Employee Relations and Employment Regulations
Work motivation is about being able to create an environment whereby staff are willing to apply their efforts towards the achievement of corporate goals whilst also ensuring that individual and group needs are satisfied (Armstrong & Taylor, 2014). The challenge is that in seeking to create this environment there are also legal and regulatory stipulations to consider which govern the way in which these relationships need to be managed and structured. This chapter outlines the major factors shaping and defining the employer-employee relationship. In doing so, it will discuss the concept of the employee before providing an indication of the formal frameworks that need to be considered.
Being regarded as an employee gives a number of rights whilst also creating mutual obligations (Leatherbarrow & Fletcher, 2015). From a legal perspective, an employee is working under a ‘contract of service’ whereas non-employees (i.e. those self-employed or sub-contractors) are deemed to operate under a ‘contract for services’ (Torrington, Hall, Taylor & Atkinson, 2014). UK law defines an employee as being an individual who has entered into or who works under a contract of employment (UK Legislation, 2016a).
UK employment legislation provides the framework for the employer and employee relationship. This can be encapsulated within an employment contract formed on the basis of a clear and unambiguous offer from the company, an unconditional acceptance of that offer from the individual and some form of consideration (usually pay and benefits) (Beardwell & Thompson, 2014). There must also be an intention between both parties to form a binding contract. The terms and conditions of such contracts generally fall into three areas - express (the clear terms outlined in the contract and set out in other documentation such as staff handbooks), implied (UK Common Law assumes that both the employer and employee will be ‘fair and reasonable’ in their dealings) and statutory (following legislation) (Redman & Wilkinson, 2009).
Within the UK, legislation and associated arrangements seek to regulate the relationship between the employer and the employee. This section presents the key issues captured by some of the most important legislative frameworks. However, many others exist and further/wider reading is recommended.
The Employment Rights Act 1996 set out numerous minimum standards that an employee has a right to expect. This legislation also address more social issues such as the right to request shared parental leave (Armstrong & Taylor, 2014). The Act stipulates that employees have a legal right to receive a detailed statement covering their terms and conditions of work and that any changes require consultation. Importantly employees are also empowered to request changes to their contract terms (Foot & Hook, 2008). Other key provisions include rights to ‘time off’ and minimum notice periods for the termination of employment (Leatherbarrow & Fletcher, 2015).
The Equality Act 2010 extends anti-discrimination protection to people with certain characteristics including race, disability, sex, sexual orientation, religion (or belief), age, pregnancy and marital status (Armstrong & Taylor, 2015). Direct or indirect discrimination (intentional or unintentional) can be legally challenged and those experiencing harassment and victimisation can also claim that they are experiencing discrimination (Taylor, 2014). The Act established the Commission for Equality and Human Rights which has the power to initiate its own prosecution procedures should it consider that discrimination is taking place (Marson, 2009).
A large number of laws and regulations must be considered including:
The Health and Safety at Work Act 1974.
Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 1995.
Health and Safety (Consultation with Employees) Regulations 1996.
Management of Health and Safety at Work Regulations 1999.
Corporate Manslaughter and Homicide Act 2007.
(Leatherbarrow & Fletcher, 2015)
In addition employers need to be aware that increasing importance is also being placed on employee well-being and the maintenance of a sensible work-life balance and legislative frameworks are now being used to address such concerns. In essence, the employer owes a ‘duty of care’ to their employees, but employees must also do all that they can to remove or at least minimise workplace hazards through their own actions and behaviours.
The 1998 Working Time Regulations places limits on working hours as well as entitlements to rest breaks and annual leave (Armstrong & Taylor, 2015). The National Minimum Wage Regulations 1998 also makes it both a civil and a criminal offence if an employer does not adjust their pay regimes to reflect the minimum hourly rates set out by the Government (Lockton, 2014).
The Public Interest Disclosure Act 1998 supports employees who wish to raise any business performance or ethical issue that provides evidence of corporate failure or malpractice (Fisher, Lovell & Valero-Silva, 2011). This protects and empowers employees and the intent is to overcome any organisational or cultural pressures that may prevent them from acting (Lockton, 2014).
The Children and Families Act 2014 reflect the public desire for employment rights to keep pace with modern family developments. However, whilst all employees have the right to request flexible working patterns (and the employer has a legal duty to consider them), they can be refused if the requirements of the business make it impossible to support such arrangements (Lockton, 2014).
Ultimately, a successful company needs to develop and maintain an enduring competitive advantage in order to thrive and survive (Porter, 2004). Conflict and tension between employees and their employers is negative and disruptive and means that the organisation does not function as effectively as it could or should do (Leatherbarrow & Fletcher, 2015). This unitarist perspective has seen the development of employee relations approaches which seek to unify effort, motivating and inspiring employees through systems that aim to foster loyalty and commitment (Muller-Camen, Croucher & Leigh, 2008).
