Employment Guidance Leaflet

Factors Influencing Employment Relations

There are numerous factors that influence the employment relationship, and they can be roughly divided into internal and external ones.

Internal factors are those that originate in the internal environment.

• Example 1: the management and leadership style of the organization and managers (for instance, authoritative versus shared leadership) may significantly affect the employment relationship and the employee’s response.
• Example 2: business’ strategies, objectives, and targets. When they are clearly set and explained, when they are SMART (that is, specific, can be measured and achieved, linked to a certain timeline, and, therefore, realistic), they are more likely to provide suitable guidance, which should improve the employment relationship and employees’ performance.

Concerning external factors, they involve those which can be defined as originating from the environment. External factors are numerous because of the multiple areas that can influence the employment relationship. It is natural that economic, political, social, and legislative factors affect an employment relationship, but apart from that, there are ethical and technological factors.

• Example 1: corporate social responsibility, which is widely applied nowadays, calls for fair treatment of all the stakeholders, including employees, which is why it is of direct consequence for the employment relationship, even though it is not the law.
• Example 2: the development of new technology affects business requirements; as a result, employees may need to improve their qualifications. Also, the changes that are related to this factor make the qualities like flexibility and the ability to learn valuable for employers. At the same time, new technology can facilitate the working process, which, on the one hand, can make it more convenient for the employees (for instance, the development of communication means) and, on the other hand, might result in redundancy (the history has multiple examples of automatization leading to massive dismissals). Therefore, one single factor may have multiple effects on employment.

Employment Statuses

Employment statuses include five types.

A person has the employment status of a worker if their work or service is supposed to be done for a reward (money or any other benefit) according to a contract that does not have to be done in writing. A worker can send somebody else to perform their work or service through a subcontract, and the employer is supposed to provide the worker with work until the contract expires.

There are “casual workers” sometimes referred to as freelancers, who are not typically employed by a particular business; in this case, no subcontract is possible, and there is no obligation for the employer to provide the work or for the employee to provide the service.

Another status is that of the employee, which defines a person who has an employment contract. Technically, an employee is a worker with several extra rights, which, however, may be only applicable to the people who have been working for a particular amount of time (which is stated in the contract).

Employee shareholders work in the company and own its shares (no less than £2,000).

Officeholders (including directors) do not have a contract and regular payments but have a position in it.

Self-employed people work for themselves, that is, run their businesses, which are their direct responsibility. The employment law and PAYE are not applicable to this status.

Reasons for Stating Employment Status

It is important to determine the employment status of a person for at least three reasons. First of all, employment status is used to establish the responsibilities of the parties (both the employee and the employer). Secondly, the rights of the people with different statuses differ, which implies that the status can help to determine and possibly protect the rights of the employed persons. Thirdly, employment status is of importance for taxation and National Insurance. It is noteworthy that the status may be different for the employment and tax law, and the employers need to determine both statuses.

As a result, the decision on employment status needs to be established clearly and, if necessary, with the help of the court.

Regulations Concerning Holidays, Rest Periods, Working Hours, and Night Working

Work-and-life balance is an attempt of ensuring that the employee has the opportunity of finding their personal balance between the work and private life that would allow them to achieve satisfaction in both fields. These outcomes are also likely to improve productivity, commitment, and reduce turnover intention, which is why the balanced life of employees is in the employer’s best interest.

Work-and-life balance is an individual matter, but employers have standard means of helping the employees to achieve it, part of which is regulated legislatively. In particular, the employed have the right to limit the number of their working hours to no more than average 48 per week (which is a right since the employees may also choose to increase the figure), the minimum break time meant for resting and the minimum paid holiday as well as statutory sick payments. Apart from that, CIPD considers compassionate leaves to be good practice: in this case, employees may be granted paid days off in exceptional circumstances that are not stated by the law.

