employment legislation

Ignorance will be no defence

1 August 2007



Robin Rhodes highlights current legislative changes affecting small businesses and highlights the advice available to employers


Employment legislation is clearly seen by nearly all politicians to be “a good thing”. New laws are enacted almost every year and a look at the current Department of Trade and Industry website shows 181 separate publications on employment legislation.

Ignorance of the law is no defence. Most small and medium enterprises (SMEs) are faced with an awesome task of trying to keep up to date. We are regularly told of the firm intention to cut “red tape” but the evidence of the past few decades has shown the reverse to be true.

The Government is using the right words about simplifying and clarifying, but without recognising that this will lead to yet further change simply it could be desirable, rather than because there is a real need.

Change might be desirable, but often in practice new laws that are not understood by employers or employees can sour employment relations, making them far more adversarial than they need be.

For example, the Dispute Resolution Regulations, which came into force as recently as October 2004, are to be repealed.

A review led by Michael Gibbons recognised the good intentions behind the legislation but concluded that the statutory disciplinary and grievance procedures “had unintended consequences that outweighed their benefits”. The whole system is now in serious disrepair.

Employment tribunals have become dauntingly legalistic and in the process have lost much credibility in the eyes of both claimants and employer. In a CBI survey all employers with fewer than 50 staff would settle claims irrespective of the merits to save both the time and cost of a tribunal. The Review estimates the average cost of defending a claim to be £9,000.

The tribunals receive more complaints now (well over 100,000 last year) than before the introduction of the 2004 law, a consequence that goes against the original intention.

To make matters worse, the ACAS conciliation and helpline service is seriously underfunded, so neutering this free and invaluable facility.

The Review has made a long list of recommendations for change nearly all of which make sense and which should simplify matters greatly, to the advantage of both employers and employees. Whether these “good intentions” can be converted into effective and user-friendly processes without “unintended consequences” is less certain.

However, the recognition that ACAS should have a larger and much earlier role in disputes, and should receive much more realistic funding, is very welcome, as is the intention to take much greater account of the actions of an employer who has followed a fair process and genuinely sought to settle the dispute.

It is increasingly obvious that a quiet but massive change is gradually taking hold in our society regarding working hours.

What began as “family-friendly” policy has now moved to “work/life balance”. The right to request flexible working hours has extended from parents to carers and there are many voices now suggesting that it will not be long before the facility is extended to all employees.

The original employer reaction of “this is not a part-time job” is also beginning to fade, with the benefits of higher productivity and the retention of quality employees becoming more apparent.

A simple list of the various forms of flexible working gives an indication of the potential scope for change: part-time, flexitime, job sharing, compressed working weeks, shiftwork, annual hours, term-time working, temporary working, fixed term contracts, zero hours, and lastly homeworking.

Each of these is being used to great effect by a growing number of employers and, more importantly, often at the initiative of the employer rather than as a response to the request allowed by employment laws.

Companies are also getting used to the idea of maternity leave being for a minimum of 9 months, reflecting the extension of the period of statutory maternity pay. No doubt they will accommodate this when the norm becomes 12 months. Paternity leave at or around the time of the birth has caught on, but men’s enthusiasm for the opportunity to take longer breaks seems limited.

The impact of the age discrimination laws, which came into force on 1 October 2006, has been felt immediately with regard to retirement.

Allowing employees the right to request to work beyond the age of 65 has raised some quite difficult and sensitive employment relations problems, again mainly because of the government's well-intentioned attempts to limit the law’s effects.

The ACAS advice to employees is clear: “You will not automatically be allowed to work beyond your expected retirement. Your employer does not have to agree to your request or give you a reason for turning it down.”

This seems fine but what do you talk about when going through the procedure, including appeal, if you’re not obliged to give a reason for declining the request? Were the real reasons to do with performance or health? If you are not replacing the employee, was it a redundancy?

The UK age laws are being challenged in the European Court of Justice and this may result in employers being required to give their reasons, which they would have to justify.

On the subject of discrimination, the government’s plans for merging all the various commissions responsible for the UK equality and discrimination laws into one Commission for Equality and Human Rights will be matched by the introduction of the Single Equality Act. This will replace the nine separate major pieces of legislation currently covering these topics, and will “modernise, simplify, and improve the old laws making commonsense proposals for their integration and harmonisation so that everyone will know where they stand.” Let’s hope they succeed in that aim.

My article in November 2006 dealt with the problems for employers generated by the asylum and immigration laws. Since then an employer in the industry has been jailed and fined a substantial amount for breach of these laws.

The Immigration and Nationality Directorate has now been replaced by the Border and Immigration Agency. A consultation process is now taking place to simplify the application of all immigration laws. This aims not only to making them clearer and more transparent but also to bring in tougher checks abroad, introducing identity cards for foreign nationals. It also intends to and provide a checking service to enhance the assistance provided by the employer telephone helpline.

But be under no illusions – the civic and criminal penalties are to be substantially increased and anything less than real thoroughness in these processes will have very costly consequences.

The industry has seen a dramatic increase in the direct costs of employing staff arising from the introduction and development of the National Minimum Wage. The new rate due in October 2007 will take the increase in the NMW since its introduction in April 1999 to more than 53%.

However, it is made clear by the Low Pay Commission that future increases are likely to be limited to the general increase in average earnings, not least because the impact on pay differentials is becoming more marked.

In its most recent review, the LPC was required to take into account the proposed increase in statutory paid holiday. This will have a minimal effect on the laundries in the industry who have paid 29 days per year since the days of the Laundry Wages Council (LWC). However it may well have a much more costly effect on those in the industry who were not covered by the LWC.

The government’s decision to phase the increase from 4.0 weeks to 5.6 weeks over an 18-month period from 1 October 2007, rather than the proposed 12months, will provide only small relief.

Many in the industry have complained for some time that they suffer from competition from companies that appear to be unmoved by the need to pay the national minimum, statutory holidays or even in some cases VAT.

The DTI has introduced a Vulnerable Workers Enforcement Forum to attempt to “crack down” on these abuses, without increasing the regulatory burden on law-abiding employers.

Health and safety laws continue to set interesting challenges. The new regulations on smoking at work that came into force in England on 1 July 2007 are no exception.

Information for employers on this topic, particularly the website at www.smokefreeengland.co.uk, is really first rate.

Several employers in the SME sector may be unaware that the Information and Consultation of Employees Regulations 2004, involving quite substantial rights for potential employee representation, will apply to companies with over 100 employees with effect from 6 April 2007 and for those with 50 or more employees from 6 April 2008.




Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.