Russell Brown, employment law specialist at Manchester-based Glaisyers explains why he thinks it’s a bit of a mixed bag for businesses, but on the whole good news.
One of the legacies of New Labour will undoubtedly be the raft of employment legislation and their so-called ‘family friendly’ policies they’ve introduced since being in power. The Working Time Directive and the Minimum Wage have left an indelible mark on commerce, so it’s perhaps not surprising that with the Employment Act on the horizon, company bosses are already searching out for the nearest piece of sand to bury their heads in.
The message however is don’t panic. The Employment Act, which received Royal assent on the 8th July 2002, holds some key features designed to make your business run more efficiently.
Timetable
The Act, which can generally be separated into family friendly policies and laws affecting the way work related disputes are handled, is due to be implemented by secondary legislation. The DTI’s present timetable indicates that the first change will be this October. Maternity, paternity and
adoption leave provisions are due around April 2003, followed by Employment Tribunal and dispute resolution reforms. These are subject to consultation over the winter and are expected during the course of 2003.
Family friendly – business unfriendly?
The reforms that will grab most of the newspaper headlines next year will be the ones affecting new parents, in particular, fathers. Since 1999, fathers have been entitled to 13 weeks of unpaid parental leave. The take up so far has been relatively low, mainly due to the reluctance of people to have their household income reduced at a time when costs are unusually high. Paternity leave however will become far more popular next year when two weeks of it become paid.
It is argued that because the maximum paternity pay will be £100 a week, only low paid workers will be interested. There is certainly an element of truth here, but employers should not underestimate the growing importance in family values amongst staff and the increased desire for a better ‘work-life balance’.
Factory owners, managing directors and HR professionals can no longer expect new fathers to just take a few days off around the birth of their child. These days are long gone, and though businesses will not incur a direct financial penalty, they should certainly be prepared for the potential loss of key staff at this important time.
From the 6th April 2003, the statutory period for maternity leave will also increase substantially. Ordinary maternity leave will now last 26 weeks with additional leave for another 26 weeks. The Act extends the payment period for statutory maternity pay from 18 to 26 weeks, so for the first time, the length of ordinary maternity leave and the period of payment of statutory maternity pay will be exactly the same.
This is an extremely generous offer from the Government, especially when you consider that the actual weekly amount for maternity leave will increase to £100 a week. This will of course hit commerce hard in terms of logistics and the difficulty in finding replacement staff. Businesses with a high proportion of women should certainly be on their guard.
Flexibilty
It’s not only new mothers and fathers that will be affected. Subject to final consultation, parents with children under 6, or disabled children under 18, will be able to demand flexible working arrangements from next
year.
Employers will only be able to reject an application for flexibility upon specific business grounds and will be expected to provide those reasons in writing. In my view however, businesses should take a positive view and eembrace this new work pattern.
Over the last few years, some employers have experimented with implementing flexible working practices. The results have been very interesting. Companies have reported that by giving staff more flexibility; staff morale, retention and productivity have all increased.
The fact that employers will be forced into this will result in many of them wishing they’d done it sooner.
Dispute Resolution
In addition to the family friendly policies, other parts of the Employment Act refer to how employers and employees will follow grievance and disciplinary procedures.
The Government’s proposals are certainly radical, but I’m sure most bosses who in the past have been the victim of a claim for unfair dismissal or sexual discrimination, will strongly agree that a different approach is urgently required. Employment Tribunals are currently clogged with thousands of cases. Though many of them are justified, many as we know are unreasonable and simply the result of disgruntled staff members who want to exact revenge.
In my view, employers who act and have always acted in a moral manner towards their staff, have very little to worry about as the Government will provide more protection as of next year. In the future, members of staff will only be able to pursue claims in a Tribunal if they have complied with all formal grievance procedures. This means that any failure to raise a grievance, thus preventing the employer from remedying a complaint, may result in employees being barred from bringing proceedings.
On the other hand, failure on the part of employers to comply with disciplinary procedures may result in pecuniary damages being awarded against them.
This is a critical point to bear in mind. Where, for example, an employee’s loss of earnings amounts to £10,000 and an employer was deemed to have had a complete disregard for the statutory disciplinary procedures, an Employment Tribunal would have discretion to increase the award of damages in favour of the employee by up to 100%. This concept is completely new to UK employment law legislation, and will be alarming to most employers.
The lesson for business is simple. As long as you treat your employees with respect and follow the guidelines, it should hopefully result in fewer employment tribunal claims against you as employers.
Employment Tribunal Regulations
No longer will there be one rule for employment tribunals and one for other law courts.
The Government intends to bring the rules relating to costs awarded at employment tribunal more in line with County Courts. In simple terms, an individual’s financial circumstances will no longer be taken into account when the tribunal chooses to award costs against them.
This has been a matter of contention for a considerable period of time given that employers consistently question why employees who unsuccessfully pursue claims in the Tribunals have the protection of having limited costs awarded against them based upon their financial circumstances. This will no longer be the case.
The number of claims may also be reduced as tribunals can now strike out weak cases at the pre-hearing stage, rather than simply ordering the applicant to pay a financial deposit of up to £500. Change to what is a toothless provision within the present regulations is well overdue and of course good news for employers.
Also welcomed is the provision that as of next year, tribunals can order one party to pay another compensation in respect of the amount of time spent preparing for a case. In other words, management time spent instructing solicitors and attending Tribunals.
Fixed Term Work
Finally (but in fact the first thing that will be changed under the Act) there will be new rights for people on fixed term contracts.
From October 2002, employees on fixed term contracts should be treated no less favourably than those employed on a permanent basis. The Government has indicated quite clearly that it also intends to prevent the abuse, often
committed by employers in using a succession of fixed term contracts in an attempt to avoid employees accruing rights, which they would otherwise acquire.
Fixed term contracts have become increasingly popular in virtually all types of sector. These employees now have the same right to annual leave, paid time off for being sick, flexible hours, and pension entitlement. If you’re
treating workers on fixed contracts any differently than other members of staff, it is very important that you take action now. The punishments against you could be severe.
Conclusion
The Employment Act is one of the most far-reaching law reforms for 25 years. Whilst the Act undoubtedly introduces significant changes to present UK employment law, employers should not panic. Steps should be made by employers to familiarise themselves with the new law, ensuring that policies and procedures are in place once the changes come into effect.
With the possible exception of the flexible working provisions, by taking preparatory steps, employers should avoid encountering any difficulties provided that they follow their own procedures. Indeed, due to the changes to the so-called ‘family friendly’ policies, employers may even find they have a more motivated and productive workforce.
