Managing Employment Relations: Supporting Good Practice


The focus on good practice and law is important for managing effective employment relations in different types of organisations. In this context, it is necessary to understand the factors that can influence these relations, the aspects associated with the psychological contract, work-and-life balance, and termination as they can affect business success. The purpose of this guidance leaflet is to present the information on the impact of employment law on the employment relationship, employee rights, and issues associated with the termination of the employment relations.

The Impact of Employment Law When Starting the Employment Relationship

The employment relationship starts when a new employee joins a team of a certain company. At this stage, the specifics of the relationship between an employer and an employee become regulated by legal norms and policies, as well as ethical codes.1 The success of business depends on the effectiveness of the employment relationship; that is why, much attention is paid to following good practice and addressing legal standards.

Internal and External Factors Impacting the Employment Relationship

Internal factors that usually influence the employment relations are numerous, and it is necessary to focus on the two major factors having the most significant impact on the situation in the workplace:

Corporate culture

This factor is complex as it combines such aspects as the approach to motivating and engaging employees, the distribution of power in an organisation, and the focus on ethical standards and norms. Furthermore, corporate culture is based on specific values, beliefs, and vision followed in a company. As a result, the corporate culture is closely related to a human factor important for the development of employment relations. If the culture is inappropriate or unethical in its nature, employees do not feel comfortable in the workplace and committing to an organisation.2 Furthermore, it is also possible to observe conflicts and misunderstanding in teams affecting the quality of collaboration and productivity.

Compensation system

Another important factor is related to benefits and rewards that employees receive depending on their job role and performance. In most cases, monetary rewards work as an attracting factor for employees deciding on a job position to choose. If the compensation system is grounded in the principles of fairness and honesty, employees are satisfied with their salary.3 However, there are situations when employers can ignore their responsibility to provide a fair payment to employees, causing conflicts and problems in employment relations.

External factors that need to be taken into account when discussing the employment relationship are listed below:


The state of a national economic is considered by employees when they examine market offers and choose positions. The economic stability of a firm dependent on the economic stability of the nation explains what compensation can be guaranteed to employees.4 Thus, a competitive labour market is also influential as employees can choose a position depending on their economic needs and expectations.


The political situation or changes in the country also influence employment relations because they can lead to the progress or decay of certain industries and fields of economy. It is possible to state that any changes in the national government can affect local companies and their employment strategies.5 Furthermore, changes in the governmental course also usually affect markets and labour relations.

Three Types of Employment Status and Reasons for Determining It

Three key types of employment status are an employee, a self-employed person, and worker. It is necessary to understand differences between these statuses, and they are discussed in detail below:


These individuals work according to the contract of employment which includes the details regarding their working hours, salary, benefits, and leaves. As a result, employees’ rights are addressed, and they are rather protected by legislation in the workplace as they receive a guaranteed pay and protected wages, and they cannot be unfairly dismissed. These rights are regulated according to the Transfer of Undertakings Regulations of 2006.6

Self-employed people

These individuals have their own business, and they usually perform as freelancers or consultants. The cooperation with other organisations is realised according to the contract for services.7 Thus, employment rights of these people are rather limited.


This category is characterised by working while using the contract of employment. In comparison to employees, the number of employment rights of workers is lower, but the range is not as limited as it is in the case of self-employed individuals.8 Therefore, workers have protected payments, paid holidays, protection under equality law and health and safety legislation among other rights.

When focusing on the types of employment, it is also necessary to provide three reasons why it is significant to determine the employment status of a person:

  1. The first reason to determine the employment status clearly is the necessity of developing an appropriate contract with this person that needs to regulate the relations.
  2. The second reason is the avoidance of future conflicts between an employee and an employer if there is a need for firing a person because of referring to specific laws.
  3. The third reason is the necessity to organise and regulate processes associated with managing the employment relationship, such as the delegation or assignment of tasks, the method of payment, and the tax issue.9

Employee Rights to Focus on in the Employment Relationship

Work-and-Life Balance and Legislation

Work-life balance is important for employees because the absence of this balance leads to exhaustion, burnouts, and employees’ dissatisfaction and stress. Hours spent by a person at work and at home should be balanced to guarantee that individuals have enough energy and resources to perform their daily and working tasks. It is important to ensure that working people spend enough time with their family, and they have necessary resources to focus on their health and needs.10 If employers pay attention to the work-life balance of their employees, it is possible to observe higher commitment, satisfaction, and productivity rates and lower turnover rates.

