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- What did our expert panel make of the Employment Rights Bill?
What did our expert panel make of the Employment Rights Bill?
We take a look at what was discussed as part of our webinar on the Employment Rights Bill, delivered in partnership with Mercer.
The Employment Rights Bill has made its way into parliament and up the agenda of boardrooms across the country. Mercer and the CBI brought together a panel of expert lawyers, HR professionals and policy advisers to discuss what the Bill means for business.
A key theme in the discussion was concern about spiralling employment costs. The £25bn National Insurance Contribution (NICs) rise and the 6.7% increase in the National Living Wage announced at last month’s Budget make for a difficult backdrop against which to consider incorporating further regulatory cost. Panellists were keen to stress the importance of the government getting the details right and avoiding unintended consequences for growth.
The key takeaways were:
The Bill enables a separate legal status for probation, but whether that will limit costly tribunal claims remains unclear
- Simply removing the qualifying period for unfair dismissal would mean exposing a business to the possibility of a tribunal claim whenever it actions a probation period. This would raise the expected cost of employment as regardless of whether a fair process has been followed to be accused is to lose
- In response to these concerns, the government has taken powers within the Bill to introduce a lighter-touch process for probation and has indicated this may be set at nine months. The extent to which it will still be possible for tribunal claims to be brought will however be determined by policy decisions still to be taken in secondary legislation and following consultation
- Attendees stressed that tribunal delays are already significant. The extra 9m people this policy brings into scope of being able to launch a claim means accompanying measures that enable weak claims to be struck out may be needed.
Reforms to zero-hour contracts have changed and could entail significant administrative cost
- The right to have a contract reflective of the hours worked over the past 12-weeks will be targeted at those on ‘low’ hour contracts, with low to be defined following further consultation. Exactly how low ‘low’ is at this stage unknown. Given the policy was originally set to apply to all workers, it may not be as limited to zero-hour contracts as many firms expect
- There is a clause within the Bill that could enable a business to offer a fixed-term contract for the remainder of a high demand period rather than a permanent contract. This could potentially, if designed carefully in subsequent regulations, limit concern about a businesses’ ability to use overtime in response to variable demand
- However, the right is now a right to be offered, rather than a right to claim. The onus is then on the business to monitor when the right is triggered and to take on the administration of making offers. With each person’s reference period being individual to them, there will not, as the Bill stands, be an option to make offers in bulk.
Large companies could be required to undertake perpetual collective consultation
- The Bill removes the requirement that thresholds for collective consultation be calculated at ‘one single establishment’. This means employers will need to track all redundancies across their workplaces to determine whether the threshold has been reached.
The Bill’s provisions on dismissal and re-engagement could complicate restructuring
- Failure to agree any variation of contract – include those that are not detrimental - a reason for unfair dismissal. This could frustrate legitimate attempts to change terms where the employee does not agree – such as, for example, in an office move.
Businesses have concern that trade union reforms could weaken employee relations
- Across reforms there is a common theme of removing accountability mechanisms whilst expanding powers.
There may be cause for businesses to think more carefully about their workforce plan.
- The Bill entails increased risk in taking on staff on permanent contracts, less flexibility to restructure a large workforce and higher compliance costs. This could however mean some businesses take a more proactive approach to their workforce decision making, which in turn could mean their workforce is better aligned with their growth ambitions.
Over the coming months, the CBI will be empahsising to government the need to take policy decisions that ensure the costs entailed by the Bill are manageable. When margins are squeezed too far, employers lose the headroom to pursue growth, and a growing number are facing a tough decision between either cutting investment or jobs.
What are your business’s next steps?
As the Plan to Make Work Pay package is rolled out it may be helpful to seek advice on what the reforms mean specifically for your business model. Mercer’s human resource consulting services could be invaluable for helping you stay ahead. For more information from Mercer, please contact David Wreford.
The CBI is keen to hear your feedback on the Employment Rights Bill. Your contributions to the business community’s response to the government’s consultations on the Bill could be invaluable for ensuring that a pro-growth, pro-worker landing is found. If you would like to know more about the CBI’s Employment Rights Bill Working Group, please contact Laurence Raeburn-Smith.