Extent Management Prerogative Constrained by Employment Regulation

One of the most dynamic and engaging subjects in legal curriculum is employment regulation. It reflects the changing nature of society and global environment in which businesses operate. British employment law has been impacted by International labor law over the years but most of all British membership of European Union has shaped the legal environment in workplace most decisively (Edwards, 2003). The state, over the past, has influenced the relationship between employer and employee through legislation, dispute resolution and by providing legitimate rules of engagement, shaping priorities and creating best practices in employee relations.

Primary sources for study of employment regulation are a combination of case law and statute law. The bulk of statutes pertaining to individual employment relationship are found in Employment Rights Act, 1996 and the bulk of statute law applicable to trade unions is in Trade Union and Labour relations Act 1992. The Employment Rights Act 1996 (ERA) consolidated a number of previous statutes from the Contracts of Employment Act 1963. It deals with employees’ rights such as unfair dismissal, reasonable notice before dismissal, time off rights for parenting, redundancy but most importantly it establishes importance of maternity rights (Pitt, 2008).

Time off Rights

Parents are given right to time off for bringing up children which includes maternity leave and pay, paternity leave and parental leave. Maternity Rights pertain to right to paid time off for family emergencies and parental leave and increase in maternity leave.

Unfair Dismissal

Under s.94, employees have a right to fair dismissal. It is considered the most important right as only after dismissal a former employee would complain about his other rights being breeched as well. Under s.98(2), fair reasons to dismiss an employee are conduct of the employee, capability or qualifications, retirement and redundancy.

Flexible working

Under s.80F, employees have the right to request flexible working. An employer under this statute need to grant more flexible hours, or give written reasons for declining to do so.

Written contract

Section 1(2) of the Employment Rights Act (1996) states the main terms of the contract must be in writing and provided to the employee within eight weeks of the start of their employment. The ‘written statement of particulars’ confirms the main express terms of the employment contract. It is intended to be a guide for employees’ of their rights, terms and conditions of employment to expect. It is also meant to provide an evidential basis on which to bring a claim for the breach of some right in a court or employment tribunal (Opsi, 1996).

Reasonable Notice

Under s.86, employees have a right to reasonable notice before their contracts are terminated.

At present, if an employee has worked for an employer for more than a month, he needs to be given 1 week’s notice. In case he has worked for more than 2 years, he needs to be given at least 2 weeks’ notice. It should be noted that there is mutuality of obligations on both the parties so employees are also expected to give reasonable notice.

A study of Britain’s managers conducted over last twenty years has showcased changes in managerial approach and action in industrial relations. Critical aspects are noticed in the relationship of trade unions and management(Kaufman, 1997). Regulatory authorities, considered as natural allies of unions, can challenge and reduce the power of management. A single complaint, to regulatory organization can cause a company management time, public embarrassment, potential fines and huge costs of compliance. Trade unions in conjunction with European work councils (EWCs) are able to take on an effective negotiating role. The management cannot take decisions that might lead to workforce reductions, plant closures or lead to worsening of work conditions. It also has to make sure that collective bargaining agreements stay in place (Rigby, Smith & Lawlor, 1999). EWCs role is not only in identifying common interests and objectives but also in mobilization and the coordination of actions at the European level. Case in point, Ford and GME restructuring processes have shown that EWCs are accepted as negotiating partners not because management is progressive but because of EWC’s capability to mobilize employees and represent common interests at EU level which makes it harder for management to challenge various plants and national unions against each other (Whittal, Knudsen and Huijgen 2007). It is assumed that organizations of labor have presented a problem to market economy as case workers take help of their organizations to negotiate better wages and conditions than market makes possible.

There has been distinguished growth in the degree and convolution of employment regulation and industrial relations since 1997. These pertain to maternity and paternity rights, National Minimum Wage and working time regulation. The regulation states that employees who have completed one year of service and have a child to care for, are entitled to 13 weeks unpaid parental leave. The Maternity law offers protection to pregnant women from any unjust conduct at work because of their pregnancy or childbirth, or their desire to obtain maternity leave (which usually starts 11th week before the child birth).

Under the Employment Act 2002, the maternity leave has increased to 26 weeks paid maternity leave and 26 weeks unpaid maternity leave. Also, parents of children aged under 6 and disabled children under 18 will have right to apply for working flexibly. Further, adoption leave will be considered for parents adopting a child with adoption leave mirroring the maternity and paternity leave. An employee who has had a child born or expected to be born or placed for adoption on or after 6th April 2003 is entitled to one or two week paternity leave.

