Flexible, effective
and fair?
TUC response to BIS Red Tape Challenge paper
on employment related regulations
1.1
Introduction
The Trades Union Congress (TUC) comprises 58 affiliated
unions with approximately 6 million members, who work in a
wide range of services, industries and occupations across
the UK, in organisations both large and small and in the
public, private and voluntary sectors.
The TUC welcomes the opportunity to respond to the
questions set out in the BIS ‘Flexible, effective and fair’
paper but does not recognise the concerns set out in the
paper or agree that the case for labour market reform has
been made out.
Rigorous concrete evidence has not been
provided to demonstrate the need for reform. The TUC is
concerned that the Government appears to be relying heavily
on the website responses to the Red Tape Challenge. It is
not sound policy to rely on hearsay. There is no way of
verifying the accuracy of comments made on the website.
Some responses are little more than polemic or rant and
there is a question as to the extent to which workers –
especially the most vulnerable workers who have the most to
lose from a watering down of existing employment rights –
are aware of this consultation or have access to the
resources to respond through the medium of the website.
The government cannot seriously claim that its Red Tape
Challenge website captures the views of a representative
sample of businesses or workers.
The TUC is also concerned that very little time has been
allowed for responding to this paper.
2.1
Executive summary
 The TUC does not recognise the claims made by some
elements of the business community (which appear to
be endorsed by the government) about the ‘burden’ of
existing labour market regulations. The fundamental
question to ask is why regulation was necessary. If
that need still exists, so does the need for
protection.
 The BIS paper does not provide robust evidence to
support the claim that existing employment regulation
acts as a barrier to employment growth. If businesses
are not recruiting new staff currently, this has more
to do with the state of the economy, and the outlook
for growth. In fact the OECD and ONS evidence cited
in the BIS paper demonstrates effectively that the UK
labour market is already characterised by light-touch
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2
regulation and that existing regulation has not
hampered employment growth.
 While measures to stimulate employment growth are
required, given the current levels of unemployment
the TUC does not believe that labour market
deregulation will have that effect. This is the
wrong approach, is likely to have no discernable
effect on employment growth and will not lead to the
creation of sustainable long-term jobs.
 The TUC endorses a vision of the labour market where
both parties to the employment relationship are
informed and empowered and are able to negotiate
their relationship within a framework of fundamental
protections. However, as this is not the case in
many workplaces we do not agree that minimum
intervention by the government is desirable at this
stage. The government has an important role to play
in establishing the legal framework for employment
relationships and ensuring, through legislation and
the work of its enforcement agencies, that
fundamental workplace rights are upheld.
 The TUC believes that there is still much to do to
ensure that workers are informed and empowered in
the employment relationship and is concerned that
measures currently being considered by the Government
will have the opposite effect, by removing rights
altogether or making existing ones more difficult to
enforce. Far from agreeing with the statement in
paragraph 13 of the BIS paper that refers to a
perception that businesses have no rights, all too
often it is workers who have few rights.
 The TUC Commission on Vulnerable Employment (CoVE)
which reported in 2008 found that around two million
workers in the UK were in vulnerable employment –
precarious work that places people at risk of
continuing poverty and injustice resulting from an
imbalance of power in the employer – worker
relationship. The Commission found that vulnerable
workers had little knowledge of their existing rights
and didn’t know where to get advice.
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Government vision for the labour market
The BIS paper sets out a vision of a labour market that is:
‘ flexible, encouraging the creation of jobs by making it
easy to get people into work and to stay in work’
While there is a genuine need to encourage job creation,
particularly in the current economic climate, the TUC
does not believe that the proposed deregulation of the
labour market and weakening of employment protection
will achieve this effect. The TUC believes that
enabling people to stay in work is equally important. We
wish to see the creation of sustainable, quality jobs
that are here for the long-term rather than disposable
jobs – here today and gone tomorrow. Unfortunately some
of the Government’s current proposals are likely to have
the latter effect, enabling employers to shed jobs as
easily as create them. The current proposed extension
of the qualifying period for unfair dismissal from one
to two years is one such proposal.
‘effective, enabling employers to manage their staff
productively,’
Nobody is saying that employers should not have the
“right” to manage their staff effectively – indeed they
have a responsibility to do so - but effective
management requires staff to be treated fairly. The
existing legal framework gives employers considerable
freedom in how they organise their workforce and how
they deal with conduct and capability issues for
example. There is evidence that treating staff fairly
boosts morale and productivity at work, through reducing
absenteeism and turnover for example.
If employees are
treated badly at work and do not have effective
employment rights to protect them, they will experience
stress and low morale; those that can leave and find a
better job elsewhere will do so (meaning potentially the
loss of key skilled staff) and those that remain may
experience stress resulting in ill-health and absence
from work. Stress is, for the first time, the most
common cause of long-term sickness absence, according to
the 2011 CIPD / Simplyhealth Absence Management Survey.
Unsurprisingly in the current economic climate, public
sector respondents identify organisational change and
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4
restructuring as the number one cause of stress at
work.
The CIPD quarterly Employment Outlook report for
Summer 2011 found that:
‘job insecurity is playing on employees’ minds. There
has been an increase in people saying they could lose
their jobs, particularly in the public sector, and
only 1 in 20 public and voluntary sector employees
think it would be easy to get a new job. There has
also been a substantial rise in the proportion of
people who are worried about the future.’
‘fair, with employers competing on a level playing field
and workers provided with a strong foundation of employment
protections.’
