Employing people is not simple. From role to role, sector to sector diverse laws, rules, regulations and guidance can apply. As employment models become more diverse the rules governing how those models should work seem to become more numerous. Arrangements around part-time, hybrid, or zero hours can make the situation even more challenging.
The Labour Party’s Employment Rights Bill has thrown new light on this area. Their changes and general direction has been seen by some as shifting the balance of the employment relationship in favour of the employee.
If this is the case – or even if it isn’t – are there instances where legislations and compliance might actually work against good employment relations? In these days when organisational culture can be as important for businesses as the products or services they deliver, can the law compromise the positive impact achieved by companies, hindering good working relationships within the workplace?
Additional costs to comply
Morag Bailey, Head of HR at prepared fruit specialists PrepWorld UK describes current employment law as
“manageable and logical” although she also acknowledges this could be because HR is now used to how it works. The new proposals she says appear fair although she is anticipating additional costs to her business particularly through day one access to Statutory Sick Pay. This, she argues, could affect the financial position of companies such as hers where there are a high level of hourly paid colleagues. “This cost comes on top of the significant increases in NI and NLW that we are facing,” she notes. “These costs will have to be passed on and our concern is about the impact this will have on the selling price of our product – at what point will customers decide that a discretionary spend product is just too expensive.”
And if a customer no longer spends this may be bad news for the workforce. In theory then, for some organisations the extra cost of meeting what are intended to be good intentions for the workforce, could result in less work. Is this an area where the decision to offer a benefit should be left to the individual HR department who can decide how to manage this and therefore balance cost with the additional employee attraction or retention the benefit could bring?
Similar issues may exist around day one rights for unfair dismissal – particularly because businesses will need to ensue they understand how the new probation period should be managed. “I am fortunate to have a big enough HR and L&D team that we will train out the changes once we have ACAS guidance,” says Bailey, but then adds: “I do worry that smaller HR teams will struggle with the volume of changes that will come in a short space of time.”
Indeed, small scale HR departments could find themselves under particular stress. Their own initiatives may need to take a back seat as they find themselves on the back foot, running just to catch up. This may not be good for employer relations – an HR department struggling to cope with new legislation and how it should be applied, may not be one that can focus on getting the best from its workforce.
When compliance isn’t an issue
“I think that a lot of employment law, and case law, comes into being because of bad employers,”
comments Elsie Coke, Chief People Office at HomeLink Healthcare.
“An employer shouldn’t need legislation to tell them to treat pregnant employees well, or that men and women should have equal pay for work of equal value. So generally speaking, if you are an employer that treats your employees well, compliance with employment law shouldn’t be an issue.”
Elsie highlights the extending of the time limit for employment claims as another possible challenge for HR departments. By extending the time of uncertainty around whether a claim will or will not be lodged by a disgruntled employee the law change could bring additional stress to departments and take up important resources:
“With ACAS early conciliation, it is already at 4-5 months you might get an unwelcome ET1, and for some reason many employment lawyers seem to like to put the claim in at the very last possible moment,”
she says. The later a claim is lodged the more difficult it becomes for managers to fully recall the details of the end of an employment relationship, so a time period of six months could represent a challenge for everyone involved.
That said Elsie reports there have been managers – not at her current workplace – who have complained that employment law is skewed in favour of employees but since employers have the majority of power in the employment relationship, she believes things are balanced out.
Compliance for a human-centric approach
Florence Carter, VP of People & Culture at learning platform Fuse Universal also feels changes in the law often come for justifiable reasons.
“While some may argue that the increasing number of employment regulations will hinder effective employee relations, I believe these changes often stem from a crucial, human-centric approach to employee relations,”
she says. Carter feels Labour’s proposed changes won’t have too dramatic an impact on her own business, where employees are already benefitting from a comprehensive wellbeing plan and more but again she suggests, smaller businesses, particularly those operating with minimal HR infrastructure, may find the changes significant.
“It’s not necessarily that the regulations are too much, but rather that smaller businesses may need additional support in implementing them effectively,” she says. “Ultimately, while compliance can feel like a burden, it often pushes businesses towards better, more ethical people practices, which benefits everyone in the long run.”
Good people processes start with compliance
“Compliance is the bedrock of the HR function and where employer/employee trust begins,”
says Olivia Spruce, Director at the Payroll Compliance Authority (PCA). “Any employee, whether permanent or temporary, will rightly expect the particulars of their contract to be legally sound and for their pay to align with all tax and employment regulations as a bare minimum.
Spruce believes that while compliance may be an administrative burden, it can be argued that it is more important than any additional added value that an HR professional can provide.
“An employee needs to feel safe in the knowledge that their employer is carrying out their duty and that they won’t experience any unfair treatment or unexpected repercussions as a result of their employment,” she says. “The HR function is a crucial part of fulfilling this obligation.”
That said, Spruce acknowledges compliance can be a significant burden and one that will keep growing as employment laws and practices evolve. She cites the changes occurring around the management of umbrella companies as an example of this as new legislation transfers the responsibility to account for Pay As You Earn (PAYE) and other tax deductions from the umbrella companies that employ the workers to the recruitment agencies that supply the workers or to the end client business. This area of employment has long been subject to complex and changing rules and this trend is unlikely to end soon.
Ultimately, whether employment law represents a headache for HR or a base line from which to build comes down to how well resourced the function is. At a time when there are significant changes in the pipeline there is no doubt but that HR needs all the resources it can get – financial, time and so on – in order to understand and instigate the necessary changes. At the end of the day what the legislation is may not have such an impact as how easy or hard the organisation finds it to introduce and adapt to that legislation.
