The Effect of Employment Legislation on Businesses


Employment laws in the UK regulate the relationship between employers and employees. This relationship is critical to the success and growth of the economy. The regulation can be achieved through voluntary regulation which involves the adoption of several mechanisms in conflict resolution in workplaces like arbitration, mediation and conciliation. It also adopts collective bargaining methods and other standards of practice. While legal measures include the use of British statute law, law of contract and tort under common law, acceptable international standards of practice and international Human Rights ad Fundamental Freedoms.

Employment law refers to the law that seeks to regulate and maintain the working relationship between the employer and employee while safeguarding their rights and responsibilities. It is the law that promotes flexibility and fairness, creating a stable environment where enterprises can thrive. The evolution of this law has taken a period of over forty years, and was and continues to be influenced through a number of features varying from economic factors to social, political and technological advancements. The law focuses on the regulation of the working relationship between three main parties: the employer-employee relationships, the employer-trade union relationships and the trade-union member relationship. These relationships define the nature of employment practices in the country. However, there is also the aspect of self-employment individuals and employment law also protects such individuals (United States. Congress. Senate. Select Committee on Small Business 1977).

The sources of employment law are many, and such laws exist in different statutes and Acts of the legislature. The principal source of the employment law is under common law in the form of contract law. All employees in the UK work under the law of contract which finds its legal basis under common law. It is not a requirement that every contract must be in writing; however the contract must provide certain terms of employment like the period of employment, the basic salary, duties and parental leave among other provisions. Similarly, under common law, tort law also finds a legal basis in as far as the employer’s liability for the acts of the employees go and accidents in workplaces. The other sources of employment law are the statutes and other Acts of parliament. A number of Acts exist which regulate the employment relations and the workplace environment and include; Health and Safety at work etc Act of 1974, Trade Unions and Labor Relations (consolidation) Act 1992, Employment Tribunals Act 1996, Employment Rights Act 1996, Public Disclosure Act 1998, Data Protection Act 1998, National Minimum Wage Act, 1998, Human Rights Act 1998, Employment Act 2002, Employment Relations Act 2004 and the Equality Act 2010.

The introduction of legislation in employment by the Government is to introduce significant changes in the nature of the relations linking the employers and their workers. It is to bring legal recognition of employment rights and duties at workplaces. The rationale for introducing legislation in employment is on the attainment of the principles of flexibility and fairness.  These principles arise from a number of internal or rather ‘homegrown’ policies that the government formulates. One of the policies is the National Minimum Wage, which sets a minimum wage for all workers. In order for this policy to be implemented, there needs to be a legal framework that provides for sanctions where there is the lack of observance. Secondly, the European Union has several requirements with regards to employer-employee practices such as the employee consultation, the regulation of working time, the rights involving proletarian and professional workers and parental leave, which similarly require enforcement through legislations (Taline & Domenico 2005).

The rationale for employment legislation is perhaps well explained in the White paper fairness at work, the policy paper, Full and fulfilling employment  and the discussion document, High Performance in workplaces.  These documents are to highlight the policies of promoting ‘partnerships’ between employers and employees, providing minimum employment standards for employees that are sensitive to business conditions, introducing family friendly employment practices and enforce the government’s ‘cardinal principle’ that fairness at work and competitiveness go hand in hand.

Individual employment law is the law that governs the relationship between the employer and the employee. It regulates the contractual provisions and agreements between the parties to employment and covers aspects relating to dismissal law, discrimination law, and health and safety law. It also encompasses other areas, which include, the minimum wage requirements, the right not to have unauthorized deductions made from wages and family friendly legislations. This is the law that deals with individual employees’ rights at workplaces and protects them against any infringement (Marvin 1996). Discrimination law, under individual employment law, facilitates the creation of a flexible labor market which builds confidence in employers and investors to hire and create new jobs. This flexibility ensures that employees are able to move freely between different employers as their situations change. Dismissal law, therefore, guarantees flexibility for the employers while ensuring protection for employees.

This law has numerous merits that impact on the employers, employees and the economy of the country. The anti-discrimination law is, therefore, a tool necessary in the fight for the achievement of the basic human rights principles and the fundamental freedom. The law prohibits discrimination based on so many grounds like disability, age, religion, political affiliation among other grounds. The issue of discrimination came up in the case of Redfearn v UK (2006)EWCA civ 659 where the European court of Human Rights stated that British law of employment did not have sufficient redress mechanisms for the employees discriminated against based on their political affiliations (David & William 2007). In this case, the claimant had been summarily dismissed from his job working as a driver under contract employment. The grounds for the dismissal were that, having been elected in the election for the BNP, it would compromise his working relations due to his political affiliations.

