Avoiding the minefield
July 2012
Peter Byrne and Siân Harrington
The coalition government is considering bringing in changes to employment law, including making it easier to fire employees without explanation. Peter Byrne and Siân Harrington look at how these changes could affect the rail industry, as well as examining how to avoid common pitfalls in employee relations
Employment law is back in the spotlight thanks to a very public spat between prime minister David Cameron and business secretary Vince Cable in May. The root of the disagreement was the leaked Beecroft Report on proposed changes to employment law, one of which was the controversial no fault dismissal recommendation – or what has become known as the ‘fire at will’ proposal.
Cable called this idea ‘bonkers’, Labour leader Ed Miliband attacked Cameron for leading the ‘nasty party’ and Cameron responded by accusing Labour of being ‘in the pocket of trade unions’ and thus unable to ever reform employment law. Venture capitalist Adrian Beecroft himself waded into the storm by accusing Cable of being a ‘socialist’.
The suggestion that employers dismiss employees regardless of fairness in exchange for fixed compensation, or in the case of small employers without even this, is certainly a provocative one. Even Beecroft admits the result could be some employees being fired simply because the boss doesn’t like them. But the benefit, say those in favour, is the removal of one of the barriers to economic growth. Take away the onerous burden of employment legislation and you will encourage organisations to hire staff and kick-start the economy.
The furore around the Beecroft report yet again serves to highlight the minefield that is employment legislation. Keeping on top of regulation in this area is not easy for employers. Employment law can be bureaucratic, complex and timeconsuming. Also in May Cable published the Enterprise and Regulatory Reform Bill. This aims to simplify complexity in the employment tribunals system. The idea is to encourage parties to come together to settle their dispute before an employment tribunal is lodged, through using Acas conciliation and settlement agreements. A new Rapid Resolution scheme will make the determination of less complex disputes quicker and cheaper for both employers and employees.
Acas itself launched guidance in May to help HR managers have ‘difficult conversations’ about performance, conduct and personal matters, thus enabling potential litigation to be avoided. And there has already been a change in legislation related to unfair dismissal. Since 6 April employees can only contest being struck off on the grounds of unfair dismissal after two years’ continuous employment, rather than one. Again, this is intended to encourage recruitment.
Darren Hockaday, HR director of London Overground Rail Operations Ltd (Lorol), says it is too early to say whether these new rules will encourage employers in the rail sector to recruit but adds: ‘It depends on size. Perhaps it will encourage small employers who have a fear of the burden of legislation, though it remains to be seen whether it will make a real difference.’
However, he concedes that some areas of employment legislation are too complex. ‘HR has to continually update itself and lawyers have a role to play in helping HR practitioners understand these changes,’ he says.
In particular, the unionised state of the rail sector can make it harder to make changes. ‘Terms and conditions in the rail sector have been built up over many years and are relatively favourable. Compared to other sectors, it is harder to negotiate on terms and conditions and, when wanting to make wholesale change to terms and conditions to drive change in business, HR faces a real challenge,’ Hockaday explains. ‘However, I have seen good examples where employers and employees have been prepared to make compromises on both sides.’
The reason all this is important is that facing an employment tribunal claim from an employee (or group of employees) could financially put your business and its reputation seriously at risk. Failure to understand and deal with employment issues properly can lead to increased financial costs to the taxpayer, the business community and the economy. It is estimated that the total cost to the UK economy of dealing with more than 218,000 claims brought before Employment Tribunals in the year to 31 March, 2011 (latest available annual data) was more than £1bn.
A ccording to the British Chambers of Commerce (BCC), three-fifths of tribunal claims are settled, with an averagesettlement of £5,400. For those who chose to defend the claim the average cost comes in at £8,500. BCC research finds one in five businesses had been threatened with a tribunal in the past three years.