The right to work-life balance is set in the legislation of the United Kingdom with reference to the acts that regulate working hours, overtime work, night working, holidays, and specific rest periods:

  1. Working hours. In the UK, working hours are regulated according to employment contracts. However, according to the working time directive, individuals cannot work more than 48 hours per week to guarantee their work-life balance.11
  2. Night working. According the working time directive and guidelines provided by the UK Government, employees working at night are prohibited to work more than eight hours during a 24-hour period to ensure the work-and-life balance.12
  3. Holidays. Following the working time regulations, all employees in the UK have the right to receive an annual leave in 28 days after working in a company for a period of time set in the contract.13
  4. Rest periods. These periods of rest occur during a day, and they can last from fifteen minutes to one hour, depending on the number of working hours. Rest periods are obligatory and regulated according to the working time directive.14

Family/Parent Legal Support

The support to families and parents if they are expecting a child is guaranteed according to the Employment Relations Act 1999, the Employment Act 2002 and the Work and Families Act 2006.15 Employers are expected to provide support for their employees in the listed situations to make sure individuals receive required support and assistance. In this context, it is necessary to focus on the legislation regulating maternity leave, paternity leave, adoption leave, and dependants leave.

  1. Maternity leave. Pregnant employees have the right to have a 26-week maternity leave.16 It starts two weeks before the due date, and it is obligatory to take four weeks after the child birth.
  2. Paternity leave. Partners have the right to take a two-week leave after the birth. They can take the leave any time within six months.
  3. Adoption leave. The paid leave constitutes 24 weeks, and the additional unpaid leave is possible to be taken for 16 weeks.
  4. Dependants leave. Although employees have the right to take dependent leave, they are not paid during this period.17

Reasons Why to Treat Employees Fairly Regarding Pay

To address legal standards adopted in the United Kingdom regarding employees’ rights, it is extremely important for employers to treat their employees fairly regarding their payments. Two specific reasons need to be discussed in this context:

  1. The first reason is the necessity to avoid discrimination in the workplace. According to the Equality Act 2010, women and men in the United Kingdom must not be discriminated in terms of salaries they receive for the same work.18 Thus, women and men are expected to receive the same pay for performing tasks at the same position. Furthermore, the legislation also prohibits discrimination based on race, sexual orientation, disability, religion, and other factors that can influence inequality in payments.
  2. The second reason is associated with following ethical codes adopted in an organisation and based on certain legal standards. The unfair treatment of employees in terms of pay can negatively affect the overall atmosphere in a company, their motivation and performance. 19It is important to guarantee that all employees in a company are treated fairly to avoid negative changes in the quality of work, attitudes towards other employees, absenteeism, and productivity.

Equality Legislation

According to the Equality Act 2010, all employees are protected against a range of unlawful actions and behaviours. They include direct and indirect discrimination, different types of harassment, and victimisation.20 These key types of problems covered by the equality legislation in the United Kingdom need to be discussed in detail:

  1. Direct discrimination. This problem occurs when employees are discriminated with reference to their age, gender, race, sexual orientation, or religion. These individuals are perceived differently depending on bias spread in a company. The outcomes of direct discrimination can include dismissal, problems in promotion, and unfair performance appraisal among others.
  2. Indirect discrimination. This problem is observed when policies adopted in an organisation indirectly prevent some employees from receiving certain benefits or being promoted, for example. The policy in a company is developed to be applied to all the staff, but there is a group of people or an individual who becomes disadvantaged because of this policy.21
  3. Harassment. This problem describes an unwanted behaviour against an individual that can be associated with bullying, physical contact, joking, threatening and exclusion. Harassment in the workplace is prohibited as it aims at affecting the dignity of an individual and creating a negative and conflicting atmosphere at work. Sexual harassment is also prohibited according to the norms of the Equality Act 2010.22
  4. Victimisation. The problem is usually associated with a situation when a person files a complaint of discrimination in the workplace and becomes victimised by other employees. The outcomes for a victimised individual can include unfair dismissal or any type of bullying.23 As a result, the atmosphere at work may cause a person leave a company.

