Peter Done, Managing Director of Peninsula employment law firm puts the blame firmly at the politicians’ door but do you agree?

The political landscape
The Heath Government of the 1970s was dogged with industrial unrest, power cuts, strikes and a three day working week which resulted in many people wondering exactly who was running 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, when the Conservative party finally made it into power under Margaret Thatcher in 1979 a raft of employment measures were brought into restore the balance of industrial relations, to reduce the power of the unions and to restrict the amount of industrial unrest and strikes that were crippling businesses in the country. Many employers found the legislation of great assistance.

The Conservative Government was, however, concerned about the influence Europe had upon its workplaces and while 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 – many will remember the Maastricht opt-out negotiated by John Major which gave Great Britain the power 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 dealt with matters including hours of work and holidays.

The current position:
In May 1997 the Labour Government returned to office. They triggered a whole raft of employment related measures. Over 150 pieces of employment legislation have been brought in so far, and there are at least 20 or more planned for implementation in the not too distant future.

This has opened the floodgates to regulation and employer burden in two ways:

Trade Unions return to power
Firstly it has implemented provisions that lay dormant domestically and politically for the 18 years they were out of power. The power of the trade unions has been restored slowly and while not all the legislation put in place by the Conservatives to curb their power has been repealed, the Labour party has succeeded in dismantling various parts of it, with the first provisions being to reverse the check-off by which employers collect union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. Employers of as few as 20 staff were additionally forced into trade union recognition.

The nanny state bites back
The National Minimum Wage has also been introduced but rather than keeping it simple it has been dogged by four definitions of work that counts and five definitions as to which funds can be included for the purposes of the legislation. They have also 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 has even interfered with business transfers, preventing them from running ex-public sector operations efficiently by insisting that new employees taken on after a 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.

Three steps trigger confusion
The misconceived and badly thought out Statutory Dispute Resolution procedures followed 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 reasons of 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 cannot only find dismissals deemed automatically unfair but look at up to 50% additional compensation with again no consideration for the means by which small employers can pay.

Like most employment legislation the detail of how the Regulations work in practice has not been properly thought out, despite consultations that the Government has embarked upon. Many are unrealistic and unworkable in practice, a result of the wrong people – civil servants with little experience of the small to medium sized business market putting them in place.

Recently the Courts have had to interpret what constitutes a grievance procedure under the statutory provisions, due to the unhelpful and vague nature of the details of the legislation.

Europe takes control
Secondly, on top of this unnecessary regulation driven into place by misguided political will, the Labour Government has created a ‘double-whammy’ for businesses by unlocking employment Directives from Europe via the removal of 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, put 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, therefore shifting the balance enormously in favour of the employee, without any consideration 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 contended 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.

Parents call the shots
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, adoption leave and time off for dependents and the right to request flexible working. Again no provision for the size of the employer is taken into account meaning that small to medium sized businesses are becoming more and more embroiled in red tape.

Although the Government introduced these provisions one by one, they fail to look at the composite effect of the multitude of them as a whole, 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 including the EAT and Court of Appeal has to interpret the legislation and then often disagree with each other while the Government fails to correct matters.

Interpretation is lost
As it currently stands 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 simple 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 consideration given to the ability of the employer to pay.

Discrimination permeates new definitions
Whereas employers used 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 forward to age discrimination bringing in difficulties for employers who want to concentrate on the right profile of workers.

All these forms of discrimination have also introduced ‘statutory questionnaires’ which can be served on companies by unsuccessful applicants further adding to the red tape burden. 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 has 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 to work in the country, having to go through complicated procedures with National Insurance numbers, passports and work permits etc. With the possibility of criminal prosecution should they inadvertently employ the wrong people.

The burden grows
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.

Do you agree with Peter Done? Do current levels of employment legislation constitute a red-tape burden or are minimum standards governing the employment relationship to be applauded? Simply post your comments in the box below.