This notion of fairness is crucial to an effective
labour market. The level playing field that employers
compete on should not be the lowest common denominator
one of minimal protection for workers, but if vital
employment protections are weakened or removed, that is
what will happen; the good employers will be undercut by
the bad. While some employers may be able to resist
this, others may not and may go to the wall or adopt the
same unscrupulous tactics in order to compete. That is
not the kind of labour market we want to see in the UK.
The TUC welcomes the fact that the Government vision for
the labour market says that workers should be provided
with a strong foundation of employment protections and
it is essential that any proposed reforms to emerge from
the Red Tape Challenge do not undermine the existing
framework of rights.
3.1
The current state of the UK labour market
This section of the BIS paper acknowledges that the UK
labour market is characterised by a ‘light-touch’ system of
employment regulation and that the ‘UK framework is less
onerous than most.’ The paper cites the findings of the
Organisation for Economic Cooperation and Development
(OECD) that the UK has one of the most lightly regulated
labour markets amongst developed countries, only the US and
Canada cited as having lighter overall regulation. This
section of the BIS paper concludes: ‘Our system of
employment regulation is an important element of the UK’s
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5
comparative advantage.’ Given this conclusion it is odd
that the current Red Tape Challenge focuses so intently on
perceived excessive burdens on employers.
By international standards, the UK does not have a tightly
regulated labour market. In the OECD’s index of labour
market regulation, the UK is right down at the bottom of
the table. Only the USA has a less regulated labour market:
Employment protection, 2008
Turkey
Luxembourg
Mexico
Spain
France
Portugal
Greece
Norway
Slovenia
Belgium
Germany
Italy
Estonia
Austria
Chile
Poland
Sweden
Netherlands
3.5
3.4
3.2
3.0
2.9
2.9
2.8
2.7
2.6
2.5
2.4
2.4
2.3
2.2
2.2
2.2
2.2
2.1
OECD-Total
2.1
Czech Rep
Finland
Hungary
Korea
Denmark
Slovak Rep
Iceland
Switzerland
Israel
Japan
Australia
Ireland
New Zealand
Canada
2.0
2.0
1.9
1.9
1.8
1.8
1.6
1.6
1.5
1.5
1.4
1.3
1.2
1.1
United Kingdom 1.1
United States
0.7
Source: OECD Employment data
It should be noted that Germany, which is weathering the
current economic storms better than most of its fellow EU
member states, including the UK, has a more tightly
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6
regulated labour market. Clearly labour market regulation
is not hampering economic performance there.
The TUC Touchstone pamphlet ‘The Red Tape Delusion: why
deregulation won’t solve the jobs crisis’, (TUC, 2010)
examined the relationship between the degree of labour
market regulation and various aspects of economic
performance and concluded that there is no evidence that
moderate levels of labour market regulation impede economic
performance and a good deal of evidence that some types of
regulation can improve aspects of economic performance.
The UK experience
The TUC also notes that the graph on page 3 of the BIS
paper entitled ‘UK employment by year’ shows the most
turbulence in employment levels during the 1980s and early
to mid 1990s. The period from the mid-1990s onwards, that
saw the introduction of a number of important new
employment rights such as the National Minimum Wage,
Working Time Regulations, Part-time Work Regulations and
Fixed-term Employees Regulations for example, was a period
of sustained employment growth. If as some will argue,
this is because economic conditions were favourable at that
time, this works both ways; if employment growth has now
stalled, this too reflects economic conditions that are
affecting economies worldwide. When employers hesitate
over taking on new staff, this is likely to reflect
concerns about weakness in consumer demand, availability of
finance, the prospects (or lack of them) for recovery and
the wisdom of expanding in such a climate and not concerns
about excessive regulation of the labour market.
4.1
5.1
Principles for reform of the labour market
framework
Having stated that the UK labour market is characterised by
‘light-touch’ regulation and that the existing system of
employment regulation is ‘an important element of the UK’s
comparative advantage’, the BIS paper goes on to say that
‘there is more that we can do to encourage firms to take on
staff.’ While measures to boost employment growth are
required in the current economic climate with unemployment
at a 17 year high, it must be recognised that the
Government’s current economic policies and the effect of
spending cuts are actually hampering growth.
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In paragraph 6 of the BIS paper the Government sets out its
vision for the labour market ‘in which both employers and
workers are informed and empowered, able to negotiate their
relationship within a framework of fundamental protections,
with minimal intervention by the Government.’
The TUC too wishes to see a labour market in which the
parties to the employment relationship are informed and
empowered, but the reality is that the two parties do not
enter an employment contract as equals; workers have far
less negotiating power, especially where they are working
in sectors where union density is low and in organisations
where trade unions are not recognised.
In most cases the prospective employer and employee do not
sit down as equal parties and thrash out the terms of an
employment contract. The reality is that the employer
dictates the terms and it is very much a case of ‘take it
or leave it.’ Of course there will be some highly skilled
and professional workers whose skills and expertise are in
short supply and who may be able to negotiate terms, but
these are a small minority – especially in the current
economic climate where on average, there are 5.6 applicants
chasing every job vacancy.
Given that the two parties to the employment relationship
do not contract as equal partners, the framework of
fundamental protections that are said to be part of the BIS
vision are vital to redress the imbalance between employer
and worker. It should be remembered that not all workers
enjoy the status of “employee” and such workers have even
fewer rights. The TUC Commission on Vulnerable Employment
(CoVE), which reported in 2008, estimated that around two
million workers in the UK were in vulnerable employment and
the Commission’s final report contained case studies that
provided graphic illustrations of what it means to be in
vulnerable employment in the UK today.
