Ten years of labour

If a week is a long time in politics, 10 years is an eternity in employment law. Employment law has moved far and fast since New Labour came to power in 1997. Indeed, it is difficult to think of any other field of law which has been the subject of such an ambitious, relentless and far-reaching legislative programme.

Ten years ago, there was no national minimum wage. No legislation fixing maximum working hours or providing for paid holidays. The employment provisions contained in the Disability Discrimination Act had only just come into force and had yet to have any real impact. In most cases, people had to be employed for two years before they would gain the right to claim unfair dismissal. The compensatory award in unfair dismissal cases was capped at £12,000. In practice, the threat of an unfair dismissal claim was little deterrent to larger employers.

Fast forward 10 years and the changes are stark. This article looks at the some of the forces that have shaped employment law over the last 10 years. Specifically, we will consider the expanding role of consultation in employment relationships, the changing profile of legal risk, the impact of demographic pressures and the continuing European influence.

The importance of dialogue

Consultation obligations within employment law have taken off under New Labour. While it is true that consultation has long been an important part of the law on redundancies, health and safety matters and the transfer of undertakings, consultation has become much more important over the last decade and is now deeply embedded in much of our employment legislation.

There are some obvious examples of how the present government has expanded the importance of workplace consultation. The Information and Consultation of Employees Regulations 2004 set out a statutory model for dialogue in the workplace. The revised TUPE Regulations 2006 contain enhanced notification requirements and seek to promote pre-transfer consultation. Even the widely-criticised statutory procedures governing discipline, grievances and dismissals may be looked on as an attempt (albeit perhaps unsuccessful) to force employers and employees to talk to each other before they end up at an employment tribunal.

Other examples of the increased importance of consultation are less obvious. For example, the Disability Discrimination Act 1995 (introduced under the previous Conservative administration, but greatly extended under the present government) has dramatically changed the way in which employers manage long-term absence. Partly as a result of the statutory obligation to make “reasonable adjustments” in respect of disabled workers, many employers now adopt a much more consultative approach towards absence management than was the case 10 years ago.

Sometimes, the government has preferred to inject new consultation rights into the employment relationship rather than create more substantive legal rights. Take flexible working, for example. The government has not created a formal right to flexible working; but it sought to promote flexible working by introducing a system by which employees can request a flexible working arrangement from their employers.  This model has been criticised, but the government adopted a superficially similar model under the age discrimination laws in relation to requests by workers to carry on working beyond their retirement dates. Under the current drafting of the Employment Equality (Age) Regulations 2006, employers are allowed to refuse requests for post-retirement working though, bizarrely, without having a statutory obligation to explain why.

It is also worth observing that most of the government’s attempts to promote consultation within employment relationships have been at an individual level. The government has shown no great enthusiasm for consultation at a collective level; and indeed there has been no great enhancement of collective rights generally over the last 10 years.

Legal risk: a changing profile

The period from 1997 to 2007 has seen a gradual expansion of the legal risks associated with employment law. Ten years ago, most of the legal risks centred on dismissal. Now the risks increasingly apply throughout the life cycle of the employment relationship.

Many of the employment rights created over the last 10 years can be enforced while the employee remains in employment. Indeed, it is possible for employment-related claims to arise even before the employment relationship has formed. For example, a decision not to shortlist a job candidate for interview may be enough to found a discrimination claim. The introduction of age discrimination legislation heightens this risk. While it is still early days, what we may see over the next few years is a sharp growth of claims arising at recruitment stage. This would be consistent with the Irish experience, where age discrimination legislation has been in force for a number of years.

This expansion of legal risk – from recruitment and selection all the way through the employment relationship to termination – represents a significant change in how employers must approach questions of employment law. It heightens the need for HR and line managers alike to be trained on how their activities may create legal risks for their employers and what steps can be taken to minimise these risks in practice.

Demographic pressures

In recent years, demographic pressures have affected both the substance and presentation of UK employment policy. The UK population is ageing. The baby boom generation, born in the aftermath of the Second World War, is reaching retirement age. With a significant proportion of the UK workforce due to leave the job market in the next few years, employers are facing some serious challenges. How do they cope with the expected skills shortages? Can they re-structure their benefits packages in order to retain the right mix of skills and experience? How do they manage and incentivise an ageing workforce?

Changes in the age profile of the UK population formed a major part in how the government sold the age discrimination legislation to a largely sceptical business community. In arguing that age diversity was good for business, the government was able to tie a business benefit to legislation which it was compelled by European law to introduce in any event. The age discrimination legislation may be seen, at least in part, as an attempt to promote better retirement planning.

Elsewhere, the government has sought to use employment legislation in an attempt to encourage people to have families while trying at the same time to dissuade working parents from leaving the job market altogether. A raft of so-called “family-friendly” rights has been introduced over the last 10 years, including a right for working parents to request a flexible working arrangement from their employers. Acknowledging that, with an ageing population, many workers now have caring responsibilities towards both their children and their parents, the right to request flexible working arrangements has now been extended under the Work and Families Act 2006 to those workers with caring responsibilities towards adults.

The European influence

Europe continues to exercise a powerful influence over the content and timing of the UK employment agenda. This has been particularly noticeable in relation to the discrimination field. What is interesting here is that the government’s actions often lag behind its public statements. TUPE is a good example of this. While most employment lawyers would agree that TUPE 2006 is an improvement on its 1981 predecessor, the legislation was much delayed and, when it finally came into force, it did not do much more than codify existing European case law. The 2006 Regulations, while welcome, certainly fall considerably short of the government’s stated aims for TUPE reform in the late 1990s.