Individual employment law protects the sanctity of a family and seeks to preserve families in the midst of employment demands. The legislations are family friendly which guarantee the rights of families in working places. The law encourages practices such as parental leaves, flexible working hours, provision for childcare and flexible jobs among other practices, which help families, handle the increasing conflicts between work and family responsibilities. These practices as envisaged involve compressed working hours, flexibility, home working, job-sharing, term-time working, staggered hours, annualized hours and part-time working (Woodland, Nadine 2003). Family friendly legislations, therefore, gives workers increased autonomy and control over their time, supporting those who are under pressure to balance work and family thereby helping families to survive.

Employment law plays a critical role in the achievement of flexibility and fairness in the working environment. The law facilitates the realization of substantive issues in contractual employment. This aspect differs largely from the traditional approach, where British employment law only set the general framework while the details of employment were left to the employer. This was largely because the principle law that governed employment was contract law under common law. Today, the enactment of statute law has led to the establishment of legal principles that govern the employers’ behavior and the requisites of employment. The statute law, therefore, plays a crucial role in employment as every action taken by the employer or employee has a legal consequence. For instance, the dismissal of an employee is assessed on the principle of fairness while equality law ensures the achievement of nondiscrimination in workplaces (David 1995).

Secondly, employment law facilitates procedural issues that concern the individual employee and the collective relationships. Employment under contract depends on the issue of consent by the employee to the provisos of the contract. The law ensures that consent is present without undue influence or coercion. Employment law also governs procedural issues relating to disciplinary action by the employer and the grievance mechanisms available to the employee. It is an obscure expression of the contract of employment that the employer will provide an opportunity for their employees reasonably and promptly, to acquire remedy of any grievance they may have. This matter came up in the case of Wa-Good (Deamark) Ltd V Mcconnell (1995) Irlr 516 Eat where the court held that, the stoppage of an employee from accessing a complaint process or from using a grievance procedure successfully could sum to practical dismissal (Ross, Susan & Anthony 1986).

Employment legislations impact negatively in the growth of the economy by hindering the operation and growth businesses. This is true where the legislations are as a result of political expediency. Indeed, most legislation has been introduced by the government simply because it enjoys political popularity in a certain constituency. Where this is the case, the legislations run the risk of being vague thereby alienating the interests of the business class due to lack of sufficient consultation.  Such laws lack in transparency where the need for regulation is not clearly outlined, and the purpose is not effectively communicated. The interference by the political class substantially undermines the cardinal principles of a free-labor market and free-collective bargaining, which may stifle, the economy.

Secondly, employment regulations impact the growth of businesses as the fee of conformity with the set of laws is extremely high. For instance, complying with the requirement of the National minimum wage requires a lot of capital investment; this may in turn impact on the global competitiveness of the businesses in the UK (Per & Edward 2010). The regulations, therefore, may diminish the competitive edge of business which may lead to the decrease in the creation of new jobs thus harming the interests of the employees. This impact is perhaps felt harder on small businesses as they may not have sufficient profits to meet the cost of implementing the regulations. They mostly focus on surviving and thus they may not pay attention to the employment laws that may inhibit their survival.

The increased legislations in employment have inhibited the operation of businesses, and this has led to many sectors of the economy considering the alternatives to legislations. The purpose of legislations is to help in dispute resolution and creation of a fair and flexible working environment. Therefore, in solving disputes, businesses can employ mechanisms that allow for early dispute resolution. This will allow employers and employees to avoid the expensive nature of the legal process while giving employers the freedom to hire new employees.

Employment tribunals also provide an alternative to regulations. The tribunals provide a cheap, accessible and fair process to solving disputes. In this way, the employees can easily access employment tribunal and have their complaints addressed in an expeditious manner. In conforming to employment legislations, many organizations have adopted a number of mechanisms that can allow them to comply with the regulations. For instance, in order to comply with the requirement of the national minimum wage, many organizations have reduced the number of their employees while maintaining workforce that the organization can support (Ewing 1993). Similarly, in the interest of achieving family friendly regulations, organizations hire part-time employees.

In conclusion, the existence of employment law is necessary for the achievement of human right principles and fundamental freedom. Family-friendly regulations help in preserving the family while maintaining working relations. Employment law is necessary for the achievement of the principles of natural justice.

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