Psychological Contract

The concept of a “psychological contract” in the workplace is associated with a situation when employers and employees have certain expectations and perceptions regarding each other. In contrast to a legal contract, a psychological contract is not written or tangible, and it reflects the views concerning the employment relationship. The scope of psychological contracts in the workplace can include employees’ expectations regarding managers’ support, leadership, and approach to supervision adopted in a company. Employers, in their turn, have certain expectations regarding employees’ attitudes to their daily duties and responsibilities, as well as their commitment.24 The development of a psychological contract in the workplace is typical because, cooperating in one team, employees and managers generate specific attitudes to values and beliefs, and they also develop a kind of morale adopted in a company.

Practical examples of companies’ policies and procedures oriented toward supporting a psychological contract are usually associated with strategies for enhancing employees’ satisfaction with their job. These policies and practices include talent management practices, training and development strategies and team building activities. To address employees’ expectations regarding their career development, employers need to propose effective training and development programmes that include seminars, workshops and visiting conferences. The policy regarding promotion in a company should also be transparent, as well as performance appraisals. Thus, employers pay much attention to creating comfortable conditions for employees’ professional development, and employees become more committed to a company.

Issues Related to the Termination of the Employment Relationship

The termination of employment relations is a complex process in many cases, which can be associated with the dissatisfaction of an employee or an employer, or both depending on a situation. There are many issues that can be observed and need to be addressed during the termination process to resolve or improve a problematic situation. These issues include unfair dismissal, exit interviews, and the management of redundancies.

Differences between Fair and Unfair Dismissal

Dismissal can be defined as the termination of a formal contract between an employer and an employee. According to the Employment Rights Act 1996, it is expected that dismissal is based on certain fair reasons for terminating the cooperation, and these reasons can include inappropriate performance, regular absenteeism and the violation of a company’s policies.25 From this perspective, fair dismissal is observed when the reasons are clearly stated, and the procedure of termination corresponds with the ethical and legal standards.

However, the cases of unfair dismissal can also be observed in organisations. Employees are regarded as being terminated inappropriately and unfair dismissal is observed when these individuals are fired because of their race, age, sexual orientation, religious views, political views and pregnancy. These cases are associated with the discrimination issue, and they are considered to be illegal. Additionally, unfair dismissal is observed when individuals are terminated because of their membership in a legal trade union, being involved in legal proceedings against the employer, or protecting his or her interests regarding maternity, paternity, or adoption leave.26 If an individual has made a protected disclosure, he or she cannot be terminated.

Unfair dismissal can have a significant negative effect on an organisation. The reason is that the information about unfair dismissal can be easily spread, influencing a company’s reputation. Consequently, it will be rather problematic for managers to recruit and attract talented human resources to address their corporate needs.27 The situation of unfair dismissal can lead to legal proceedings against a company, high costs and stakeholders’ decreased trust.

Importance of Exit Interviews

Exit interviews need to be viewed as important and helpful for both employees and employers. The first reason is that employees receive an opportunity to learn what aspects caused an individual’s decision to leave an organisation. Therefore, it is possible to determine weak areas that require improvement in corporate culture, management, teambuilding, task assignment, training and development, performance appraisal, promotion, and other areas. Interviewing an employee will help an employer to focus on practical problems that can be addressed to improve all the processes in a company.

Additionally, paying attention to employees’ opinions, it is possible to address the problem of turnover and promote retention.28 Moreover, it will be possible to become aware of certain issues and problems in a company that cannot be discussed openly by employees because of their fear to be prejudiced by managers. Exit interviews are also important for employees leaving an organisation. The reason is that they have an opportunity to resolve all questions with managers depending on the specifics of their contract. In addition, employees can also receive a feedback from a manager that can be used for pursuing a position in another company.

