Employers and unions highlight opposing views on regulation

The November 2000 annual conference of the Confederation of British Industry was the occasion for renewed public debate with the Trades Union Congress about the role and impact of business regulation, particularly in the area of employment relations.

The Confederation of British Industry (CBI) used its annual conference, held on 6-7 November 2000, to launch a new report on the impact of employment legislation in which it argues that "the government should not introduce new employment rights in addition to those already in the pipeline from Europe unless there is a clear business/employment case" for doing so.

Key points of the CBI report

The report, Cutting through red tape, highlights the results of a survey of CBI member companies which shows that "while the rights imposed by recent new employment regulations have had relatively little impact on most employers, a majority of firms believe that the cumulative administration and red tape burden involved has been disproportionate".

Of the 400 firms replying to the survey:

  • 61% agreed that insufficient time had been allowed for implementation;
  • 55% agreed that the level of administration was unacceptable;
  • 50% agreed that the initial start-up and preparation had a significant negative impact; and
  • 49% agreed that dealing with new regulations diverted senior managers from more important business activities.

Using government figures, the CBI report calculates that 15 new employment rights introduced since 1998 will cost UK business some GBP 12.3 billion between 1998 and the end of 2001, but argues that this figure does not fully reflect the administration and opportunity costs faced by companies. Commenting on the survey, CBI director-general Digby Jones said: "Excessive red tape has caused most of the headaches, rather than the rights themselves. This has led to an incalculable cost with firms diverting resources into admin and losing opportunities."

The call for a halt to further employment relations legislation is reiterated in the CBI's "manifesto" for the next general election, published to coincide with the conference. The CBI has also voiced concern about the emergence of a "compensation culture" following a record increase in employment tribunal claims against employers in 1999-2000 (see below) and has called for the reform of the employment tribunal system.

TUC challenges CBI red tape campaign

In an open letter to the UK's employers, released as the CBI conference opened, John Monks, general secretary of the Trades Union Congress (TUC), said that instead of "moaning" about the impact of employment legislation employers should work with unions and the government to "raise Britain's game" by tackling the "real problems" facing the economy - productivity and skills (UK0011197N). The TUC argues that, while employers always say that employment rights will cost business millions of pounds, the cost per employee per week is actually very modest - only GBP 0.09 per week per part-time worker to introduce equal treatment for part-timers (UK0005175F) and GBP 0.02 per worker per week to introduce unpaid parental leave and time off for family emergencies (UK9912144F). The TUC letter also seeks to put the cost to business of regulation in context by quoting official figures showing that the value to UK business of unpaid overtime by employees is some GBP 23 billion a year. While the TUC says that it does not want the UK to become "a nation of clock-watchers", it argues that employers often take this extra time for granted while opposing "modest improvements" in employee rights.

Record increase in employment tribunal claims

In its Annual Report 1999-2000, published on 24 October 2000, the Advisory, Conciliation and Arbitration Service (ACAS) released figures showing the largest increase in the number of employment tribunal claims made since ACAS was established in 1975. During the year April 1999-March 2000, there were 164,525 employment tribunal claims - a rise of 32% on the figure for 1998-9 (124,256). However, ACAS points out that this headline figure significantly exceeds the number of applications made by individuals (103,909) because applications often include more than one complaint. The largest number of complaints continue to concern unfair dismissal (52,791), with an estimated 6,700 of these arising from the lowering of the qualifying period of employment for such complaints from two years to one year (UK9905104N). Some 7,000 complaints were made under the new Working Time Regulations (UK0001150F) and National Minimum Wage provisions (UK0004170F). Employment tribunal claims are initially referred to ACAS for conciliation and, overall, 75% of individual conciliation cases during 1999-2000 were settled or withdrawn and 25% went on to an employment tribunal hearing.

This growth in employment litigation is seen by the CBI as "alarming" and is fuelling its campaign against regulation. The TUC, however, believes the figures show that "people are no longer prepared to put up with ill-treatment at work", but that "no good employer who behaves responsibly need fear litigation".

Following the introduction of the Employment Rights (Dispute Resolution) Act 1998, the government asked ACAS to draw up a scheme to enable people who wish to avoid some of the time, cost and publicity often involved in pursuing a claim for unfair dismissal to an employment tribunal by referring their case to an arbitrator instead. ACAS consulted on a draft scheme in July 1998 and the tripartite ACAS Council submitted revised proposals to the Department of Trade and Industry for approval in the autumn of 1998. However, apparently due to the heavy programme of other employment legislation and the need to take account of the implications of the introduction of the Human Rights Act 1998 in October 2000, the implementation of the ACAS scheme has been delayed and is now scheduled for the spring of 2001.

Commentary

Arguments about the desirability of the legal regulation of the employment relationship have long been a feature of UK industrial relations scene, with employers tending to view statutory employment rights as "burdens on business" which inhibit employment and competitiveness while unions see them as essential minimum standards ensuring the fair treatment of workers. There was a sustained emphasis on "deregulation" by the Conservative governments of the 1980s and 1990s, resulting in the limitation of individual employment rights, particularly for employees in small firms. The Labour government elected in 1997 can be seen as having pursued a strategy of regulating to ensure the fair treatment of employees, subject to maintaining labour market flexibility. Ministers have sought to take account of the concerns of business in framing the detailed provisions of new employment legislation but this has not prevented continuing employer criticism of the effects of regulation (UK0004165N).

The "arbitration alternative" developed by ACAS is strongly supported by the CBI (as only one of a package of measures it wants to see introduced to discourage employment tribunal hearings) and by the TUC (as a contribution to reducing "legalism" in the enforcement of employment rights). It remains to be seen what impact the new arrangements will have. A future EIRO feature will examine the new system once it is introduced. In the meantime, between now and the next general election expected in spring 2001, both the CBI and the TUC will continue to push their respective employment rights agendas with the government in the hope of influencing its election manifesto commitments for a second term in office. (Mark Hall, IRRU)

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