The Mystery Number

It’s a staple of TV mysteries – the cryptic number that may (or may not) be significant to the plot. For example, ‘119’ in the new series of Twin Peaks; ‘Counting down from 730’ in Buffy or the mysterious number sequence (4,8,15,16, 23, 42) in Lost.

In employment law, we have our own mystery number: 87(4)

To be more precise, it refers to section 87(4) of the Employment Rights Act 1996, and deals with notice periods.

As most employers are aware, if you dismiss an employee, then in the majority of cases they are entitled to a period of notice. That period of notice is the longer of the minimum period laid down in the Employment Rights Act – sometimes known as Statutory Notice – or what is written in the individual’s employment contract.  During the notice period, the individual is entitled to their normal pay.

All pretty straightforward. But, if the individual is unable to work during their notice period, do they receive full pay or the pay that they are entitled to while off sick (Statutory Sick Pay – or in some cases no pay – for example)? This is where our mysterious clause kicks in.

Under 87(4). If someone has a contractual notice period that is 1 week or longer than their period of statutory notice, then the employer can legally pay sick pay rather than normal pay during notice.

So, an employee whose contractual notice is 13 weeks, but whose statutory notice is 8 weeks, would not be entitled to receive their normal pay during notice. But an employee whose contractual notice is 2 months (which is roughly 8.5 weeks) but whose statutory notice is 8 weeks would.  Fair? Not really. Confusing? Yes. The sort of thing that is likely to inadvertently trip up employers? Definitely!

Why does this rule exist? That’s the mystery. While many employment law rules, however arcane or apparently illogical, can be explained by some historic circumstance or rationale, the reason for 87(4) appears to baffle many. Unless of course you know differently (in which case please use the comments section below!)

Can’t Buy Me Love

While catching up on blogs post-holiday, I came across this piece by Neil Morrison. Neil is a well-respected HR Director with a household name company and member of the CIPD council, so when I read it I could only guess that his post was written to be intentionally provocative.

His argument, in a nutshell, is that when we in HR talk about “discretionary effort” from employees, we are in effect expecting them to do more than we are paying them for. If individuals just do the bare minimum, we don’t consider that satisfactory. In effect we want something for nothing – if we want more we should pay more.

At a very superficial level, that seems an attractive argument (and indeed a Marxist would argue that the essence of capitalism is that workers are not paid the full value of their work – as I pointed out in this post about Wayne Rooney)

But there are two strong points against this. The first is that many employers also offer “discretionary” things to their employees. If your workplace has a canteen or buffet bar; if you get paid your normal salary during sickness or any part of your maternity leave; in fact, even if a family member dies and you are given compassionate leave; then you are receiving something your employer does not have to offer. It doesn’t matter why the employer is doing this, they are giving you something more than you are legally entitled to. So to expect in return that you as an employee might give a little extra back is not, in my view, unreasonable. In fact, if we want to view work as a purely economic transaction, then I’m damned if I’m going to say “thank you” for a piece of work – after all it’s what you’re paid to do. And to take Neil’s analogy, if you ask for two scoops of ice-cream and it’s poor quality mass produced tasteless stuff, you’ve no grounds to complain – it’s what you asked for. I don’t have to give you hand-made full cream Italian gelato.

And secondly, while paying a decent level of pay is important, it’s been well recognised for decades that individuals value things like recognition, career development and personal satisfaction from work. Even if you consider someone like Dan Pink, with his suggestion that what people want is autonomy, mastery and purpose from work, is a bit too much of a modern fad (despite his very well researched books) then I’d direct you to that old HR staple, Herzberg, who 50 years ago suggested that pay was not enough on its own to provide satisfaction at work.

To put it simply, as a well-known band once said “I don’t care too much for money, money can’t buy me love”

Just how hard is it to treat people decently?

Every so often the internet throws up some serendipitous issues. A discussion on Twitter about the recent case of the Vicar unable to make an unfair dismissal claim since he was deemed to be employed by God caused me to look at Rerum Novarum, the 1891 Encyclical by Pope Leo XIII, which said among other things that

  • Employees should be paid a “living wage”and receive stable working conditions
  • They should have proper rest breaks
  • Trade unions were on the whole a good thing
  • Even if they had the economic power to do so, employers shouldn’t exploit or treat their staff badly

At the same time, the latest post from blogger Maid in London, which details life as a hotel housekeeper, popped up in my timeline. I think it’s fair to say that her employer takes the opposite view to Pope Leo.