The TUC is concerned that far from ‘informing’ and
‘empowering’ some of the Government’s current proposals
will have the opposite effect on workers, including
increasing qualifying periods for unfair dismissal and
introducing fees for taking a claim to an Employment
Tribunal.
Q1: How can we create the space for employers and their
staff to manage their relationship effectively?
Paragraph 6 states that the Government believes that the
best outcomes arise when employers are able to sit down and
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discuss issues direct with their staff, where process
supports that conversation rather than stifling it.
While the TUC agree that it is undoubtedly better for
employers and workers to be able to resolve disputes
amicably, informally and at an early stage, good employers
are already doing this, in consultation with trade unions
where they are present. Unfortunately, this does not
happen in all workplaces. The existing laws on unfair
dismissal and dispute resolution are there to protect
workers where employers act in an arbitrary and draconian
manner and refuse to discuss issues with workers. An
employer who follows a fair process in tackling conduct,
capability, reorganisation and redundancy issues for
example, has nothing to fear from the law.
The TUC believes that fair processes encourage employers
and workers to resolve issues and do not stifle
conversation. Removing the legal framework that underpins
dispute resolution will undermine the resolution of issues
at an early stage within the workplace. For example,
doubling the qualifying period for claiming unfair
dismissal from one to two years’ service removes the
incentive for employers to act reasonably in terminating
employment for those with less than two years service as an
unscrupulous employer will be aware that they can act with
impunity and the employee will have no right of redress
(unless the dismissal falls within a reason that is
automatically unfair and which does not require completion
of the qualifying period).
The TUC believes that the Government role should not be to
withdraw and “let the parties get on with it”, but to
empower the parties to create a good employment
relationship and resolve difficulties by providing and
maintaining a strong framework of fundamental protections
for workers and focusing on improving access to information
about rights and responsibilities and understanding of
these for both workers and employers.
Q2: What more can Government do to reduce the fear factor
in employing staff, particularly the first member of staff
that a business takes on?
The TUC agrees that both employers and employees need to be
sure of their rights and responsibilities and they need to
know what to do and where to go for help if and when they
need it. This is fundamental to an effective framework for
employment regulation.
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The TUC disputes the extent to which there is a ‘fear’
factor for employers in taking on staff. This is based on
hearsay and anecdote and more than a little political
opportunism. This argument certainly does not hold for
large employers, who have dedicated HR departments,
suitable software for monitoring and managing staffing
issues and access to legal advice.
Use of probationary periods: Most employers will engage new
staff on a contract that includes a probationary period.
Continued employment will be dependent on satisfactorily
completing the probation period. This gives employers the
opportunity to assess the new employee and ensure that they
are fulfilling the requirements of the job before they are
confirmed in post Probationary contracts are often for a
period of some months – three or six months for example.
The practice of offering employment subject to completion
of satisfactory probation is another reason that employers
need not have the ‘fear factor’ about taking on new staff.
Given that a year’s service is currently required to bring
a claim of unfair dismissal (due to increase to two years),
most staff who are not kept on at the end of their
probationary period cannot (in most circumstances)
effectively challenge this decision.
Small firms and micro employers:
Firstly, it is worth
noting that many sole traders have no intention of ever
becoming employers. A substantial minority are “lifestyle
businesses”, whilst another sizable group of sole traders
fear that taking on an employee would simply be grooming a
potential rival to walk off with their list of customers
and set up in opposition. Such businesses are unlikely to
become employers, irrespective of Government policy, the
state of the economy or the extent of regulation.
While taking on the first employee may be daunting, the
appropriate way for Government to deal with this is to
provide small employers with access to support, training,
advice and management information systems that can help
them to manage the employment relationship – not to remove
rights from workers in small firms. The latter approach
will simply make working for small employers a less
attractive option and undermine the reputation of small
firms, meaning that workers with a choice will seek better
employment conditions elsewhere, potentially depriving
small firms of necessary skills and expertise.
Organisations such as trade unions, ACAS, Citizens Advice
have a vital role to play in advising employees on the
legal framework and the various employer associations and
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representative groups such as British Chambers of Commerce,
CBI, Institute of Directors and Federation of Small
Business can play a vital role in getting information out
to their membership and providing support in understanding
legal requirements. It is unfortunate that Government
policy in the past year has served to wind down the
Business Links organisation with the Regional Service being
abolished from November 2011 (although the Business Link
website and national helpline will continue to operate).
The clear role for the Government in tackling any perceived
barriers to sole traders in taking on their first employee
is in promoting access to clear information about the
existing framework of employment regulation and resourcing
or signposting to sources of guidance and support in
managing the employment relationship – whether these be to
government or independent sources.
There are other more fundamental barriers to recruitment of
staff that relate to the state of the economy and lack of
prospects for growth. Businesses have more pressing
concerns to contend with in the current economic climate,
such as lack of consumer confidence, access to credit, and
cash flow difficulties. For many organisations, now is not
the time to expand and they are taking a strategic decision
not to do so and it is this ‘fear factor’ about the
immediate prospects for UK and global economy which is
hampering job creation, not ‘excessive red tape’ or ‘fear’
about employing staff.
For example, the Federation of Small Business (FSB) is on
record as saying that small firms would be hard hit by the
2.5% increase in VAT that the Government introduced in
January 2011 and would be least able to absorb this
increase, having to pass costs on to customers and that
this could cost jobs. The FSB called on the Government to
raise the VAT threshold, saying this could help to create
jobs.
