Radical or Bureaucratic? Why Labour’s HR proposals may be both

With the current political turmoil in the UK, and the possibility that we may see a change in Government in the near future, this post looks briefly at the HR and employment related announcements made this month by the opposition and consider their effects on the profession. I should stress that I’m not looking at this from a political view – HR professionals (and businesses more widely) have a responsibility to ensure our organisations work within the law, whatever our personal views of a particular piece of legislation.

Five key announcements have been made by Labour’s John McDonnell in recent weeks, in a series of speeches.

1.       Ban ‘zero hours contracts’. I’ve written before that this probably wouldn’t solve the underlying problem – since employers would either go down the route of full casualisation, or offer ‘1 hour per week with the option to do more’ contracts. But from an HR perspective, other than the admin time caused by changing existing contractual arrangements, it might cause businesses to rethink their reason why they use these types of contracts.

2.       Raise the minimum wage to £10 per hour. Not really an issue from an HR perspective, as the current Government have previously said they want to raise the level to £9 per hour, this is more a political argument as to what level the minimum wage should be.

3.       Sectoral Collective Bargaining. Collective agreements still exist on an industry wide basis – not just in the public sector – in some sectors. (I still need to dig out my ‘pink book’ – below – occasionally). But given that union membership is at a low level, doesn’t exist in certain sectors and employers aren’t currently obliged to participate in sectoral bargaining even if they do recognise unions, this seems to be more of a long-term aim than a change that will have an immediate impact on the way companies interact with their staff.

4.       Right to paid leave for victims of domestic abuse. I don’t think anyone would disagree with the principle behind this (and we will shortly have to implement paid leave for child bereavement, so it’s not really an extra administrative task). But I can see a whole host of practical difficulties. Will individuals have to pre-declare to their employer that they are in an abusive relationship? At what point will the right kick in (physical abuse? Mental cruelty?)? What evidence will be needed? This isn’t to make light of a very serious issue, but it is a subject that requires sensitive handling from HR and simply setting it up a ‘procedure’ doesn’t seem to be the way forward. (I haven’t seen a policy document, simply the announcement, so if there is more detail on how this would work I’m happy to link to it).

5.       Compulsory Share Ownership for Employees. This issue attracted the most media attention, primarily because employers with over 250 staff would be ‘forced’ to give employees a percentage of shares (up to 10% over a period of time), allowing them to earn dividends on top of their wages. Employee shareholding is not a new concept, there are many companies that operate schemes that allow some or all employees to be given shares in the organisation. Nor are ‘compulsory’ schemes anything unusual – companies are already required to enrol employees in a pension scheme and to make financial contributions to it, while a chunk of profits is already taken from larger companies in the form of the apprenticeship levy. In one sense the idea is simply a different approach to that taken by the Cameron government, but with the same aim – to allow workers a greater stake in their employer. From an HR perspective –  having spent several years working in an employee owned business – the major immediate challenges will be for learning and development professionals who will need to devise training on the different roles and responsibilities of an employee and a shareholder, and responding to the argument “you can’t sack me, I’m a shareholder” in disciplinary hearings.

And while we shouldn’t undersestimate the possible cultural effects of these proposals, the devil will be in the detail for most of them. Will they go the way of the ill-fated “Statutory Dismissal and Grievance Procedures” introduced – and quickly abolished – in the early 2000s? Or will they become just part of the regulatory environment for HR, like maternity leave or compulsory redundancy consultation? Only time (and the result of the next general election) will tell.

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Dear Deliveroo…

An open letter to Will Chu, founder of Deliveroo

Dear Mr Chu

I read with interest your recent comments that you’re unable to offer the riders who work for Deliveroo better terms and conditions because to do so would ‘risk the flexibility’ that they enjoy.

I fully understand that entrepreneurs who have a great business idea aren’t always experts in things like marketing, finance or – in this case – managing people. But most of those who make a success of their business get expert advisers to guide them through these issues and ensure that they support their business aims in a legal and effective way.

