Kate Reynolds

By Kate Reynolds kreynolds

The Red Tape Challenge was launched by the Prime Minister in April 2011, with the aim of reviewing some 6,500 regulations and deciding whether they were more of a hindrance than a help. By September 10 2012, at least 3,000 were destined either to be scrapped or significantly reduced.

The employer’s perspective

One of the areas most beset by red tape in recent years has been employment law, and now Business Secretary, Vince Cable, has announced consultations on a package of employment reforms as part of the on-going challenge. The package includes support for settlement agreements, caps on compensation for unfair dismissal claims, streamlining employment tribunals, clarifying the TUPE rules and further guidance from ACAS on disciplinary and grievance procedures. The reforms are aimed at giving employers more flexibility and confidence to handle their workforce, and particularly to speed up and simplify managing the end of the employment relationship.

That is never an easy time for employer or employee as, in the majority of cases, the decision will have been made by one party and not by both in agreement. There’s nothing new about the parties being able to conclude a dispute with a settlement agreement once a claim has been made to the employment tribunal, but the position is far more precarious for the employer just before the relationship actually ends. Sometimes both parties know that the relationship has broken down, but neither know what to do about it.

Discussions prompted by the employer which have ended with “off the record” offers to pay employees to leave have, in the past, been used as a springboard to claims for unfair constructive dismissal. The Government says that cannot be right, and aims to provide a statutory framework for consensual settlement agreements. ACAS has also been asked to draft a new code of practice.

The current law on the enforceability of settlement agreements requires the employee to take independent legal advice from a CAB, union or lawyer as to the terms and affect of the proposed agreement, and it’s the employer who foots the bill for this. It was hoped that this requirement may have been abolished, but unfortunately it looks set to remain.

However, there is a glimmer of light for employers dealing with unreasonable employees with unrealistic expectations, and that’s the introduction of employment tribunal fees next year and a lower cap on compensatory awards for unfair dismissal (currently £72,300). The Government hopes to discourage vexatious claims being issued by charging claimants £390 for unpaid wages claims and £250 for starting unfair dismissal and discrimination claims, where currently there is no issue fee.

The employee’s perspective

One of the biggest changes to employees will be the introduction of fees to start claims in the employment tribunal. Currently it costs nothing to start or run a claim yourself and, unlike other areas of litigation, even if you lose your claim, you do not have to pay your opponent’s costs. There are exceptions to this rule, and it is becoming more frequent that the tribunal judges will make costs orders where hopeless claims have been issued and run all the way to a final hearing, but it is still not the norm.

The fees are intended to discourage vexatious claims but, once the new fee structure is in place, there is a concern that employees with genuine claims will not be able to afford to take action against their employers and so may be deprived of access to justice.

Another potentially worrying development is a proposal to reduce the cap on compensation awarded for successful unfair dismissal claims. There is no exact figure yet, but it could be down from the current £72,300 to one year’s earnings — about £25,882, which is the national average salary. This would not make it easier to end the employment relationship, but it would give employers the comfort of knowing they would have to pay less if an employee was prepared to pay the £250 fee to issue a claim in the employment tribunal and went on to win it.

Which brings us to settlement agreements and the idea of reaching an agreement with your employer before you leave employment, so that there is no need for a claim. The Government wants to make it easier for the parties to manage this difficult time in the relationship and proposes a statutory framework for discussions leading to full and final settlement. ACAS has been asked to draft a new code of practice and the consultation will ask whether there should be set levels of payments to employees based on, for example, length of service and reason for dismissal.

Kate Reynolds joined McKinnells Solicitors in Lincoln in 2011, after she qualified as a solicitor in 2008 and worked on a wide range of both contentious and non-contentious matters including employment matters, judicial review proceedings, planning disputes, boundary disputes and construction work including advice on contracts and adjudication.

By Kate Reynolds kreynolds

— Kate Reynolds joined McKinnells Solicitors in Lincoln in 2011, after she qualified as a solicitor in 2008 and worked on a wide range of both contentious and non-contentious matters including employment matters, judicial review proceedings, planning disputes, boundary disputes and construction work including advice on contracts and adjudication.

Every quarter there is a survey commissioned by the CIPD to find out what employees think about their working lives. What was noticeable about the latest findings was that almost three quarters of those surveyed said that they felt neutral when it came to their engagement at work. Now that can’t be a good thing for employers.

Employers need engaged employees. Engaged employees are committed to the company and its values, they deliver improved business performance and they are prepared to go the extra mile.

Engagement goes beyond job satisfaction and is more than motivation. It’s something the employee needs to feel and so subsequently give the best of themselves at work. You could say that engaged and motivated employees have eaten three shredded-wheat and there’s no stopping them.

There is clear evidence that those people who are actively engaged at work achieve a better work-life balance and have greater life satisfaction and happiness, they enjoy more positive relationships with colleagues at work and they generally feel that life is worthwhile. These employees are less likely to be anxious or feeling under pressure at work or to be looking for a new job.

How can this be achieved though, given the rounds of pay cuts and freezes, short-time working and redundancies associated with the economic slump? The first step is to measure employee attitudes about work including pay and benefits, communication, training and coaching, line management and work-life balance.

The drive for an engaged workforce builds on good people management, development policies and active support by managers. Engagement isn’t about making people work harder, but providing the conditions under which they’ll work more effectively and we all know that when we’re happy, we are far more productive.

The CIPD survey revealed that whilst 72% of employees felt that their immediate managers treated them fairly, only 30% felt that their development needs were met, and that covers things like training, coaching and feedback which are all vitally important in nurturing an engaged employee.

In order to be engaged, an employee has to feel that there is a mutual respect and need and that they have a part to play in the success of the organisation. This is sometimes referred to as a psychological contract with the employer where both parties are clear what’s required of them, and both are fully committed to achieving it.

This is quite distinct from the contract of employment, as engagement can never be required as part of the legal relationship. Not surprisingly, communication is a key to unlocking employee potential as employees who feel that their views are important are far more likely to be engaged.

But why stop at personal development? Some employers are going a step further and looking at a wider picture to create positive conditions for their employees. For instance, there was a recent documentary about the firm Addison Lee which experimented with employees bringing children to work. Productivity increased as employee stress-levels dropped and the company also benefited from the positive PR as it showed a more human side, which its customers found irresistible.

In the USA, 18 states raised their minimum wage level last year and it’s estimated that the extra money in workers’ pay cheques will add $366 million to the country’s GDP. In the UK, the company that owns Holiday Inn is also paying well above National Minimum Wage and is finding that this fosters a loyal and hard-working workforce.

Despite these straitened times, no company can afford not to invest in its employees, and work hard to keep them. Offering enhanced pay and other benefits may sound like commercial suicide, but perhaps the opposite is true? Perhaps we need to move away from an obsession with cost-cutting and positively engage employees as that’s the way to growth, profitability and individual well-being.

Kate Reynolds joined McKinnells Solicitors in Lincoln in 2011, after she qualified as a solicitor in 2008 and worked on a wide range of both contentious and non-contentious matters including employment matters, judicial review proceedings, planning disputes, boundary disputes and construction work including advice on contracts and adjudication.