The Government has already introduced National Insurance
Contribution holidays for Employers for new businesses, but
take up to date has not met expectations. The scheme was
supposed to help 400,000 new businesses and create 800,000
new jobs in worse-off regions; but so far 5,137 firms have
been helped to create just over 10,000 jobs.
£940 million
was allocated for the scheme, but the government has so far
only spent £10.3 million.
The NIC holiday lets new small businesses in regions
outside the South East off the first year’s employer
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National Insurance Contributions (NICs) for their first ten
employees. The idea behind it is that one reason we face
high unemployment is that employers are put off hiring by
costs like NICs. However, the scheme has had little impact
to date in the light of the scale of public sector cuts and
lack of consumer demand. Just as with NIC holidays, so too
with employment regulations; the real problem lies
elsewhere it is not the ‘costs’ associated with employment
but lack of demand and an economy that is ‘flat-lining.’
The Government’s approach in attempting to boost employment
growth by watering down existing employment rights does not
enjoy universal support from employers bodies and some have
questioned whether the policies will have the stated
effects on employment. The CIPD for example, has expressed
concern over the proposed extension of the qualifying
period for unfair dismissal from one to two years:
‘While watering down unfair dismissal rights is seen as a
way to boost recruitment and improve job prospects for
young people and the long-term unemployed, the short-run
impact will be limited by the overall weak state of the
labour market while in the long-term any positive effect on
hiring is likely to be offset by a corresponding increase
in the rate of dismissals.
The vast weight of evidence on the effects of employment
protection legislation suggests that while less job
protection encourages increased hiring during economic
recoveries it also results in increased firing during
downturns. The overall effect is thus simply to make
employment less stable over the economic cycle, with little
significant impact one way or the other on structural rates
of employment or unemployment.’
The CIPD conclude:
Increasing the qualifying period for obtaining unfair
dismissal rights thus runs the risk of reinforcing a hire
and fire culture in UK workplaces which would be
detrimental to fostering a culture of genuine engagement
and trust between employers and their staff and potentially
harmful to the long-run performance of the UK economy .
Although the policy change will undoubtedly be welcomed by
the deregulation lobby, it isn’t the way to boost growth
and jobs.’
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Q3: what rights should be included in the set of
fundamental employment protections?
Paragraph 8 of the BIS document refers to a ‘streamlined
framework’ that gives workers ‘greater flexibility to
negotiate an employment relationship to meet their needs.’
What does this mean in practice? If a streamlined
framework effectively means fewer rights, this will not
help workers to negotiate an employment relationship to
meet their needs; it will have the opposite effect. For
example if the existing right to request flexible working
is removed, then this will disproportionately affect
working women, parents and carers. If these workers are
then unable to effectively combine their caring
responsibilities with their work, they may have to leave
the labour market altogether, which is bad news for all
parties; the government will lose tax revenue and may have
to pay out greater benefits, the workplace and the economy
may lose workers with considerable experience and valuable
skills and the workers may be underutilised compared with
their investment in education, skills and training and may
face greatly reduced income and even struggle to maintain
their families and those that depend on them.
The TUC is concerned that paragraph 8 of the BIS paper
appears to imply that the existing framework of employment
rights can be divided into those that are fundamental and
those that are not. The TUC does not endorse this approach
and does not understand the basis for it. When considering
any individual piece of employment regulation, it is
essential that the original purpose for its introduction is
considered. A need will have been identified at that time
for that aspect of the employment relationship to be
regulated – in other words a ‘voluntarist’ approach was not
effective. Unless it can be demonstrated with supporting
evidence that the need no longer exists then the
presumption should be that the regulation is necessary.
The BIS paper is correct to say that workers should be
protected from unscrupulous businesses and that there
should be a level playing field for competition between
employers – and that is precisely why effective regulation
is necessary. If existing regulation is weakened and
minimum standards undermined then good employers who try to
do the right thing, will be undercut by the rogues.
Q4: where do the processes required by the rules hinder
the outcome that they are seeking to achieve?
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The TUC has not identified any such examples. If
respondents from the business community have identified
specific concrete examples then the TUC would be interested
to see these and welcome the opportunity to respond,
particularly if legislative changes are proposed as a
result. Throughout the Red Tape Challenge exercise, the
TUC has been concerned that many assertions are just that assertions – not backed up by hard evidence. The reasons
that a particular piece of legislation was introduced and
the outcomes it is designed to achieve must be given
primary consideration. If there are ways of simplifying
regulatory requirements or making these more intelligible
to both employers and workers without undermining the
rights that they give effect to in any way, then that would
merit consideration but the TUC is concerned that
introducing changes to the ‘processes’ will be used to
undermine the substantive rights.
6.1
The Employment Law Review: progress to date
Paragraph 12 of the BIS paper sets out the Government
objectives for the Employment Law Review as:
Look again at what each policy is seeking to achieve to
ensure that the requirements and burdens are necessary and
appropriate for the outcome we want;
What is the ‘outcome we want’ that is referred to here?
The outcome must include a strong framework of fundamental
protections for all workers in the UK labour market and not
seek to undermine the existing framework of rights. The use
of the word “burden” is political; businesses have
responsibilities and incur costs – they also enkoy profits
from the work of their employees.
Look at whether there are other ways besides regulation to
achieve the same end that allow employers and staff to
decide for themselves how to respond;
The TUC maintains that a strong regulatory framework is
necessary to protect individuals at work. While good
employers may already be operating to far higher standards
than those set down by law, that is not true of all
employers. The BIS paper in paragraph 16 recognises that
some employers do ‘seek to gain unfair advantage by
mistreating their staff’ and that the government has a role
to play in enforcing fundamental employment rights.
