crunch have meant companies are much more willing to discuss flexible working arrangements in order to cut costs.
Since the UK entered recession, unemployment has risen sharply; the latest statistics reveal that the jobless total hit 2.26 million in the first quarter of 2009. The Confederation of British Industry (CBI) forecasts that this figure will peak at more than three million next spring.
In a recent report, the CBI claims that flexible working practices have given organisations and their staff more freedom to adapt to changing demand and individual needs: “Most firms have made or are planning changes to their working patterns to reduce labour costs. The most popular responses were to increase the use of flexible working and cut the use of agency staff and overtime.”
Currently, just under 20% of the working population enjoy flexible working arrangements, according to the ONS labour force survey. This is up from 12.8% in 1998. Flexible working includes part-time jobs, working fewer hours than a standard working week, and flexitime, which allows workers to vary their hours while still working for a core period each day.
Other options include job-sharing, where one position is split, usually between two individuals, as well as term-time working, where people work on a full or part-time basis during the school term and take unpaid leave in the holidays.
RIGHTS AND BENEFITS
However, flexibility can come at a price: in exchange for this freedom, you may have to sacrifice a percentage of your salary and associated benefits, or forfeit some benefits altogether.
The rights to which you’re entitled will depend on whether you are a worker, an employee or self-employed.
The majority of people are ‘employees’ who work for somebody else under a contract of employment. The employer is legally obliged to deduct income tax and national insurance (NI) contributions from your salary before paying you. Employees are also entitled to all minimum statutory employment rights, including maternity, adoption and paternity leave; the right not to be unfairly dismissed; and statutory redundancy pay.
The definition of a ‘worker’, meanwhile, can include casuals, freelancers and some self-employed individuals, although this does not extend to those who are genuinely pursuing a business activity on their own account.
So how do the various entitlements compare? Well, the good news is that legislation now prevents part-time workers being treated differently from their full-time counterparts, according to Rachel O’Connell, solicitor at Just Employment Solicitors & Advocates.
“You will have the same general entitlement as full-timers,” she says. “However, statutory maternity and sick pay depend upon a number of qualifying conditions, such as your average earnings being at or above the lower limit for the payment of NI contributions – which can affect part-timers.”
EMPLOYEES vs WORKERS
The main differences, however, are those between employees and workers. “Employees are entitled to receive one week’s notice and redundancy pay for the first two years of employment, and then a week per year up to a statutory limit of 12 weeks [although this varies slightly depending on your age – the older you are, the more you will get]. Workers, meanwhile, don’t have to be given any notice of termination,” says O’Connell.
Also, if you are a worker, you won’t be entitled to redundancy pay, but you will be due the same 28 days paid holiday per year (including bank holidays) as employees, as well as the right not to be discriminated against on the basis of sex, age, race, disability, religious beliefs or sexual orientation.
However, the entitlements will vary on a case-by-case basis, depending on the number of hours you work and the terms of your agreement. “Casual workers are often denied employment protection rights because their arrangements with employers are too loose to give rise to the obligations necessary to support contracts of employment,” points out O’Connell.
As well as potentially changing the scope of your general rights, switching to flexible working is also likely to affect your personal finances, as Andy Gadd, a financial adviser at Lighthouse Group, warns.
“You should sit down and look at your expenses over the course of a year, and divide them into fixed and variable costs,” he advises. “Fixed expenses will be items such as your mortgage or rent, as well as any outstanding debts you may have, while flexible costs can include food, utilities, clothing and other household expenses.”
You then need to compare your income with your expenses and work out a budget that ensures you are able to survive for a minimum period of time with no income.
“A ‘rainy-day fund’ is an essential, because you never know when something will go wrong with the car or the washing machine will give up the ghost,” explains Gadd. “This money should be held in a low-risk, accessible, tax-efficient vehicle such as a cash individual savings account.”
As well as your short-term financial needs, it’s important to consider longer-term goals. This may include setting up a pension which, when you consider the tax advantages, remains one of the most efficient ways to save.