Employee engagement is essentially comprised of:
Emotional engagement - creating a working environment where employees have emotional as well as structural ties to their managers and the organisation. Employees must feel that their opinions count and that there is a genuine interest in their development needs.
Cognitive engagement -outlining what is expected of employees, their purpose/role and how that relates to the organisational mission and objectives. This should include opportunities for the employee to excel and grow, including advancement and performance improvement.
Employee Engagement is a combination of commitment to the organisation and its values. It cannot be demanded as a part of the employment contract and considers what the employee has to offer - assuming that the employer can create the conditions to support the employee in making that offer (Daniels, 2010). Effective employee engagement can deliver clear business performance benefits such as:
Businesses with the highest rates of employee engagement are twice as successful as those reporting poorer levels of engagement.
Poor engagement leads to increased turnover and associated recruitment costs.
Indicators of employee satisfaction and resulting performance can vary significantly between similar business units within the same company, highlighting how employee engagement efforts can directly shape performance.
(Torrington et al, 2014)
Employee Voice refers to the varied processes and structures used to enable people to contribute to decision making in their workplace (Torrington et al, 2014). If staff better understand what lies behind the objectives they have been set, then they are more likely to work harder to achieve them. In taking forward any business change programme, the effective and early involvement of employees is often seen as being the critical success factor (Kotter, 1996).
The sharing of information can be carried out in numerous ways, but being told about things does not give employees any voice or influence - the challenge is to create a dialogue that builds involvement and which provides staff with the mechanisms to articulate alternative (and sometimes better!) solutions (Currie, 2006). More interactive approaches giving employees greater freedom to express their views and opinions ensure that they feel valued even if their suggestions are not carried forward (Bratton & Gold, 2007).
Attitude surveys and staff suggestion schemes (if intelligently managed) also provide a mechanism to capture employee voice. Many companies also use informal team gatherings that seek to capture a range of opinions utilising the concept of ‘quality circles’.The aim is to create a problem-solving group that involves people from across the organisation (and all levels) to generate ideas, encourage cooperation and drive change (Torrington et al, 2014).
Consultation is generally regarded as being the hallmark of good management and where representative bodies exist (such as Trade Unions) then formal consultative frameworks are likely to be in place. It is also possible to provide employees with the opportunity to exercise greater autonomy over their work. The resulting dialogue and the self-organisation that results can deliver greater employee engagement, although careful (if discrete) management and supervision is often required.
Industrial Relations is not just another term for Employee Relations, as it denotes a change in emphasis. Concern with industrial relations developed when the focus was on collective relationships within an industry and each business within the ambit of that industry observed the terms and conditions between employers’ representatives and Unions, which bound every employer (Torrington et al, 2014). Whilst more modern attitudes to employee relations take a much broader perspective, the dynamic between employee representational groups and employers (reflecting the more traditional ‘industrial relations’ description) remains a vital component of any employee engagement strategy. Often, Trade Union representatives remain the primary formal staff engagement mechanism for business leaders and in areas where the working relationship is good then this also supports more informal engagement networks.
In many large organisations a Trade Union is empowered to reach a collective agreement with an employer that can shape the terms and conditions of all staff even if they are not a member of that Union (Bratton & Gold, 2007).
Expressions of dissatisfaction with business processes and/or management policies may lead to open conflict or even industrial action. This is more likely when the formal and informal engagement mechanisms used have not proven to be useful (or even trusted) further reinforcing the importance of genuine and open dialogue.
In the UK, mediation is seen as a means of avoiding a reliance on costly and time-consuming formal processes to resolve work-place grievances. This informal and flexible approach to reaching consensus is embodied in the recognised and accepted role of the Advisory, Conciliation and Arbitration Service (ACAS) (Bratton & Gold, 2007). Ownership of the dispute rests with the parties concerned, as this encourages all involved to fully commit to implementing any solutions reached. Such conciliation is often used informally throughout organisations. Sometime, the third party can be asked to reach a decision on behalf of those in conflict. This arbitration is only effective if all involved have agreed in advance to accept the decision reached.
Where formal and informal mechanisms have failed to ensure that employees meet the required standards and behaviours outlined and agreed for the organisation, then formal disciplinary measures may be necessary. This should be aimed at improving the employee’s behaviours, punishment if necessary and deterring others from taking similar actions (Beardwell & Thompson, 2014). Even for minor concerns, a disciplinary process should be formal and recorded. A stepped and progressive approach (e.g. a verbal warning first, with written warning for subsequent breaches, then suspension then dismissal) also provides adequate opportunities for the employee to correct their failings (Foot & Hook, 2008).
This Chapter has only been able to provide the most essential overview of a number of complex issues surrounding employment law and employee relations. The formal legislative frameworks surrounding the employer-employee relationship are extensive. However, an understanding of how to effectively manage employee relationships (and the use of the more informal engagement mechanisms) can help to both maintain an enduring competitive advantage and avoid a potential breach of legislation.
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