Managing Redundancies

Redundancy is a problematic and sensitive process for any company when it is necessary to reduce the number of positions and terminate employees. The legislation in the UK protects the interests of employees, therefore, the redundancy process should be managed effectively to avoid law suits against a company. The following key stages need to be covered in the process of managing redundancies in any organisation:

  1. Stage 1 – Preparation. At this stage, managers conduct the assessment of a situation in a company, identify time available for completing the procedure and prepare required documents.
  2. Stage 2 – Selection. Managers determine the number of people for redundancy and specific criteria, according to which it is necessary to select employees. The selection of criteria is an important step as they should be objective. In other cases, employees can focus on protecting their rights according to the legislation.
  3. Stage 3 – Individual consultation. This stage is important to explain why a certain employee is selected to be fired. Additionally, it is also necessary to discuss other available possibilities for being employed in this company.
  4. Stage 4 – Notice of redundancy and appeals. During this step, managers are expected to formally inform employees about the coming dismissal in a written form. Employees are provided with details on how they can appeal.
  5. Stage 5 – The termination process. At the final stage, the actual termination of employees is realised, and those individuals who worked for a company for more than two years have the right to receive a statutory redundancy payment.29

The necessity of redundancy in an organisation can indicate certain problems. However, if the process of redundancy and termination is not realised effectively, it is possible to observe even more difficulties. To avoid negative impacts of redundancy on a company, including filing lawsuits against a company, it is necessary to identify the most objective criteria for selecting employees, communicate the situation openly and fairly, and provide required support for individuals.


This guidance leaflet provides details on how to address specific human resource management issues in the context of the legislation. The information provided in the leaflet also presents an important background regarding the importance of employment relationships in organisations in order to contribute to corporate success. It is also critical to note that the points on determining good practice and possible ineffective strategies in the context of the UK employment laws are represented in this document in detail, leading to a comprehensive discussion of the issue.


CIPD, Employee Relations . Web.

CIPD, Employee Turnover and Retention. Web.

CIPD, Maternity, Paternity, Shared Parental and Adoption Leave and Pay Q&As. Web.

CIPD People Skills Hub, Contracts and Employment Status . Web.

CIPD, The Psychological Contract. Web.

CIPD, Unfair Dismissal Q&As. Web.

Crawshaw, J., Budhwar, P., and Davis, A. (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017.

Equality Act 2010, c 15., Contracts of Employment and Working Hours. Web.

Perkins, S. J. and Jones, S., Reward Management: Alternatives, Consequences and Contexts, 4th edn., London, UK, Kogan Page Publishers, 2020.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246).

Turnstone HR, Manage the Redundancy Process Effectively. Web.


  1. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, p. 303.
  2. CIPD, Employee Relations. Web.
  3. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, pp. 303-306.
  4. S. J. Perkins and S. Jones, Reward Management: Alternatives, Consequences and Contexts, 4th edn., London, UK, Kogan Page Publishers, 2020, p. 114.
  5. Ibid., pp. 114-119.
  6. The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246)
  7. CIPD People Skills Hub, Contracts and Employment Status. Web.
  8. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, pp. 303-306.
  9. CIPD People Skills Hub, Contracts and Employment Status. Web.
  10. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, pp. 129-130.
  11. Gov. Contracts of Employment and Working Hours. Web.
  12. Ibid.
  13. Ibid.
  14. Ibid.
  15. CIPD, Maternity, Paternity, Shared Parental and Adoption Leave and Pay Q&As. Web.
  16. Ibid.
  17. Ibid.
  18. Equality Act 2010, c 15.
  19. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, p. 306.
  20. Equality Act 2010, c 15.
  21. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, p. 306.
  22. Equality Act 2010, c 15.
  23. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, pp. 306-307.
  24. CIPD, The Psychological Contract. Web.
  25. CIPD, Unfair Dismissal Q&As. Web.
  26. Ibid.
  27. J. Crawshaw, P. Budhwar, and A. Davis (eds.), Human Resource Management: Strategic and International Perspectives, 2nd edn., London, UK, SAGE, 2017, pp. 412-433.
  28. CIPD, Employee Turnover and Retention. Web.
  29. Turnstone HR, Manage the Redundancy Process Effectively. Web.
Find out your order's cost