Updating employment rights in response to evolving workplace dynamics is essential to foster balanced labour market regulation, supporting both fair treatment and business growth within the UK’s unique employment landscape.
Importance of Balance in Labour Market Regulation
Labour market regulation is always a balance between ensuring responsible employment practices without being too burdensome or constraining, together with fair treatment and reasonable security for individuals.
The UK has a comparatively lower level of employment protection by OECD standards, but it performs relatively well on a range of labour market outcome measures, according to new CIPD research. For example, around 5% of the workforce in the UK work on temporary contracts versus an average of 15% in Europe, but rates of self-employment are similar. In summary the report concludes there is little to be gained from moving towards either significantly greater regulation or deregulation of the UK labour market.
Need for an Update
However, employment regulation does need updating given how jobs, workplaces and working practices are evolving. And improving access to work for all is vital economically and societally. Workforce expectations have been changing, they want their voices heard, and to feel supported and included, as well as more choice in how they work. Our workforces are also becoming more mobile – less of the job for life and more of the life of jobs, and other forms of employment such as through the gig economy have grown. Many of these points were called out in the 2017 Taylor Review of Modern Working Practices and regulation needs to keep up.
Businesses have been responding given the competitive nature of the jobs market, with more focus on engagement, wellbeing and inclusion, and more flexible operating models. We should encourage this direction of travel with greater transparency and workforce reporting – greater clarity on the ‘S’ in ESG – helping to reinforce management and board attention and interest from shareholders and other stakeholders.
Perspectives on the Employment Rights Bill
The recently published Employment Rights Bill, part of the ‘Make Work Pay’ agenda, with 28 proposed reforms, is the most extensive change to employment regulation in decades. This is a lot to absorb, in particular for smaller businesses with more limited resources, and concerns have been raised. It will be important to balance between enforcing compliance and providing guidance, and phased implementation and consultation to refine the details have been promised and will be essential.
In consultation with our members who as HR professionals will be at the heart of how changes get managed and implemented, we see recognition and support for many of the proposals. For example, more support to people at work, recognition of flexible working and reinforcing principles of inclusion and wellbeing in areas such as parental leave, sick pay, and bereavement. Better support to workers leads directly to positive business outcomes and must help address issues of rising absenteeism and encouraging people back in to work.
There are unsurprisingly points of concern, and the devil will be in the detail. For example, the introduction of a new statutory probationary period in place of the unfair dismissal qualification period as part of the commitment to day one employment rights will need to be carefully consulted on to ensure it is pragmatic and workable.
If new regulation adds significantly to costs and risks for employers in employing people, businesses can be discouraged from hiring, particularly from more diverse demographics which may be perceived as ‘riskier’. Employers may even lean towards taking people on with temporary contracts, which could undermine employment security for workers. Indeed, it is some of these risks that were recognised in DBT’s assessment of the financial impacts of the new Bill.
Consolidating approaches to appropriate enforcement through the new Fair Work Agency will be necessary, alongside more resources for Acas to boost its capacity to provide advice and guidance to SMEs.
Tri-partite Working
As expected, the new Bill also aims to strengthen the voice and positioning of the trade unions. Reducing voting thresholds and increasing rights of access to workplaces to recruit members do look concerning to many businesses, particularly those who have not had unions in their workplaces in the past and see the rise in industrial action in the last couple of years.
This highlights the need to strengthen tri-partite relations between government, business, and unions. Experience of working together, ‘industrial relations’ and ‘social partnerships’ have diminished in recent years. This was highlighted in recent research by Acas and we need to improve shared understanding and create guiding frameworks and principles. We can learn from where these social partnerships have been defined in large employers such as the NHS and in other countries.
A Holistic Approach to Drive Growth
Updating employment regulation alone won’t drive growth. Being pro-growth and pro-business will require encouraging greater investment in skills, where the UK still lags, and in creating better jobs, in particular with responsible use of technology and AI. These must be drawn together in industrial strategy and linked to more coherent skills policy, and it is positive to see plans evolving in these areas. Improving how we all manage our most important resources, invest in them, and create good jobs and supportive and inclusive workplace cultures will be the keys to the future.
To read more of Chamber’s analysis on the labour market, ahead of the upcoming Autumn Budget, please click here.