According to government, these moderations and changes in the employment act will provide parents with more choice to have a balanced work family life contributing to business efficiency at the same time.

Active measures have been taken to restore and widen trade union rights as a pre condition for protecting workers’ interests within labor market and employment (Smith, P. and Morton, G. 2006) The Government proposed encouragement for development of tripartism, collective bargaining and mutual discussion between management and trade unions on industrial relations under the Employment Relations Act 1999. It further introduced regulations to outlaw the compilation, dissemination and use of trade union blacklists. Section 3 of the Employment Relations Act 1999 was introduced with the aim of making blacklisting unlawful, if the practice, which is widely regarded as culpable and mismatched with good employment relations

The Employment Agencies and Employment Businesses Regulations 2003 Act administer the behavior of the private companies and construct a structure of minimum standards that both employers and employees are entitled to follow (Department for Business Enterprise and Regulatory Reform, 2004).

On the whole, the regulatory has proved to be beneficial for workers but from the employment agencies’ or businesses’ point of view there are increased obligations. In addition to the Conduct legislations, businesses and employment agencies should be aware of and act in accordance with other relevant regulation, statutory codes and official rules relating to equal opportunities, health, immigration, national minimum wage, working time schedules and membership into trade unions. Employment agencies’ and businesses’ obligations have increased to state clearly their terms and conditions and provide explanation to their workers. Employers need to conduct background checks on workers before they join as an employee. Per the regulation, it is against the law to decline employment or to treat an employee unjustly in terms of pay or conditions due to underlying reasons of their race, nationality, sex, sexual orientation, religion or disability.

Legislation itself is not posing the problem to Companies’ management but the fact that it is being introduced in such an incessant torrent. There is so much ambiguity surrounding employment legislation that usually businesses are unsure about where the regulatory would strike and toss their business operations. Small-business owners’ often are fearful about their ability to understand and implement the compliance changes accurately and on time. The impact of legislation injures small employers because owners or managers have to acquaint themselves with it along side managing a business’s daily operation. While many small businesses, such as Innocent Drinks, have been more liberal than required towards workers’ rights by handing out £2,000 tax-free baby bonus to new parents, the legislation tends to squeeze any goodwill out of the relationship between employer and employees. In the past few years, small companies have been trying to come to terms with new and debatable employment legislation like disability rights, maternity leave, and termination of employment procedures, minimum wage or 48-hour working-week directives. Even sole traders need to spend approximately 30 hours a month to deal with red tapeism. This proves to be an opportunity cost to them as they end up spending this time understanding regulatory rules and filling forms.

The conventional vigor of small firms has been their willingness to be adaptable and flexible to deal with individual worker problems. However, the small or large businesses do not wish to be tied down by state imposed rules if they do not fit their circumstances. For smaller firms, the impact of the changes in legislation varies dramatically. As a result, the small businesses are reluctant to take on new employees. Stephen Alambritis, spokesman for the Federation of Small Businesses, proposed to the government to impose a freeze on new employment legislation for some years as its impact has caused many firms to start up as sole traders to avoid the headache of employing staff (Bridge, 2004).

Major changes are seen in management attitudes and the insulated effect of institutions. However, the most unexpected findings are the unpretentious rise of managerial amalgamation since the 1990s (Poole, Mansfield,Gould and Mendes, 2005).It does seem that skillful management is able to find ample opportunities to protect prerogative.

The main reasons seem to be small size of enforcement machinery in relation to large and dispersed workforce and inadequate infrastructure. Further there is almost exclusive focus on organized sector. The governments have not so far encouraged proactive enforcement through inspections. The extent of regulation impacting an organization makes planning problematic even when there is growing need for it so there is more delay from employers in adopting it effectively. (Claydon and Beardwell, 2007).

It is found that employment regulation has not been actively implemented majorly because employees are confused regarding their legal entitlements and obligations.There seems to be no incentive for employers to pay the minimum wage and they seem to wait until they are caught breaking the law to pay up. Today, 95% of those employers pay back what they owe when they are caught underpaying the minimum wages. TUC Deputy General Secretary Frances O’Grady said that the government need to enforce regulation on deceitful employers who are consistently contravening the law and underpaying their workers. He further suggests that government should introduce an immediate penalty of £100 per worker for all employers caught failing to pay the minimum wage.

