Business perceptions of the impact of employment law are at odds with the reality, according to a new government-commissioned study published by Employment Relations Minister Jo Swinson.

The study, Employer Perceptions and Impact of Employment Regulation, said that businesses viewing employment law as “burdensome” were often expressing a lack of understanding. In the case of dismissal processes – which were labelled as stressful as costly – businesses would often go beyond the legal requirements because they believed such action was necessary.

Other findings included:

• Equality legislation and the Agency Workers Directive (PDF, 330KB) seen as impacting recruitment practices
• Employers with formal working practices in place were more confident about compliance, while those that were reactive rather than proactive saw employment law as worrying
• Smaller firms with little internal HR expertise saw legislation as complex and inaccessible to those without specialist knowledge
• Medium-sized and larger businesses were more likely to be proactive in learning about the law, while small firms were more likely to be reactive

Employment Relations Minister Jo Swinson said: “The UK has one of the most lightly regulated and flexible employment systems in the world. What this study shows is that we need to work with employers to help them better understand their rights and responsibilities leaving them free to focus on growing their business.

“Through the government’s Employment Law Review we are reviewing existing legislation with the aim of providing clarity and certainty for business to give them the confidence to manage their workforce effectively.

“We are addressing business and employee concerns about the dismissal process through encouraging a greater use of settlement agreements and are working closely with Acas to get the rules and procedures for Early Conciliation right. We are also making changes to employment tribunals to make them simpler, cheaper and quicker to use.”

“Central to our efforts is the promotion of the benefits of good communication, better management and the early resolution of workplace problems as this can lead to the best outcomes for everyone.“

The Government is still reviewing employment legislation and is in the process of making changes, including introducing a 12 month pay cap on the compensatory award for unfair dismissal.

Since much of the employment law framework surrounds the relationship between employer and employee the burden often falls on HR departments to keep up-to-date with the latest developments and ensure the business remains compliant at all times. The research suggests proactive companies fare best, so HR departments should look for cost-effective ways to stay up-to-date with employment law and the effects of new legislation.

It’s also important for HR to train managers in compliant behaviour so that managers feel confident in dealing with all situations.