The reference to allowing ‘employers and staff to decide
for themselves how to respond’ ignores the fact that early
resolution of disputes within the workplace is already an
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option and one that trade unions assist in where they have
a workplace presence, but where employers refuse to engage
or have procedures in place to facilitate workplace
resolution of disputes, workers and those that represent
them need access to legal support in order to effectively
protect workers. Without an effective framework of
fundamental rights, workers are extremely vulnerable; any
notion that with fewer enforceable rights workers will have
choices about ‘how to respond’ is illusory.
Where the current rules need to be kept, simplify to make
them easier to understand and follow;
The TUC supports better regulation and supports genuine
simplification measures but reiterates the need to ensure
that any attempts at ‘simplifying’ the current rules do not
in practice mean the watering down of existing rights. The
TUC expects that the Government will consult the social
partners fully on proposed changes, so that those who
represent vulnerable workers as well as those that
represent business have the opportunity to respond.
Make sure the right information and guidance is available,
so that employers and staff are making informed decisions,
not reacting to a misperceived sense of risk;
The TUC believes that access to clear and concise
information and guidance and knowing where to find this is
vital both to employers (especially small employers who do
not have access to the in-house HR expertise that many
larger businesses have) and to workers, particularly the
most vulnerable workers and those who do not usually have
access to union support and representation in their
workplace. The TUC welcomed the establishment of the
Government Pay and Work Rights Helpline and the work
undertaken to publicise this, but believes more needs to be
done to raise awareness of existing rights and
responsibilities and to assist the smallest businesses to
understand the legal framework and comply with it. This is
the most effective way of tackling misperceptions about
‘red tape burdens.’
Look at how we have implemented EU directives, seeking
opportunities to consolidate and challenging where UK
regulation has gone beyond what was required by Europe;
The TUC is concerned by claims that UK implementing
legislation has ‘gold plated’ EU Directive requirements and
does not agree that this is the case, rather that there may
be instances where the UK legislation fails to implement EU
Directives adequately. Where there is “gold plating” it is
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often a result of lobbying by business to ensure that EU
law fits the UK system, for example in several health and
safety measures.
Seek opportunities to rationalise existing legislation and
support the development of modern workplaces.
Any attempt to ‘rationalise’ existing legislation must not
weaken or remove existing protection for workers.
Safeguards should be built into any proposals to
rationalise the current legal framework of employment
protection. Modern workplaces should ensure that workers
are treated with fairness, dignity and respect, that
employers and workers alike are aware of their rights and
duties towards each other and that rights are enforceable
backed by a strong legal framework. The modern workplace
of the 21st century should not resemble that of the 19th.
Paragraph 13 of the BIS paper states that, ‘Businesses have
told us time and again that they feel that they have no
rights.’ This is not a description that the TUC and
affiliated unions that represent workers across the country
in many different sectors recognise. It is certainly not
consistent with the substantial increase in employment that
ran parallel to the modest re-regulation of the labour
market during the last decade (as demonstrated by the Chart
on page 3 of the BIS Flexible, effective and fair paper).
The fact that BIS launched the Employers’ Charter in
January 2011 shows that the Government acknowledges that
business already has much autonomy and discretion in
managing staff. For example, to take the most common
reasons that a business may consider shedding staff –
issues of conduct, capability, business restructuring and
redundancy situations, these are all potentially fair
reasons for dismissing staff under the existing law on
unfair dismissal (ERA 1996 s98 (2)) and provided that an
employer follows a fair process and acts reasonably in
dismissing, they have nothing to fear from the law.
Being dismissed is a huge blow for any worker, and in
particular being dismissed on grounds of conduct or
capability, which can severely damage future employment
prospects. It is only right therefore that employers are
not allowed to act arbitrarily and have to consider
carefully the decisions they make and whether these are
justifiable.
Far from businesses not having any rights it is very often
workers who have few rights and current government policy
is exacerbating this. The Government decision to increase
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the qualifying period for unfair dismissal from one to two
years effectively denies employees the fundamental right to
challenge arbitrary dismissal in the first two years of
employment.
Moratorium on new legislation: The Government has
established a moratorium on new legislation from April
2011, setting out the presumption that start ups and
businesses with fewer than 10 employees should be exempt
from new domestic regulation for three years (paragraphs 15
and 16 of the BIS paper deal with this). The rationale for
this moratorium is that it will help to ‘increase the
confidence of fledgling firms to grow and take on new
staff.’ However, the TUC believes that there are more
fundamental constraints on business growth and expansion
currently reflecting the poor prospects for the UK economy
in the immediate future. By establishing a threshold of 10
employees for this moratorium, the government may
inadvertently discourage firms from expanding beyond 10
employees and thereby stifle growth.
Employment Tribunal proposals: Paragraph 16 of the BIS
paper says that ‘the business community have consistently
told Government that their biggest headache is the
employment tribunal system.’
Just because some employers
do not like the Employment Tribunal System (ETS) does not
mean that the system is wrong or inefficient. The
Government has not put forward any convincing evidence to
support its proposed changes to Employment Tribunals. It
is likely that those employers who complain most
vociferously about the ET system are those that have
findings against them and those who have not adopted fair
workplace procedures. In the TUC response to the BIS
‘Resolving Workplace Disputes’ consultation we outlined
evidence from BIS own research series which did identify a
correlation between case outcome and satisfaction with the
ET system overall. Published findings from the Survey of
Employment Tribunal Applications 2008 Report (Employment
Relations Research Series No. 107) concluded:
‘The outcome of the case drove satisfaction with the
ET system for employers, with employers involved in
cases in which the claimant was unsuccessful at the
tribunal were more likely to be satisfied with the ET
system in general (79 per cent) than those in which
the claimant was successful at the hearing (61 per
cent).’