There is considerable debate about where the scope of employment rights really lies. The provision protects only those under the legal definition of ‘employee’ and not other ‘workers’. This is because some judges have taken the view that there is not sufficient “control” or “mutuality of obligation” to establish a contract of employment. In the case of O’Kelly v Trusthouse Forte plc [1983] ICR 728, Sir John Donaldson MR held that some waiters who were hired through an agency to do dinner functions were not “employees” (either of the function hall or the agency) because they did not, technically, have to turn up to work for a shift, and they could be sacked at any time.

A close look at Employment Act also shows various ambiguity points which some employers have worked to their benefit. For instance, flexibility clause although allows fair amount of flexibility to employees, employers expressly reserve the right to alter the employee’s duties or similar aspects in employer-employee relationship. Also, notice periods clause in employment contracts need to be of equal length from either side but sometimes employers get away with demanding longer notice period from employees as it is completely legal. Ideally bonuses and commissions need to be based on individual performances and specific formulas but an absolute discretion gives employers a free reign. Although there are fair reasons for employers to dismiss their employees, there is no restriction on management to dismiss an employee without proper notice if the employee for instance is not good natured, not skilful in his job or on the grounds of ‘some other substantial reason’.

The employment relationship has changed dramatically in recent decades. Employee relations is progressively being used as an extension of Industrial relations (Ackers & Wilkinson, 2003). With changing times, there has been a considerable shift in employee relations from collective bargaining institutions to relationship with individual employees, reflecting reduction in industrial action since 1980s. (Rollinson, and Dundon, (2007).

A key concern of UK employers is compliance with regulatory with many businesses struggling hard to cope with inexorable pace of new regulation. For small businesses, it translates into time and money spent on complying with government imposed requirements rather than working towards growth and profits. A recent CBI-commissioned MORI poll of chief executives confirmed that the rising wave of employment legislation is undermining UK as a place to do business as 80% of UK chief executives said their position was undermined through the snowballing of new rights (Morgan, n.d.).

Employers need to adopt policies more liberally as policies tend to prevent them from being undercut by employers who break the law and use loopholes to get around it. In order to minimize these costs, all regulations irrespective of being new or old, should conform to the principles of better regulation: proportionate, consistent, accountable, targeted and transparent.

Focus should be on introducing regulation that is balanced, meets above mentioned five principles of better regulation and removing regulation that is burdensome. Also, more recognition needs to be given to TU as there are less pervasive adverse effects of union representation on employment growth and workplace closure where managements allow unions a role in determining not just pay but employment matters as well.

With Globalization playing a major role in the way work is done today, interesting trends are noticed. The thought process of work force and management are going through a sea change. The management is now tilting towards results based approach than time based systems of work assessment. These changes are coming also as a result of increased number of women in labor force. Slow and steady redistribution of family tasks in a couple is leading to reconciled work life balance. Also, today’s workforce is increasingly open to working part time or in contingent employment or in multiple careers. This is exerting pressure on organizations in public and private sector alike to reconsider working hours (Gold, 2003).

Management irrespective of large or small businesses needs to design the organization in a way that allows employees to do quality work in healthy environment. Workers need to be provided with autonomy in performing their jobs, challenging assignments, constant social interaction, exert choice and feeling competent leading to employee effectiveness. In fact management needs to take up ‘transformational leadership’ role wherein they increase the employees’ awareness on company’s vision and mission. When leaders act in a way that reflects idealized influence consistently, such actions become predictable to employees and they develop mutual trust and respect. These positive psychological processes and mechanisms result in greater sense of mastery, job satisfaction, efficiency, proclivity and growth which are in fact a base for a healthy and positive work today (Blyton &Turnbull, 1992).

Employee engagement offers management a framework which indicates employee attitudes, behavior and employment relationship. The informal environment of involvement and consultation seems to be stronger than the approach of collective institutions for negotiations. Despite the impending high cost consideration on implementing HRM practices, companies are taking measures to implement uniform HR practices across geographies (Legge, 2005).

There is increased interest in use of two way communication, project teams, joint consultation, electronic media, attitude surveys and partnership values. Delivering consistent results is very important and it is only possible through human resource. It has become very essential that talented employees are trained, developed, rewarded and allowed to meet their individual goals to create sustainable business models and successful organizations (Storey, J. 2007). Global competition, customer focus and the need for speed and flexibility has transformed the equations between management and employees wherein both need to work in a congenial way towards harmonized individual and organizational goals.