Night working occurs in the time period between midnight and 5.00. A person is considered a night worker if they work three hours or more during the night hours. Their shift should not exceed eight hours, especially if any working hazards are involved; they have the right to free medical assessment before the night shifts are undertaken.

Depending on the employment status, some of the benefits may be unavailable to the employed persons. In particular, self-employed people may be exempt from some of the benefits in case their contract does not include them (since they are not covered by the employment law). Similarly, workers are not typically entitled to request flexible working hours, and employee shareholders have limited rights in this respect (they can only request a flexible schedule for the two weeks that follow maternity or paternity leave). These facts can illustrate the importance of determining employment status.

Maternity, Paternity, Adoption, and Dependents’ Leave

The family-supporting legislation in the UK is regulated by the Employment Rights Act 1996, which was modified and supplemented by a series of other Acts, including the Employment Relations Act of 1999, which introduced dependants time off and parental leave, the Employment Act 2002, which introduced the adoption leave and payments, the Work and Families Act 2006, which introduced the right to request flexible working hours for people with adult dependants, and the Children and Families Act 2014, which introduced the shared leave concept. This legislation may be regarded as an effort to improve the work-and-life balance.

The UK employment law states that the people who are covered by it may be entitled to maternity and paternity pay; employees (as contrasted to workers) are also entitled to maternity and paternity leaves and adoption leave and pay. Maternity leave for employees can be extended to one year while paternity leaves can only amount to two weeks. Parental leave can amount to 13 weeks, and it must be requested before the child turns five. People with dependants have the right to time off meant to make long-term care arrangements and may request flexible working hours to care for the dependant.

Reasons for Equal Pay

Equality is an important principle in the modern UK employment law that is guaranteed by the Equality Act. Firstly, providing fair payments for employees is significant from the point of view of avoiding discrimination (for example, underpaying female workers in comparison to male ones) and subsequent discrimination claims. Secondly, fair payment is often a part of the psychological contract, which is described below; the breach of the contract results in lower morale, engagement, trust, and increased turnover intention.

In general, fair treatment of employees is a positive behavior for a manager who is interested in attracting, developing, and retaining the ‘human capital.’ Such behavior demonstrates the employer’s commitment to employees, which elicits the appropriate response: their loyalty, engagement, job satisfaction, and trust increase while their turnover intention may decrease.

Direct, and Indirect Discrimination, Harassment, Victimisation, and Equalities Legislation

Discrimination includes several forms, and it can be directed at particular groups (people with particular characteristics), all of which are presented in the Equality Act 2010. The characteristics may include gender, age, disability, sexuality, religion, and other aspects.

• A situation of direct discrimination presupposes unfavorable treatment of a person when compared to other people that occurs because of the fact or belief that this person belongs or is somehow associated with a protected group.
• Indirect discrimination presupposes the existence of a particular policy or practice that is applied indiscriminately to everyone, but that puts the people of a protected group at a disadvantage. The policy or practice may be considered necessary if it is justified by the nature and requirements of the business, but it needs to be fair and reasonable. Whenever possible, the policy needs to be improved or removed to ensure that all the steps towards nondiscriminatory practice introduction were made.
• Harassment presupposes any patently undesirable conduct that is based on the fact or belief that a person belongs to a protected group and is aimed at humiliating or offending the individual.
• Victimisation can be defined as the situation in which a person is mistreated after having filed a complaint or raising a grievance against discrimination or if they are believed to have done so. If the complaint is not true, the person is not considered to be victimized.

Psychological Contract with Examples of Good Practices

The psychological contract is a notion that was first introduced in the middle of the previous century to serve as a term for the employee’s and employer’s interpretation understanding, and perceptions concerning their mutual responsibilities that are stated in their contract. These perceptions may originate from previous experiences or verbal promises and expectations that are not put down in the contract.

Unlike the actual statements of the contract, the psychological contract is more applicable to the reality of employment, but at the same time, it is not very clearly stated and technically remains informal. For example, the psychological contract may often be connected to the idea of fairness (in payment and promotion), which is likely to be rather subjective.

