Coalition Faces Two Ways on Workplace Law
Authors: The Work Foundation
18 January 2011
There are many ways to fight one’s employer. The most expensive and damaging are probably hidden. The annual cost of sickness absence dwarfs by many times that of industrial action while the costs of lassitude and un-cooperativeness are impossible to quantify. But it is the official forms of conflict that tend to set the tone of a working era.
Strikes are now more a novelty than a systemic disease (threatened public sector stoppages notwithstanding). Today it is the rising numbers of claims to employment tribunals that have assumed a political profile their founders sitting on the Donovan Commission of the late 1960s would have been appalled by. Set up to offer speedy, informal justice to the nitty-gritty disagreements of workplaces, they have become highly legalistic encounters in which reputations are shredded and sometimes made, the preserve of TV celebrities and superstar bankers, with the potential for uncapped compensation payouts should discrimination be confirmed.
In effect, conflict has been displaced from the collective, political realm into the individual, legal domain - bringing with it a contemporary preference for managing people through a proliferating thicket of procedures and bureaucracy as a means of minimising risk. There are more than 60 different rights under which employees can theoretically bring a claim against their employers. Some 236,000 did so last year – 56 per cent more than the year before - although just 10 per cent were successful, and of these only two thirds received compensation.
So, then, a dilemma for any government: how to reform the workplace without creating the potential for greater numbers of tribunal claims?
The Coalition’s answer is resolute: face two ways at once.
On the one hand it plans to do away with the default retirement age , enabling flexible retirement, and to reform the system of parental leave to allow couples to share childcare – both of which (especially the age reform) open up the possibility of more tribunal cases.
On the other hand, its proposed 'Employer’s Charter' , part of what David Cameron calls 'the most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government', is pure old-religion deregulatory stuff. By extending the qualification period before workers are entitled to key employment rights from one to two years and requiring applicants to lodge a fee when they make a claim, the policy aims not to return dispute resolution to the workplace where it belongs, let alone improve the overall employment relations climate which gives rise to so many claims, but purely to restrict access to justice. The last time the qualification was doubled was by Margaret Thatcher in 1985.
The latter move may well be pro-business without being pro-jobs.
That a tribunal claim implies costs in legal fees and management time is not in doubt; for a small firm the potential for financial damage can be serious. Conflict always has a price – often borne by both parties.
But this is wholly different from evidence that the UK’s framework of labour law is inimical to job creation. According to the Organisation for Co-operation and Development’s league table of 'employment protection law strictness', the UK has the second most business-friendly framework of labour regulation of its member countries, second only to the US. This verdict has come despite the expansion of employment rights during Labour’s time in office, suggesting that while the rights have piled up they have not entailed significant transfers of power. And after all, there is no neat relationship between levels of regulation and economic performance, as the OECD has argued.
In the longer term the age reform is likely to be by far the most historically significant, as the law catches up with profound changes in lifecycle patterns.
In the short term, cutting access to justice at a time of rising insecurity among working people sends the kind of dogmatic message the Coalition has done its best, up until now, to avoid.
A gift for split-watchers.
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