Employer fear of employment regulations is perception, not reality

Victoria Phillips is head of employment rights at Thompsons Solicitors

The Thompsons Solicitors UnionHome blog


It’s an odd contrast, the Queen signing the Commonwealth Charter with its commitment to equality and respect for the protection and promotion of civil, political, economic, social and cultural rights and gender equality, while HM Government goes on driving employment rights down to the level of developing countries.


As manufacturing output falls alarmingly, creating massive job insecurity by making it easier for employers to sack people is economically illiterate. It makes even less sense now that we have evidence that employers are far more relaxed about employment regulation than ministers would have us believe.


The study by academics at Kingston University, commissioned by the Department for Business, Innovation and Skills, which we report in this week’s LELR weekly reinforces our view that the government’s obsession with restricting employment rights and access to justice to ease so-called burdens on business is driven by ideology and has no basis in reality.


The researchers’ finding that employment regulation is generally considered both necessary and fair because it ensures employee rights are protected while providing employers with a legal framework belies the government mantra that businesses are scared of taking on staff because of employment laws.


Firms surveyed recognised that they rarely experienced issues relating to regulation – such as dismissal or dealing with a dispute. Tellingly however, when asked directly, they said that regulation was burdensome. Employment regulation was perceived as complex. Employers were anxious about the impact that regulation may have on their business or other businesses in the future should they face litigation for failing to meet all the legal requirements.


It’s hardly surprising that, when researchers, business organisations or government put it directly to employers that regulations are a burden, or that they are scared of employing staff, that they’ll get the response they want. They are not, usually, asking for evidence to explain the answer. Take question two in BIS’s October 2011 Flexible Labour Markets consultation: What more can Government do to reduce the fear factor in employing staff, particularly the first member of staff that a business takes on?


Fear factor, what fear factor? Oh now you mention it…for employers (particularly small ones) can be very suggestible when they are receiving so much attention from policy makers.


The Kingston researchers conclude that employers tend to have an “inflated idea of the risk of being taken to an industrial tribunal when dismissing staff” and call for the “high risk” myth to be dispelled to help to reduce the perception that all employment regulation is burdensome.


I doubt this is a piece of advice ministers will welcome or act on. Easier to allow anecdote to continue to drive policy, whatever its impact on growth, in order to keep up the government’s calculated attack on working people.

Outside the box: Unions could help provide credit life-line for companies too

As discussed previously on UnionHome, Unite is mounting a challenge to payday lenders with high interest rates, with plans to establish a nationwide credit union network.


But how about the idea of unions working with peer to peer lenders, not excluding those that provide credit to small businesses?


Crowd funding describes the collective effort of individuals who network and pool their money, to support a wide variety of activities including businesses. Like banks, but better.


Lancashire County Council is looking to reinvest money into businesses through a partnership with crowd funder Funding Circle.


As the Bridging and Commercial website reports:Lancashire’s 52,000 small businesses are responsible for more than 50 per cent of local private sector employment. A recent study by Funding Circle indicated the potential economic boost that could be unlocked through better access to finance and 42 per cent of small businesses in the North West stated that they would increase staff numbers if they could obtain finance. 


By supporting crowd funding politically and financially, unions would be indirectly supporting their members and creating jobs should businesses be able to take out loans. And as an article on the problems faced by American food company Hostess wryly points out – union members could have a say in the running of a business, including ensuring fair work practices,  if they part funded it.


Dan Whittle writes in a personal capacity