In certain quarters, ‘ignorance and apathy’ still abound and it is often far easier to leave things well alone to simply drift and avoid dealing with the difficult issues immediately they arise. However, as we all know, leaving things alone often defers the inevitable and that minor performance issue turns into the mother of all storms or, worse still, just festers as both parties do absolutely nothing to resolve matters; the employer/employee relationship ultimately diminishes to nothing over time, mutual trust and respect break down and a major dispute inevitably occurs.
From the first time you employ someone you must have an awareness of the complicated rules and regulations relating to the employment law framework. Employment law impacts on each and every part of the employer/employee relationship.
For example, anti-discrimination laws are intended to eliminate discrimination from all workplace situations, so that your recruitment procedures – including advertisements for new employees – do not discriminate on the grounds of sex, sexual orientation, colour, race, nationality, ethnic origin, religion or belief, disability or age. Quite a list isn’t it?
In an environment where employees are becoming increasingly aware of their employment law rights, you need to make sure that you are equally, if not more, aware of these rights and are able to identify potential hazards and pitfalls to avoid future problems. In particular, if you are in any doubt whatsoever about how to handle any potentially tricky problem, do consult a specialist rather than ‘going it alone’. You should also do this at the earliest possible opportunity and ideally before any discussion or process has started and not halfway through a process that is unravelling before your very eyes.
Getting it wrong can be very costly. Both hiring and firing is expensive, absenteeism is draining and then there is the possibility of being taken to an employment tribunal – which is usually the catastrophic end to a series of bungled communications. Just a few simple guidelines and a simple operational framework to work within, plus simple effective systems being put in place and communicated effectively to all staff, can make all the difference.
E mployees who feel valued and developed are generally more motivated and more productive and, therefore, less likely to hit you with an employment tribunal claim.
A ll very much common sense and all very simple isn’t it? So, it does beg the question – why invest in specialist support at times? The truth often lies in our own abilities to be able to take the more difficult path when dealing with an awkward employee situation. Whatever the reason – ignoring, deferring or simply avoiding dealing with that ‘problem child’ is the worst thing you can do. Take a step back, get some practical guidance and advice, if needed, and then act – swiftly, diligently and with complete openness and fairness. Most of the time this will work. If not and you find yourself in real trouble, call in the specialists – or call your mum, she’ll know what to do.
5 ways to improve employee engagement
1 Give up control Many workplace decisions are made backwards, driven solely by financial considerations. Just as no product is launched without ‘user’ input, employees are best suited to make many work environment decisions. Open up financial and operational information and give employees the task of achieving innovative efficiencies. They’ll reward you twice over. Give it a go; refine and change as you go along all the time, rather than moan about the same things every month.
2 Listen more Talk with, not at, employees through genuine interactive communications, rather than one-way updates. Then track employee engagement and satisfaction. Having a good old chat is often the most effective means of finding out how people feel. Most importantly, act on any findings. Avoid benefits and policies that aren’t based on ‘how we really do things around here’. If you find you have policies in place that are not grounded in what you actually do, day in and day out, bin the policies, call them something different and start over again.
3 Accentuate the positive Is your business built on a philosophy of restricting, controlling and stopping behaviour – or do you invest in ways to promote good behaviour that drives business objectives? We find the former is often the reality.
4 Keep it real The employee-driven workplace cannot be dictated or emailed into being. Many organisations have a culture that reads well on paper, but doesn’t perform in reality. Posters about teamwork mean nothing if teams aren’t rewarded, recognised and mobilised. Most importantly, be clear on every employee’s role and objectives and make sure they absolutely know how their piece of the jigsaw contributes to the key business objectives and overall strategy. If this is difficult to figure out you probably don’t need the role, team or division. Go back and agree your key business objectives and strategy, keeping it very simple and understandable.
5 Act swiftly Monitor and measure employee performance against company objectives. Good induction, training and on the job coaching will ensure you have the right people delivering the right results. As soon as you feel or recognise this is not the case nip any issues in the bud. As always, balance is everything. Be firm, fair, polite and mature. Make your point and then listen. Have a chat and debate, agree clear next steps and follow through on any agreed outputs.
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