The present government is, of course, much more sympathetic to the European employment agenda than the previous Conservative administration. Yet, often, it implements its European obligations in the same half-hearted and dilatory manner.

The age discrimination legislation is a case in point. The original promise of age discrimination legislation came in New Labour’s 1997 election manifesto. Nothing came of it during the first parliament, except a voluntary code of practice which was widely ignored. What finally shuddered into force in October 2006 was a piece of legislation which suffered from bad drafting, confused motives, inadequate consultation and insufficient guidance. It has even been argued that, in places, the regulations actually enshrine and promote age discrimination rather than prohibit it.  One suspects that, like the Disability Discrimination Act 1995 before it, the age discrimination legislation will be the subject of considerable amendment and enhancement over the next few years.

“It’s the mileage, not the years”

Inevitably, after 10 years of a frenetic legislative agenda in the employment field, there is much to criticise. Few would dispute the point that there has been rather too much employment legislation introduced since 1997. Some of it has been introduced with too little thought (e.g. the 2004 dismissal and grievance procedures), some with too little consultation (e.g. the 2006 age discrimination legislation) and some with inordinate delay (e.g. TUPE 2006).

Since 1997, the cumulative growth in employment law has been massive and has presented a steady stream of PR opportunities for those law firms which practise in employment law. It is small wonder that DTI announcements of a further round of employment law reforms produce jaded yawns among beleaguered HR departments. After whipping ourselves up into a frenzy about age discrimination last year, even employment lawyers failed to get overly excited about the Work and Families Act 2006.

Employment law has become a field for specialists; and while this no doubt benefits those of us who make a living out of employment law, it does raise broader questions about the affordability of, and access to, specialist legal advice. It simply does not seem right that employment law has become such a complex discipline that even small employers need to seek specialist legal advice to deal with basic day-to-day employment problems. Access to specialist legal advice for employees is even more problematic; and the difficulties associated with this have no doubt helped to fuel the growth of “no win, no fee” claims firms.

Despite these very real criticisms, the New Labour employment law project has been successful in some senses. One measure of its success will be its ability to withstand a change of government. Controversial as some of the reforms were at the time, few of them are likely to be overturned by a successor government.

Another benchmark of success is the fact that, for the most part, UK employers have absorbed a decade’s worth of employment legislation and altered their management practices accordingly. Despite various alarmist fears, the UK economy has not been destroyed by the introduction of a national minimum wage or by workers having rights to paid holidays.The business community may not have liked much of the government’s employment law agenda but it has, for the most part, coped with it.

Changing culture

Perhaps most fundamentally, the past 10 years of employment legislation have significantly altered the culture of working relationships in the UK. This cultural change has taken place without any significant transfer of power to the trade unions and without completely alienating the business community.

What, of course, has not been achieved is any sense of simplicity or stability. When the incoming government first announced its plans for employment law reform, it spoke in terms of more conciliatory employment relationships and of bringing about a new era of “fairness at work”. In 1998, Tony Blair announced that he wanted “to draw a line under employment law” and achieve a new industrial relations settlement. This seemed over-optimistic at the time and seems amusingly so in retrospect. Any kind of “settlement” within this fast-moving field seems impossible for as long as employment law remains a political battleground of conflicting ideas, principles and aspirations. Employment law is and will likely remain a turbulent area, where the competing demands of business, society and our wider European obligations must jostle for political priority.

David Christie is a partner with Proactive Employment Lawyers, Aberdeen

TEN YEARS OF CHANGE

Perhaps the most obvious change is that employment law is a much bigger field than it was. There has been a massive increase in both the amount and frequency of employment legislation. Employment law has grown in terms of volume and complexity, but also in terms of coverage. Employment law in 2007 covers more than just “employees”. Many other categories of worker are also covered by at least some employment legislation. As a result, assumptions which employers used to be able to make about atypical workers representing relatively low legal risks are no longer safe.

A second change, related to the first, is that the laws prohibiting workplace discrimination and harassment have been expanded, almost beyond recognition. In 1997, there was already legislation prohibiting discrimination on the grounds of sex, race and disability. In 2007, we now have laws designed to tackle discrimination against part-time and fixed-term workers as well as discrimination on the grounds of sexual orientation, religion, belief and – from October last year – age. A new free-standing prohibition against sexual harassment has been introduced, existing discrimination laws have been strengthened and new equality duties are now being imposed on the public sector.

A third change is that the law governing the termination of employment has been transformed. Dismissing employees in 2007 is a much more difficult, dangerous and potentially costly exercise than it was 10 years ago. In part, this is due to changes made to unfair dismissal law: specifically, the reduction in the qualifying service period in most cases to one year and the raising of the statutory ceiling on the compensatory award. It is also due to the fact that, over the last 10 years, many more employment protection rights come into existence from day one of the employment relationship. With the introduction of age discrimination legislation (which applies to all workers, regardless of their age or length of service), it has become very difficult for any dismissal by an employer to be any entirely free of legal risk. Even retirement, once a relative safe haven for employers, has become a potential flashpoint for claims.

Some of the increased difficulty associated with the termination of employment is as a result of the statutory procedures governing discipline and dismissal which were introduced by the government in 2004. It is widely accepted that these procedures have given rise over the last three years to many problems which have outweighed their benefits. The entire system of statutory dispute resolution is now thankfully the subject of review and the statutory procedures may be repealed.