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New dispute regulations put extra
pressure on employers
 On
1st October 2004, Britain’s employment legislation
got a whole lot simpler according to the government- and unworkably
complicated according to many businesses! The culprit is the “Employment
Act 2002 (Dispute Resolution) Regulations 2004”, which
sets out a new three point process for handling staff dismissals,
grievances, or disciplinary actions.
The logic behind the legislation is entirely
honourable- too many workplace disputes end up costing the
public purse by ending
up at tribunal. The new rules above all state that at the very
outset, the employer must “put the reasons for the disciplinary
action in writing in broad terms to the employee”, clarifying
all the open issues at the start. However, business leaders object
that failing to follow the procedure to the letter (and it’s
not been widely publicised) will lead to claims of unfair dismissal.
Employment Lawyer Murray Fairclough runs
a 24 hour legal advice line for the Federation of Small Business.
He says: “These
rules represent the most significant piece of employment legislation
in the last decade. Unwary employers could easily find themselves
falling foul of the rules. They don’t just apply to conduct
and capability dismissals but also to redundancies, long-term
incapacity dismissals and retirements… If the employer
fails to follow the procedure, the dismissal becomes automatically
unfair, and any additional compensation can be increased by up
to 50%.”
Unions as dissatisfied as employers
As usual, nobody is ever happy with the government’s legislation-
from the worker’s point of view, the TUC is as outraged
as the business community: TUC Secretary Brendan Barber says “the
new procedures are too complicated, and are more likely to create
confusion than solve workplace problems”.
Even if your company is well versed in employment law, it seems
any new employee is potentially an expensive legal case. On past
form, successive invocations of employment law at tribunal or
appeal (e.g. Haddon v. Van Den Bergh Foods, 1999) have resulted
in resounding successes for the employee and a stern rebuttal
for the employer; irrespective of whether the case was close
to call. Companies therefore cannot always be sure that they
have acted within the law- despite their best efforts. That risk
becomes financially greater as salaries increase, and is therefore
a greater exposure at board level.
Contracts more attractive than ever
The result may well be a further shift towards
contract-based working. The legislation still applies to fixed-term
contract
workers; but there is then at least the protection of knowing
on both sides that a contract is of a fixed length, and therefore
both sides can prepare for each milestone accordingly. With interim
managers or contract-based IT staff, for example, companies already
benefit by not having to worry about holiday pay or sick pay.
Legislative immunity can now be added to that list. Malcolm Alexander,
Director of the interim management consultancy Interregna, says “This
latest piece of legislation is not fundamentally bad- but it’s
implementation will make taking on employees a less attractive
proposition. Interim managers are an ideal alternative- they
are capable, competent, and arrive without the baggage of employment
regulations”.
The government hopes that the rules means less cases at tribunal.
But the issue has received minimal publicity in the business
community; and many companies (especially those without dedicated
HR staff) have little understanding of the legislation. Temporary,
freelance, contract and interim terms of employment are already
attractive enough for many companies in many sectors- this may
be another nail in the coffin of the traditional job.
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