Some people do pretty awful jobs in unpleasant conditions. They clean hotel rooms, collect bins, make or assemble things in hot and noisy environments, work with dangerous equipment, or deal with people in difficult or crisis situations. Although it’s true that you can get job satisfaction from even the most mundane or demanding task, most in those roles don’t do it for the love of the job. And despite what some in social media suggest, these jobs aren’t all going to disappear in the next 5-10 years.

So why do we think that just because someone does a manual job, for low pay, that it’s somehow okay to treat them like dirt? While some HR people might get slightly orgasmic at the thought that the world of work is full of “cool” organisations like Google, where employees drink lattes while sliding down pool tables, others boast of their commercial prowess by looking at new and innovative ways to cut employee terms and conditions in pursuit of the “bottom line”, and a third group wander around ineffectually bemoaning the fact that line managers don’t listen to them or follow their carefully constructed processes. None of these groups seem to consider that just treating people with a little common decency might pay dividends both in terms of staff morale and productivity.

Let’s face it, if a celibate theologian from the Victorian era can “get it”, then twenty first century HR professionals should be able to.

Are our workplaces designed to fail?

I’m a big fan of economist Tim Harford, and recently read his book “The Logic of Life”.  In one chapter he deals with an economic idea which offers an explanation of the reasons both for high executive pay and office politics – Tournament Theory.

The argument – supported by some statistical evidence – runs like this. Modern workplaces reward relative performance, not absolute performance. Good performers are defined, not by specific targets, but by being better than other performers. So work becomes a series of endless tournaments between ostensible colleagues – if one wins, another loses. And with victory comes reward.

Now just like in the current World Cup, victory can be obtained in various ways.  You can go all out to achieve success, putting in lots of discretionary effort – the equivalent of playing free-flowing, attacking football. But there are equally successful strategies that will win you the match without necessarily benefiting your employer. You can be risk averse, blocking anything new and sticking to the tried and trusted, stifling your more innovative opponent – the work equivalent of “parking the bus“. Or you can go out of your way to discredit, disrupt and stab your colleague in the back – the equivalent of trying to kick your opponent off the park. Your tactics are determined by doing not what is best for the organisation but what will work for you –  and just like the group stages of the World Cup will be decided not just by who your current opponent is but also what your other  colleagues are up to.

In this model, the prize for getting to the next level  has to be sufficient to make it worth competing at all. So if you earn £20000 pa, the prospect of a promotion to a salary of £25000 is a big jump. At £70000, an increase to £75000 will have far less effect but an increase to £90000 may well incentivise you. Chief Exec salaries of say £500000 aren’t designed to reward the individual in the role, but to act as an incentive to Directors below them who may be earning a “mere” £300000.

Of course, it’s easy to spot problems with this theory from an HR perspective. For example, it makes no allowance for intrinsic motivation, despite increasing scientific support for this playing a major part in the way individuals behave in the workplace.

But what the theory does do is to explain why many of our HR initiatives fail. If our organisation structure and pay and benefits system is set up to reward relative performance, it will inevitably encourage people to behave in the way that tournament theory predicts. No amount of family friendly policies, team building exercises, empowerment or innovative recruitment strategies will change this if we have designed systems that work against what we are trying to achieve. So while OD and “compensation & benefits” are seen as the less ‘sexy’ end of HR, maybe they are the ones we should be paying more attention to if we really want to change the world of work.


Wayne Rooney and Marxism

This post was originally published in October 2010, and was a tongue in cheek response to footballer Wayne Rooney’s attempts to negotiate a new contract with Manchester United.

News of Wayne Rooney’s new deal with Manchester United – a reported £160-200000 per week – caused a mixture of amusement at the very public negotiations, followed by tabloid anger that someone should be earning so much at a time of great economic uncertainty.
While I doubt Wayne has read much Karl Marx, it struck me that he is behaving exactly as Marx suggested a member of the “proletariat” would do:
•    He is attempting to sell his labour for the highest price possible, knowing that whatever he gets for it his employer will still get more (if he scores the winning goal in the Champions League, will all the profit Man Utd make go back to him?) – the concept of “surplus value”
•    He is “alienated” from his team mates (not just because he criticised them!) as his football skills have just been reduced to a commodity to be traded on the market. His apparent gain will be at the expense of other players who cannot sell their skill at such a high value.
•    He recognises that no-one is interested in him as a person, but for his ability to do a job to a particularly high standard and for his subsequent value as an image – what Marx termed “commodity fetishism”.
So there you have it – Wayne is an exploited, alienated member of the proletariat, just like the rest of us (and Karl Marx is quite a useful left-winger by all accounts).