Red Tape In Employment Where Did It All Go Wrong?
Under the Heath Government in the 1970s, with industrial unrest, power cuts, strikes, the three day working week, many people began to ask the question: who runs the Country, the Government or the trade unions? Many took the view that even after Labour came into power, with all the events that led up to the winter of discontent in 1979, the latter was probably the answer.
Consequently, upon the Conservative Government coming to power under Margaret Thatcher in 1979 a raft of employment measures were brought in to restore the balance of industrial relations; to reduce the power of the unions and to restrict the amount of industrial unrest, strikes, etc., that was crippling businesses in the country. Many employers subsequently found the legislation of great assistance.
The Conservative Government was however, concerned about the influence Europe had upon its workplaces and whereas they were unable to block health and safety provisions, because they were voted in by qualified majority voting, employment related issues had to have unanimity. Consequently a number of areas of red tape proposed by Europe, in terms of employment legislation, were blocked and many will remember the Maastricht opt-out negotiated by John Major, thereby allowing Great Britain to choose only the employment legislation it wanted.
Unfortunately, despite the Conservative’s best efforts, the nonsensical Working Time Directive was forced into operation by Europe treating it as a health and safety measure, rather than an employment provision, despite the fact that it deals with such matters as hours of work, holidays, etc.
In May 1997 the Labour Government came to power, which triggered off a whole raft of employment related measures that has not stemmed to this day, with over 150 pieces of employment legislation brought in so far, and at least 20 more to come in the not too distant future.
They opened the floodgates to regulatory burden upon employers in two ways:
Firstly, implementing provisions they had wished to see brought in domestically and politically, especially having been out of power for 18 years. Without repealing all the Conservative’s legislation controlling trade unions – they have, bit by bit, dismantled various parts of it, with the first provision being to reverse check-off affirmation proceedures, by which employers collect union fees from their employees.
Labour then gave rights to employees who were on strike and taking industrial action, protecting them from dismissal for up to eight weeks, which had not been the case previously. Also, with employers employing as little as 20 staff, they could be forced into trade union recognition and all the shackles that that creates.
They introduced the National Minimum Wage and rather than keeping it simple, came up with four definitions of counting work and five definitions as to which funds counted for the purposes of the legislation. They increased the cap of unfair dismissal claims from £12,000 to £50,000 in one fell swoop (now it is over £57,000) without making any provision for small employers to pay. Labour even interfered with business transfers, preventing them from running ex-public sector operations efficiently by insisting that new employees taken on after transfer into the private sector had to be employed on broadly similar terms to the existing staff, thereby significantly reducing the flexibility to keep labour costs down.
There was then the misconceived and badly thought out Statutory Dispute Resolution Procedures, introduced in October 2004. This involved introducing minimum standards, in terms of disciplinary and grievance procedures that employers had to adopt, in order to avoid a new penalty of automatically unfair dismissal, which had not existed previously.
They mixed up the concept of discipline and dismissal, thereby creating a nonsense in terms of how the procedures are supposed to apply where dismissals come about by capability or redundancy, by using a conduct based procedure which just simply does not fit the circumstances.
Employers who fail to follow the unclear and complicated rules can expect to find dismissals deemed automatically unfair with the consequential penalty of up to 50% additional compensation with again no consideration of the means for small employers to pay.
Like most employment legislation the detail of how the Regulations work in practice are not properly thought out, despite consultations that the Government supposedly embark upon. Many are unrealistic and unworkable in the workplace, being put together by Civil Servants who have had no experience in small to medium sized businesses and the need to keep all costs down to maintain a viable bottom line.
Recently the Courts have had to interpret what constitutes a grievance procedure under the statutory provisions, due to the unhelpful and vague nature of how this was set out in the legislation.
Secondly, on top of this unnecessary regulation driven by misguided political will, in many cases fuelled by the wishes of the unions, the Labour Government created a ‘double-whammy’ for businesses in unlocking employment Directives from Europe by removing the Conservative’s Maastricht opt-out!
It is fair to say that the Working Time Regulations were already coming into effect due to their designation as a health and safety provision, but the minimalist approach adopted by the Conservative Government was enhanced with the Regulations being somewhat ‘gold plated’ by the Labour Government that was in place once the Regulations came into effect.
Since 1997, without the Maastricht opt-out, there has been a whole raft of bureaucratic red tape forced on employers from Europe, thereby shifting the balance enormously in favour of the employee, without taking cognisance of the costs of implementing the provisions or the size of the workforce in question.
Employers are now shackled by the provisions of the Data Protection Act, the Information and Consultation Regulations and the Human Rights Act, with its various articles and principles that have to be complied with, along with employers losing the flexibility they used to have by now being forced into rigorous approaches to part-time workers or those on fixed-term contracts.
In the past, employers just had to cope with pregnant employees on maternity leave but now we have the composite effect of paternity leave, parental leave, adoptive leave, time off for dependents and the right to request flexible working. Again no consideration for the size of the employer is taken into account meaning that the small to medium sized businesses are becoming more and more embroiled in red tape.
Although the Government introduce these provisions one by one they fail to look at the composite effect of the multitude of all these provisions, added together from both a domestic and European perspective, making the whole concept of employing people a nightmare for businesses.
When the unworkable nature of some of the provisions becomes apparent, the Courts, such as the EAT and Court of Appeal have to interpret the legislation and often disagree with each other with the Government subsequently failing to correct matters.
As matters currently stand in England & Wales, the Courts say it is lawful to roll up holiday pay as a percentage of weekly earnings, whereas it is not so in Scotland! Rather than legislating to clarify the issue, the Government just sits back letting employers go to the expense of having to face Court proceedings to clarify what should have been set out in simplistic terms by the Government in the first instance.
Not only does this raft of red tape create complicated and hard to understand rights for employees, the Government has also allowed any dismissals in such circumstances to be deemed automatically unfair, with employees not having to gain one year’s service and for Tribunals to award compensation, with no cognisance given to the ability of the employer to pay.
Whereas employers used to have to just deal with relatively straightforward anti-discriminatory practices in terms of sex, race and disability, with the influence of Europe we have seen this extended to gender reassignment, sexual orientation, religion and we are shortly looking to age discrimination bringing in difficulties for employers who want to concentrate on the right profile of workers from October 2006.
All these forms of discrimination have also introduced ‘statutory questionnaires’ which can be served on companies by unsuccessful applicants, again adding to the red tape. Should Employment Tribunals find elements of discrimination, they can make awards that are unlimited, based on the circumstances of the claimant, with again no consideration given to the employer’s ability to pay, meaning that a company as large as British Airways or a small manufacturing operation could end up with the same size of award, of over £100,000 in some cases.
The Government have even over recent years shifted the responsibility on controlling certain aspects of immigration by making it an employer’s responsibility to check the legality of employees working in this country, by having to go through complicated procedures with NI numbers, passports, work permits, etc., with the possibility of criminal prosecution should they inadvertently employ the wrong people.
All in all, in the last eight years the Labour Government’s political will and inability to take a strong stand in Europe has created a nightmare situation for employers and it is now time they took a stand. Whilst it is appropriate that employees have certain elements of protection in the workplace and are treated reasonably and sensibly, it should be proportionate and realistic.
The DTI has launched a ‘lip service’ campaign to cut red tape, but those areas in the employment field; being six issues recently announced, are just minor matters – nothing more than window dressing – which even if progressed, which is doubtful, will make no significant difference to the stranglehold red tape now has on employers.