The TUC responded fully to the Government’s proposals for
reform of employment law and Employment Tribunal procedures
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October 2011
17
as set out in the BIS ‘Resolving Workplace Disputes’
consultation paper.
The key points raised in our response
remain valid and are repeated here;
 ‘The TUC is firmly opposed to the extension of qualifying
periods for unfair dismissal claims. This will increase
job insecurity, encourage unfair treatment in the
workplace and discourage employers from managing
performance effectively. There is no evidence to support
the assertion that changes to unfair dismissal law will
act as a driver for growth or job creation or will reduce
the overall workload for Employment Tribunals.
 The proposal is likely to be discriminatory against
younger workers, black workers and those from ethnic
minority communities and against female part-time
workers.
 The TUC is firmly opposed to the introduction of fees for
Employment Tribunals. Fees would price working people
out of access to justice; seriously deter individuals
from enforcing their rights; and impact
disproportionately on low paid and disadvantaged groups,
including women, black and minority ethnic communities,
and disabled workers.
 The TUC calls on the Government to carry out a fuller
Equality Impact Assessment on the proposals contained in
the consultation document and in particular those
relating to the extension of the qualifying period for
unfair dismissal and proposals to introduce fees for
Employment Tribunal users.
 The TUC supports the principle of extending Acas preclaim conciliation (PCC) services. However, there is a
serious risk that PCC proposals as currently framed could
damage the impartiality of Acas by requiring conciliators
to advise on the merits of a claim and on complex
jurisdictional issues including employment status.
 The TUC recognises that it takes too long for many
Employment Tribunal claims to reach a hearing. In our
view, the Tribunal System is under-resourced to deal with
its current workload and there is a shortage of Tribunal
Chairs who are specialists in employment law.
 Steps could be taken to improve the efficiency of the
Tribunal process including by extending the role for Case
Management Discussions (CMDs).
 The TUC would also welcome improvements in the
enforcement of multiple equal pay cases, for example
through the use of the CAC to determine claims.
 However, the TUC is seriously concerned that many of the
Government’s proposals for reforming Employment Tribunal
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18
procedures are heavily weighted in favour of employers
and are likely to restrict access to justice.
 The proposed increases in the caps for deposit orders
and costs awards will be used by employers to deter
individuals from enforcing their rights.
 Extended powers for Tribunal Chairs to strike out
applications, without the need for a hearing or the
opportunity for parties to make representations,
threaten natural justice.
 The TUC is also firmly opposed to proposals for
Tribunal Chairs to sit alone in unfair dismissal cases.
 The TUC supports proposals for the imposition of
automatic penalties for employers who breach an
individual’s employment rights. However the increased
sanctions should be paid directly to claimants rather
than to the Exchequer. Penalties should also be
automatic in all circumstances.
 The TUC does not support proposals for linking annual
increases for compensation or statutory redundancy pay
(SRP limits) to CPI rather RPI which will reduce the
value of these benefits in real terms over time.’
Default Retirement Age: the TUC welcomes the abolition of
the DRA with effect from October 2011. The TUC has long
considered the DRA to be an unfair anachronism in modern
workplaces as staff, and most good employers, welcome a
more flexible approach to retirement. Abolishing the
default retirement age will help people retire at a time
that suits both them and their employer and the growing
number of people working past 65 shows that many people are
keen to stay in work and have a lot to offer employers.
However, many others are forced to continue working due to
poor pay and lack of a decent pension, illustrating the
urgent need for better pension provision in the private
sector.
The TUC and the Charted Institute for Personal and
Development (CIPD) have recently published guidance for
staff and employers on managing age in the workplace, which
offers best practice guidance on working without a
retirement age.
Managing sickness absence:
The TUC is represented on the
advisory group for this Review and is feeding in its views
through the group.
Medium-term plans for the Employment Law Review
The BIS paper reiterates the medium term plans for the
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October 2011
19
Employment Law Review:
National Minimum Wage
The TUC believes that the National Minimum Wage (NMW) is
well-conceived and well-executed piece of employment law,
in that its application is relatively simple and certain.
Changes to the NMW are well-founded on the evidence
gathered by the Low Pay Commission (LPC), where the input
of employers’ organisations and trade unions is matched by
that of leading pay academics and it generates clear
benefits for workers, employers and Government alike. The
net result is that there is no obvious ‘fat’ to trim.
Indeed, BIS has held the NMW up as an example of good
regulation.
Nevertheless, the TUC has asked the LPC to check again that
the provisions for treating “output only” workers
differently are still justified. Our concern is that we
have recently seen rather more abuse of these provisions
than we have been able to find proper use. If these
provisions can no longer be justified then they could be
removed as a simplification measure. However, the TUC would
argue that this is a matter where the LPC should weigh the
evidence carefully to ensure that removal would not leave
law-abiding employers at a disadvantage.
Protections for working people during restructuring and
outsourcing
The TUC will participate in any forthcoming review of TUPE
rules and the consultation periods for collective rights.
These rights provide vital protections for employees who
are affected by restructuring or outsourcing and often face
income and job insecurity.