I can only assume that you haven’t done so when it comes to employment matters, so I’m happy to correct some misapprehensions you seem to have.

Firstly, you suggest that it’s up to the Government rather than your company to define individual employer status. Actually, it’s not. There are a number of long-established legal tests that can be applied to determine whether someone is an employee, a worker, or self-employed. It may be true that 21st century economy needs 21st century legislation – and certainly the Government are looking at this at the moment – but at the moment the existing legislation does seem to be able to deal with most situations, even in the dynamic ‘gig economy’.

Secondly, employment status doesn’t prevent you offering flexible working arrangements or work patterns.  I’d have thought the data you collect on ordering times for takeaway meals would allow you to identify regular peaks and troughs in demand and schedule your labour requirements accordingly. Using a bank of casual labour, paid through the payroll, would allow you to offer sick pay, holidays and pensions to your regular core workers and supplement these at peak times.  It’s a bit of a 20th century solution, but sometimes old ideas still work effectively

Finally, I have to say that trying to disguise the nature of the working relationship – by using phrases like “invoice” not “timesheet” and “branding guidelines” instead of “uniform” – won’t cut the mustard if you’re challenged. Employment Tribunals will look at what actually happens rather than the words on a page and are pretty adept at seeing through sham arrangements.

I’m always happy to help growing businesses avoid simple employment mistakes and so if you need some further advice please give get in touch, although if you do have 15000 workers I’d probably suggest you need to have some full time in-house expertise. You might find my book helpful though, it sets out clearly and simply what entrepreneurs and small business owners need to know about people management.

Best wishes

Simon

 

Zero Hours Contracts – the symptom, not the problem

Every so often people get into a “moral panic” and become fixated on a “bad thing”, about which “something” must be done. In HR/Employment Law the current “bad thing” is zero hours’ contracts.
These are employment contracts that don’t provided any guarantee to the employee of any number of hours per week. Hours can vary and in some cases the individual may not be required in any particular week – hence the Zero Hours name.
Various politicians have in recent weeks queued up to suggest reforms – from banning “exclusivity clauses” (i.e. ones which prevent an employee on a zero hours contract from working for someone else) to forcing employers to give a guaranteed number of hours after the individual has worked for them for 12 months. As a number of employment lawyers and other commentators have noted, both of these are easy for unscrupulous employers to get round if they want to.
It’s worth remembering that current estimates in the UK of people work under zero hours contracts vary from 600000 to 1.4 million. Out of a total workforce of 30 million, even at the upper end that’s less than 5%. And not all of those are unhappy with the arrangement – some surveys show that the majority who have them are happy to work under a “zero hours” contract.
As is often the case, those who are critical of these contracts are focusing on the symptom not the cause. There are two issues. Firstly, in a labour market during a recession, employers have plenty of staff to choose from so can drive costs down (wages can’t fall below minimum wage, so terms and conditions go instead). Once the economy picks up, individuals will move to more secure employment if they wish and employers will either face constant turnover of staff or have to improve their offering. It’s all about the balance of power in the employment relationship.
And secondly, our expectations as consumers are forcing employers to adopt these more flexible practices. Fancy a book from Amazon for next day delivery? Moan about the fact your train is cancelled because the driver is off sick? Expect not to wait in Costa for your coffee even though 20 of you have turned up at once? Companies don’t have banks of staff hanging around on the “off-chance” that there might be a surge in demand, but our expectation that our order will be fulfilled immediately means they need to be able to call on people at short notice for varying hours.
One very good example of this is a charity I’ve worked with who provide a personal shopper service for the elderly and housebound. They don’t know if Mrs Smith will need her groceries on a Tuesday or a Thursday, or not at all in a particular week. Hence the staff are employed under zero hours contracts by the charity.
Whatever the legal employment framework, “bad” employers will always bend the rules to their advantage and exploit individuals. One of the current mantras in HR is “don’t make rules for the 95% of decent employees based on the bad behaviour of 5%”. The same should apply to the legal restrictions on employers.