The problems with employment law

I write as one who is running a business under siege. I’m in the very tough area of manufacturing – our so called hope of the future – coping with a double dip recession, and above all I have struggled with staff issues over the last few years. 

Please let me make this very clear from the start: I have some absolutely outstanding staff. They’re loyal, hardworking and prepared to go not one but several hundred extra miles without a word of complaint.

However, in a small company, which produces a prestige product, it only takes one faulty performer to bring things crashing down and any business leader will know one person with attitude for the rot to spread. An old business coach of mine had a phrase for them: the internal terrorist. Very apt.

I have stood back and watched the growth industry of HR flourish like a sunflower on the back of ever increasing HR legislation. I have watched colleagues in other businesses collapse with stress from threatened employer tribunals, while in the meantime their businesses go to the wall through the under-performance caused.

I have read every booklet going on promoting good employee relations, performance management, incentives, training, offers of promotion and more training. Take it from me, it is a rare case on an industrial shop floor that people want more than to come in, do their job and go away again. Few are just motivated by the encouragement to progress unless perhaps it is linked to instant higher pay. They do not want more responsibility – all of which is fair enough at junior levels, but not a very good fit with all the HR talk.

I was cynical about the government’s promises to attack employment law. Not least because any government promises on red tape over the years have delivered little. That said, I was delighted that the timescale on unfair dismissals was re-established at two years, having been changed by Labour back in 1999. 

On balance, I approved of the fees for bringing a tribunal, which will become law next year. I know that, very sadly, there may be one or two individual casualties who cannot afford the fees and are 100 per cent entitled to be heard. But equally, without this there are simply too many, give-it-a-go with nothing to lose people out there whose weak, if not outrageous cases are bringing small businesses down.

I awaited with mild hope the announcement from Vince Cable last week on his new proposals following on from the Beecroft report. It’s a sad comment on our system that the bill on this is already three quarter of the way through the house.

I read that the outlines proposed have had a luke warm response. Small wonder. There are two main arms to the proposals. The first is that compensations payable at the top end are massively reduced. To go with this, there is a new settlement scheme proposed to end employment relations in a fair and consensual way, rarely a likely outcome. And of course new guides and codes of practices from ACAS, who, bless them, already have them to start with.

The real problem is that for the small business, the average payout is still £5,000 to £6,000 and, given the balance between this and legal fees, plus time and stress, it’s still a difficult choice to risk. In this day and age, it does not take too many £5,000 to £6,000s to put a business out of business. 

Then there are some weak and woolly talks of alternative forms of consultations at various stages. One bit that does get my blessing, more leeway for judges to dismiss weak cases without even a hearing. It still doesn’t take away the threat. Employers will still have to go through processes and negotiations, consultations and more stress. Manufacturing organization EEF rightly commented that it does nothing to speed up progress or deliver reforms.

The Chartered Institute of Personnel and Development warned about just reforms damaging mutual trust and confidence between employer and employee. There is little trust left in the employee by the employer who has been shafted once or twice by the odd person. They become only too aware that they can afford to trust no one.

The opposition and the unions warn that it will allow bosses to exploit, bully and treat with contempt, encourage job insecurity and fail to create a single job. 

What they refuse to recognize is that many good companies in this country are going to the wall, costing large numbers of jobs, brought down by a small handful of individuals who consider it their right to underperform and attempt to sue and criticize, both because they cannot survive making substandard products or providing substandard service  – and because the management and owners simply cannot cope with the blackmail and stress levels against which the law offers no defence.

Jan Cavelle is founder of the Jan Cavelle Furniture Company.

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