The TUC does not agree that the rights operate as a barrier
to restructuring. Rather they facilitate restructuring in
a manner which safeguards employment levels and the terms
and conditions of affected staff and avoids potential
disputes. The rights play an important role in maintaining
trust amongst remaining employees. As a result, they
contribute to the operational effectiveness of restructured
businesses.
The requirement on employers to consult with recognised
trade unions or workplace representatives on collective
redundancies are beneficial for employers, employees and
the wider economy. During the recession, some private
sector employers have worked closely with trade unions
through the consultation arrangements to identify ways of
avoiding redundancies and to enable the businesses to
retain skilled staff.
As a result, businesses are better
Flexible, effective and fair?
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20
placed to respond to any future upturn in demand.
Any reduction in the length of the consultation period
would limit the opportunity for trade unions and employers
to explore alternatives to redundancies. This is likely to
lead to unnecessary job losses and will have a negative
impact on welfare costs and household income. The TUC will
therefore resist any proposal to reduce the consultation
period from 90 days to 30 days.
The TUPE Regulations ensure that the workplace
representatives for affected employees are informed about
potential transfers and consulted about related measures.
They also safeguard the pay and conditions of staff who are
transferred and limit the ability of existing and future
employers to take a selective and potentially
discriminatory approach to which staff are transferred.
The Regulations have also played an important role in
avoiding competition between contractors on the basis of
lower pay and conditions.
However it is a matter of serious regret to the TUC that
the TUPE Regulations do not provide protection for new
employees hired to work on outsourced services. There is a
wealth of evidence which demonstrates that outsourcing has
a detrimental impact on workers’ conditions of employment
in the longer term and this has serious long term impacts
on service quality. The issues are particularly
significant where public services are contracted out. The
removal of the Two Tier Code is likely to amplify these
problems.
The TUC recognises that the scope for weakening collective
redundancy and TUPE protections is extremely limited given
the requirements of EU law. Instead we believe that a
future review be enhanced to ensure that future contracting
out and restructuring does not result in increased
unemployment, a diminution in employees’ pay and conditions
or a growth income inequality.
Proposals to make the right to request flexible working a
‘lighter-touch’ process.
The TUC has already responded on this point through its
response to the Government’s Modern Workplaces
consultation. In answer to whether we would support the
proposal to replace the statutory process for the
consideration of flexible working requests with a Code of
Practice, the TUC response stated:
‘we cannot support the proposal without more detail about
the form and content of a proposed statutory Code of
Practice and reassurances that the procedural rights that
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21
parents and carers currently have will not be diminished in
any way. The statutory process is all some employees have
to fall back on when trying to get a fair hearing for their
request. Without it, managers may be more dismissive of a
request, for example, rejecting a request as set out in a
written application without taking the time to discuss it
with the employee, outlining their concerns and exploring
ways in which current work organisation could be altered to
accommodate it or an alternative arrangement could be
agreed upon that met the needs of both parties.
Agreement is often reached on flexible working through
discussion and compromise and we believe this would be
difficult to achieve, and achieve in a fair way, without a
requirement to hold a meeting at which the individual could
be accompanied by a union workplace representative or
colleague. It is also important that there is a requirement
upon the employer to hold the meeting at a time that the
employee’s chosen companion is available and that the
employer’s decision following the meeting is provided in
writing and that there is an opportunity to appeal the
decision. Safeguarding these basic procedural steps to
ensure a fair hearing is particularly important given that
an employee only has one opportunity a year to make a
request.
If reassurances were given about maintaining the statutory
procedure, we would be supportive of having a statutory
Code of Practice to accompany it as we recognise that
beyond the minimum procedural safeguards there are issues
which employers would benefit from further advice and
guidance on such as, how to handle requests for temporary
variations in working arrangements or trial periods without
making a permanent change in the contract.’
Discrimination awards: The BIS paper reiterates the
Government’s intention to consult on discrimination awards
later this year and the TUC will respond to this. However,
the TUC believes that the Government’s scope to make
changes is effectively curtailed by existing EU equality
Directives.
Enforcement: ensuring a level playing field
for workers and employers
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Q5: What criteria should determine which rights are
directly enforced by Government and which by the
individual?
The TUC welcomes the statement in paragraph 19 of the BIS
paper that ‘The Government is clear that employers who are
determined to operate outside of the law should not be
allowed to undercut their legitimate competitors by
exploiting their workers. It is essential that the most
vulnerable workers, those most likely to be exploited by
unscrupulous employers are effectively protected.’
The Government has a vital role in determining the
boundaries of lawful and unlawful behaviour; the government
should be aware that any moves to water down the existing
framework of fundamental employment protection, could in
effect legitimise exploitative behaviour, by removing the
taint of illegality (and the sanctions that accompany it).
Far from restraining unfair competition, this could
encourage it and lead to a levelling down of employment
standards in the workplace.
The TUC believes that an effective enforcement framework is
an essential component of any system of regulation.
In our view, the following principles should underpin the
UK enforcement system:



Enforcement agencies should have adequate powers to
be able to undertake proportionate and effective
enforcement action
Penalties for breaching Regulations should be set at
a level which encourages compliance with employment
and safety standards
Enforcement agencies should have increased resources
for intelligence- led investigations and inspections
to ensure that rogue employers are deterred from
breaching the law due to the risk of enforcement
action being taken.
Adherence to such principles is essential if workers are to
be protected and a level playing field is to be created
ensuring good employers are not undercut by the rogues.