There are plenty of options, from basic stakeholder pension schemes to the broader investment choice and flexibility offered by self-invested personal pensions, so you should consult a financial adviser.
WORKING FOR YOURSELF
There are obviously plenty of benefits to flexible working, but what if your boss isn’t receptive to the idea? Well, you could become self-employed and plan your own working week.
Millions of people are choosing to work for themselves because of the freedom, flexibility and financial rewards that it can bring, according to Emma Jones, founder of website Enterprise Nation.
“You need a lot of hard work and commitment when starting a business, but that’s amply rewarded by the fact that you’re in control of your own time and work schedule,” she says. “You even gain control of your work environment – becoming your own boss means creating your perfect home office.”
As ever, there are plenty of pros and cons to consider. For example, as an employee you may have become used to other people doing tasks such as making coffee for meetings and fixing your computer when it crashes.
“When you become your own boss you’re in charge of everything,” says Jones. “This is good, as you have to learn a lot very fast. But it’s advisable to prepare yourself mentally for leaving a supportive environment in order to create your own.”
An increasing emphasis on corporate social responsibility for the sake of the environment and attempts to meet the wider needs of the country’s workforce will mean this area will continue to develop in the future, says Smith.
“I see more schemes being put in place to allow for flexible working, including more staff working from home, and more job-sharing and video-conferencing,” she says. “This will cut down on the need for travel and the amount of time people have to spend away from home.”
How I left the rat race behind...
Paul Barker turned his back on the daily grind to dedicate his life to teaching the Japanese martial art of Aikido and insists it’s the best decision he has ever made. “I spent years in jobs, willing away the time so I could start training in the evenings,” he says. “It was only later that I realised that the lessons I was learning through Aikido could be used in the rest of my life.”
Paul believes that Aikido – which combines effective self-defence techniques with spiritual development – can help everyone achieve true balance in their lives, regardless of their occupation or working hours.
Three years ago, Paul, 59, moved to Bexhill, East Sussex, to concentrate on giving regular Aikido classes. He now has high-flying businessmen and students among his students.
“Teaching is my way of giving something back to a martial art that has provided me with so much,” he says. “I am very content with my way of life.”
Paul has no desire to return to the corporate environment. “I could see myself doing voluntary work or helping animals in the future, but I certainly have no interest in simply making money for a large organisation,” he says.
HELP! I am a freelancer and the company I work for has just gone bust...
If you work as a freelancer you might never get paid if the firm goes bust, warns Mark Cornish, employment partner at Anthony Gold solicitors in London.
“You will have been performing a commercial agreement for services and will be classed as an unsecured creditor. So you’ll have to take your place in the queue with the other businesses waiting to be paid.”
“Although you may be able to claim breach of contract to recover your unpaid money, once a company becomes insolvent you can’t take a claim to court without the court’s consent.
“You have to submit the claim to the insolvency practitioner instead, and they will treat it as part of the unsecured debt. They will outline how much is owed, and include a claim for the amount that you would have earned had the contract been performed properly.”
Cornish adds: “People are quick to see the benefits of freelance arrangements, but not the potential risks.”
A form of money purchase defined contribution pension launched by the then Labour government in April 2001 with low charges and no-frills minimum standards. Designed to appeal to people on low and middle incomes who wanted to save for retirement but for whom existing pension arrangements were either too expensive or unsuitable, the stakeholder didn’t really take off and looks to be superceded by the National Employee Savings Trust (NEST).
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
Generally speaking, insolvency is to businesses what bankruptcy is to individuals. A company is insolvent if the value of its assets is less than the amount of its liabilities, or it is unable to pay its liabilities (loan payments) as they fall due. It’s an offence for an insolvent company to keep trading, so the main options available to an insolvent company are: voluntary liquidation, compulsory liquidation, administration or a company voluntary arrangement.
Confederation of British Industry
The CBI promotes the interests of its members, some 200,000 British businesses, a figure that includes 80% of FTSE 100 companies and around 50% of FTSE 350 companies. Formed in 1965, it’s the lobbying organisation for UK business on national and international issues and seeks to influence the UK government to help businesses compete effectively.