The psychological contract is difficult to enforce, especially with the help of the court, but it may be more significant and influential in defining the activities of the employee than the written contract. The statements of the psychological contract and the integrity of the employer in adhering to it result in greater commitment, engagement, and job satisfaction of the employee; breaking the contract can annihilate these positive outcomes and destroy the employee’s trust.

While the psychological contract may not be obvious, it is the job of the manager to attempt to use this phenomenon to improve employee-employer relationships.

Examples of the practices that are aimed at expectation management include, in my experience, employee job satisfaction polls and personal interviews, which can be regarded as a form of employee attitude measurement and the improvement of bottom-up communication. Apart from that, respectful treatment is of importance; it may include the legislatively required absence of discrimination as well as non-required measures like justified compassion leaves and a comfortable working environment that demonstrate the commitment of the employer to the employees and the psychological contract.

Fair and Unfair Dismissals with Impact Examples

Dismissal can occur if the employer or the employee chooses to terminate the contract (with or without prior notice depending on the circumstances and the specifics of their contract), or if the contract expires without renewal.

An employee-initiated dismissal that has happened as a result of the employer’s actions (breach of the contract) is called constructive dismissal.

Wrongful dismissal presupposes the breach of the contract, for example, in terms of the notice period.

Unfair dismissals occur if the employees are not treated fairly during dismissal, and the employee who claims to have been dismissed unfairly needs to demonstrate the specific reason that makes the dismissal unfair.

A fair dismissal is based on reasonable grounds and carried out reasonably and fairly. While they do not cover all the situations, the employee’s skills, qualifications, and conduct can be regarded as suitable grounds for dismissal together with redundancy that is discussed below.

The employer is supposed to carefully consider the question of whether the ground is indeed sufficient for a particular dismissal.

• The issues of performance can and should be addressed through other means of intervention first, including oral and written notices.
• Redundancy is considered to be the last resort by the CIPD, and this decision needs to be thoroughly assessed before being implemented.

The appropriate procedure for dismissal will include the following:

• the investigation of the dismissal ground (for instance if the capability and productivity are the issues, an investigation might discover insufficient instruction and management);
• the investigation of the potential alternatives to dismissal (for instance, improving the management practice or choosing another disciplinary action);
• informing the employee of the dismissal reason and possible outcomes (in writing and in the discussion of the issue, where the employee may be represented by a person of their choice, including trade union representatives);
• ensuring the possibility of appealing.

Insufficient investigation and unfair procedure may lead to unfair dismissal.

Wrongful dismissals are illegal, which is why their financial and reputational costs for an organization are very noticeable. Apart from that, the amendments to the Employment Rights Act of 1996 (in particular, the Unfair Dismissal and Statement of Reasons for Dismissal Order 2012) also guarantee the protection from unfair dismissals.

Wrongful and unfair dismissals presuppose compensations for the employees, which has a financial impact on the organization; they also may damage the employer’s reputation and lower the surviving employees’ morale. Apart from that, dismissals result in turnovers, which can lead to various difficulties and challenges (the need to attract and train new employees, overwork, deadline issues, and so on).

The Importance of Exit Interviews to Both Parties

Even though employers may be dissatisfied with the results of exit interviews and might not always find them credible (Wilkinson, 2005), this practice exists because it can potentially alleviate the negative consequences of dismissal or other reasons of employment relationship termination (including psychological consequences and negative feelings) and provide valuable information for both parties. These outcomes may be achieved if the employee and employer share their ideas on the reasons for dismissal; if the employee is asked to provide their opinion on the positive and negative aspects of the management in the organization, and if the employer provides welcome support and advice concerning the past and future employment of the employee.