The TUC recognises that the current enforcement landscape
has developed over time in response to different social and
economic problems. However, we do not believe that this
means the current structure is not relevant or necessary
for current purposes.
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Research undertaken by the TUC in recent years, including
the findings of the Commission on Vulnerable Employment
revealed that the principal problems facing vulnerable
workers continue to be:

underpayment of the NMW;

non-payment of wages;

being required to work excessive hours;

losing out on holiday entitlement and not receiving
holiday pay;

being required to pay for work finding services or to
overpay for transport services;

being housed in sub-standard conditions;

lack of transparency of employment condition and

lack of awareness of employment rights.
The statutory enforcement agencies are currently
responsible for enforcing the law in most of these areas,
the main exception being statutory holiday rights.
There is no evidence that the social and economic risks
which led to the establishment of the enforcement agencies
have diminished. Rather the contrary is true. Research
undertaken by the Low Pay Commission and the recent EHRC
Inquiry into the meat processing sector reveal extensive
non-compliance with employment standards and widespread
victimisation of low paid and vulnerable workers. If the
role of the statutory agencies were reduced such practices
are likely to become more commonplace.
Research by the Commission on Vulnerable Employment and
Citizens’ Advice also reveals that vulnerable workers are
extremely reluctant to complain about mistreatment in work
or to take claims to Employment Tribunals due to the fear
of losing their job and their home or of being
victimisation at work.
Such workers rely on the ability to make anonymous
complaints to enforcement agencies. Others are simply
unaware of how to complain and therefore rely on
intelligence-led investigations and enforcement. The TUC is
therefore concerned that one of the objectives of the
review will be to enable vulnerable workers to use the
Employment Tribunal system to enforce their rights. The
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24
proposed introduction of fees for Employment Tribunals will
also further deter workers from making claims.
The TUC therefore believes that it is vital for the State’s
involvement to continue in all the areas where it currently
has an enforcement function.
The TUC recognises that the different enforcement agencies
have varying powers and can impose differing penalties. It
would be welcome if the review of enforcement agencies led
to the upgrading of the enforcement system so that all
agencies have the same powers and penalties at their
disposal including naming and shaming, criminal prosecution
and civil penalties.
The TUC also believes there is a strong case for the
extension of the GLA licensing model to other sectors of
the economy, including construction and social care. This
view was supported by the Donaghy report: One Death is too
Many – Inquiry into the Underlying Causes of Construction
Fatal Accidents and Home Affairs Select Committee 2009
report on Trade in Human Beings. The ability of the GLA to
conduct pre-licensing audits and to revoke licences where
employment, tax and housing laws are breached has played a
vital role in raising standards in the agriculture, food
processing and shell fish industries. It is vital
therefore that the current licensing system is not simply
retained but also extended.
The TUC believes that the current framework of agencies
helps to ensure improved enforcement. For example, the
ability of the GLA and EAS to investigate and take
enforcement action relating to NMW payments supports and
complements the work of the HMRC NMW enforcement team. EAS
and GLA inspectors will often inspect workplaces and
sectors not reached by the HMRC NMW enforcement team.
The TUC would be seriously concerned if the review led to
any diminution in the scope of enforcement undertaken by
the State or in the powers or penalties available to any of
the existing enforcement agencies. Such reforms would lead
to the mistreatment of vulnerable workers; increased noncompliance with the law and unfair competition for good
employers.
The TUC agrees that the establishment of the Pay and Work
Rights Helpline has assisted workers and employers to
access the enforcement system. In our view, further
measures should be adopted to enable more co-ordinated and
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25
joint enforcement action by the enforcement agencies. In
particular, the remaining legal barriers which prevent
agencies from sharing intelligence once formal
investigations have commenced should be removed. This
would mean that enforcement agencies can take joint
enforcement action where inspectors from just one
enforcement agency have inspected a workplace. Such
measures would increase efficiency and would also ensure
that employers who breach multiple employment laws receive
appropriate penalties.
Finally, however, the TUC believes that the current
enforcement system is significantly under-resourced.
Recent cuts in funding mean that enforcement agencies are
less able to respond to complaints and to undertake
intelligence-led investigations.
The TUC is concerned that the reference in paragraph 23 of
the BIS paper to ‘leaving those who are better able to look
after themselves to seek redress through the employment
tribunal system’ could imply a reduction in the enforcement
role of the government and the enforcement agencies. The
TUC would not support such a change and believes that the
role of the existing enforcement agencies is vital to the
effective enforcement of workplace rights.
The TUC is particularly concerned about any proposal that
will require more people to look to the employment
tribunals to enforce their rights given the proposal to
introduce fees for bringing a claim to tribunal and
potentially a further fee to progress the case to full
hearing. In paragraph 20 of the BIS paper, the employment
tribunal system is referred to as ‘accessible’ and it is
essential it remains so. The TUC believes however that the
Government’s forthcoming proposals on fees will undermine
accessibility of the ET system and effectively ‘price out’
some low paid and unemployed claimants from being able to
enforce their rights.
The union role
The TUC welcomes the Government’s recognition of the role
that unions can and do play in enforcing rights and
resolving workplace disputes. Paragraph 27 of the BIS
paper in particular acknowledges the role that unions and
community groups play in reaching the most vulnerable
workers and the TUC has experience of reaching out to
vulnerable workers through the work of the Union
Modernisation Fund for example. There is also academic
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26
evidence that demonstrates the positive role that unions
play in the workplace and shows that the number of ET
claims submitted against unionised businesses is far lower
than from those that do not recognise a union.
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