The Impact of Redundancies on the Whole Organisation

Redundancy can be defined as the case when the workforce needs to be reduced. It is a legible ground for dismissal if the business of the employer is being terminated, if the employee’s work is no longer required for the business or if there is no more need for this work to be performed in the location where the employee is employed. These cases of redundancy are considered to be genuine. If the redundancy is not genuine, the situation may lead to unfair dismissal claims, which are discussed above.

Apart from the adverse psychological and financial outcomes that the dismissed individual may experience, the possible consequences of redundancy include the following:

• direct and indirect financial consequences (that include, for example, the payments and increased turnover effects);
• the breach of the psychological contract;
• the resulting damage to the employees’ trust and morale;
• the resulting negative impact on their motivation, productivity, and loyalty;
• the damage to the organizational culture and climate.

As a result, various institutions issue guidance and recommendations on the means of reducing the problems that are related to redundancy. For example, CIPD suggests several recommendations on redundancy handling that are going to be presented here. The specific policies and practices, which organizations should have formalized, may be different, but the following elements are likely to offer the proper responses to the challenges of redundancy.

• The initial stage of redundancy management presupposes planning, which may include, for example, reduced overtime, frozen recruitment, retraining, and other schemes and techniques that may be considered preventive or alternative to redundancy.
• If the redundancy does occur, the employer has to identify the selection pool, which involves the employees who can be fairly and legally dismissed on the redundancy ground (typically, the employees whose work is being reduced).
• The selection pool might include people who would volunteer for redundancy with a voluntary redundancy package; in this situation, the negative outcomes of redundancy are likely to be completely eliminated.
• The next step is the consultation (collective and individual) that must be meaningful: it is necessary to provide all the information of significance (the reason for redundancy, the following procedures, redundancy payment calculation methods, and so on). The consultation will be collected if there are more than 20 employees to be made redundant; the employees may be represented by the recognized trade unions or otherwise elected representatives. There are set dates for different numbers of employees to be made redundant (for example, 45 days before the notifications is the latest when the collective consultation can occur for the redundancy of 100 employees).
• The next stage is the selection of the individual people from the selection pool. The reasons for the selection must be objective as it is important to avoid discrimination, which can result in psychological contract breaches, loss of trust and reputation, lowering morale, and discrimination claims. Acceptable grounds include the conduct, performance, and qualifications of the employee, the disciplinary, and attendance records. CIPD recommends performing the assessment of the employees’ dismissal criteria score by several managers independently as a means of improving the objectiveness of the decision. The scores provided by them may be used to get the final score.
• All the selected employees must be informed about the possibility of redundancy in writing, and individual consultations will follow. There should be at least two meetings in each consultation (one to inform about all the relevant aspects, one to make the final decision), but the number may be increased so that the individual can appeal and provide all the arguments to avoid redundancy.
• In order to alleviate the stress of redundancy, the employer is required to consider the possibility of alternative employment; if the employee refuses it, and their decision is proved unreasonable, they may be refused the statutory redundancy payment. The final decision about the alternative employment is taken after the trial period (four weeks).
• Large-scale redundancies are a special case; in the UK, the Department for Business Innovation and Skills must be notified if more than 20 employees are being dismissed because of redundancy.

Apart from the required steps, some additional actions may be performed to alleviate the possible negative consequences of redundancy:

• The employer may choose to provide support, advice, and even activities aimed at refreshing their job search skills to the employees.
• As for the survivors, it might be important to ensure that they understand the reasons for the events, view the future in a positive light, and realize their significance for the company. If needed, individual interviews may be used to achieve these ends.

The CIPD recommends the dismissed employees’ support and survivor care as the aspects of a well-designed program that improves the perception of the fairness of the dismissal and raises the employees’ morale.

References

CIPD. (2007). CIPD policies and procedures for people managers. Web.

CIPD. (2016). Maternity, paternity and adoption rights. Web.

Wilkinson, K. (2005). Are exit interviews of any value – do leavers really tell the truth? Web.