Employment rights and remedies: things can only get better…

by Joseph Markus

Today is a difficult day for employees.

Today it becomes more difficult, if you are (or will be) one, to seek redress from your employer. Previously, to qualify to claim unfair dismissal, an employee needed to have been employed for a continuous period of a year. That has now risen to two years.

Additionally the amount of costs (that is, the costs of legal advice and representation) that can be awarded against either party has risen from £10,000 to £20,000. Costs are only ever awarded in this context where a party has behaved ‘unreasonably’. But that isn’t really the issue. The fact that costs could be awarded, that an employee could be threatened with an application for a costs order (something that I’ve experienced on occasion), is deeply off-putting, particularly now that that spectre is twice as big and twice as scary.

Taking those reforms alongside the proposed changes, to come into effect next year, to require prospective claimants to pay a fee to the Tribunal, the climate is one of deterrence.

Driven by the lure of a ‘flexible’ labour market, translating roughly to cheaper, more-easily-sackable workers, and, in thrall to the self-serving goal of the CBI and business community to push Britain’s ‘competitiveness’, other values are swept aside. Even if it were justifiable to treat workers this way in aid of an ailing economy, it’s highly unlikely that increasing insecurity among workers will increase confidence and spending (either among those workers or their employers). There are other, more significant, determinants to whether employers will hire more.

This comes at the same time as local councils are cutting provision for free legal services and the Government are cutting the legal aid budget from under our feet.

The old cinema in which CCLC is housed

My local example, the Camden Community Law Centre—one of the country’s first law centres, incidentally—is gradually, but irreversibly, in decline. Camden Council are revoking funding for housing and welfare advice. And, in a uniquely cynical move, the Council have dedicated to continue funding employment and immigration case-work, but this is in the knowledge that CCLC cannot continue to use their current premises or maintain an effective level of service with this partial funding. This way the Council will appear not to have been the one that killed the Law Centre.

In the background to all this is the final fact that employment law, in 2013, will go entirely (in the coldly bureaucratic language of the MoJ) ‘out of scope’.

We’ll be left with, as Nick Cohen so elegantly put it: one law for the rich, no law for the poor.

  1. To argue that an employer does not have the right to fire a person for any reason is insanity equally insane is to say that a worker cannot quit at any time for any reason. In the end regulations designed to “protect” workers’ rights do nothing more than discourage hiring. Why should not a company be able to fire someone for any reason. Employment should be a mutual agreement with a lifespan decided by participants and spelled out in a legal contract not a marriage for life. A free will employment system has the effect of putting the most skilled person in the job best suited for him or her. The mistake that socialists often make is to assume that the force of government is able to improve on human nature. No system is perfect, but companies and people all working in their own best is the system most likely to produce the highest standard of living for the greatest number of people. Government force can only help protect a less qualified worker’s job at the expense of a better qualified worker’s opportunity to excel at that job.

    • josephmarkus said:

      It isn’t insanity. Far from it.

      The UK’s unfair dismissal laws ensure that an employer has to sack someone for a reason that is, in some sense, rationally connected to their employment. This makes sure that employers cannot sack people for no reason, for a discriminatory reason, for a reason related to trade union involvement, for taking maternity leave, because they don’t like the worker, and so on. It also forces employers to follow a fair procedure when it is alleged that an employee has stolen or is not capable of performing the work. All of that is a good thing and, done properly, should not add materially to the costs of doing business (remembering, as well, that recruitment is a very large expense).

      You presume that contract law is conducted in an unrealistic vacuum in which everyone has exactly the same amount of bargaining power. Employers have considerably more power than employees, especially when there is a lot of unemployment. Employers always have the option of exit, whereas for an employee that (theoretical) option is less real. You also have to factor into the equation the extent to which, for an employee, this work may be, as well as his living, his life. People enjoy their work. To stop them doing it, without cause, is unfair. (You also presume a perfect employment market in which the number of jobs equals the number of workers and you assume that an employer is able to, and always will, choose people based on intrinsic skill or merit and not on any other (irrelevant?) characteristics.)

      Additionally, the effect of employment rights legislation is generally seen to be a good thing (there is some ILO research on this, although I’ve misplaced the reference). A worker in unstable work, constantly at threat of arbitrary dismissal, will not perform as well as someone in a stable working environment.

      How do you know this sort of regulation dis-incentivises hiring? I would suggest that other things—for you payroll taxes, for us National Insurance—are greater drags on hiring. Taxes on employment are immediate inhibitions; the speculative ‘tax’ of being sued is not likely to figure much in hiring decisions.

      So, in short, I don’t agree.

  2. I do understand your point and it is well taken in theory, but as you said the law and as well politics is not conducted in a vacuum. Large corporations with millions and now days billions of dollars to invest in lobbyists and campaigns will always be favored by government. Workers may gain the protections you talked about and unions might get stronger but such apparent progress will only serve to give a false sense of security. It is likely that whatever the individual worker gains in the political struggle he will ultimately lose in the form of government handouts to the very corporations being regulated. No system is perfect but it seems likely that free markets, even the labor market, are likely to lead to the most prosperity for the most people.
    This is most pointedly played out in the areas of gender and race.
    Left leaning organizations try to convince minorities that they are victims of society and that without government standing in the way, society would shut them out, force them into poverty, and enslave them. Right leaning organizations are equally deceptive and despicable. But we must never forget that from slavery to Jim Crowe, to forced segregation, and today labor laws the most pernicious forms of discrimination have always come from government not from society. The US government did not end discrimination with any of its central planning or so-called anti discrimination laws. Free markets and the purchasing power of minorities is what ended discrimination. The bus boycotts are a perfect example of government mandated discrimination being broken by economic power and free choice.
    A white’s right to take a seat from a lady of color was mandated by the US government, it was the so-called law and there were many arguments for it, but it was no different from a person of color’s right to take a job from a white today, again there are many righteous sounding arguments for both, but both are discrimination and both breed hostility which serve to divide us and in the end enslave us all.
    And yes you are right, labor laws are only the beginning, government interference in the form of payroll taxes, insurance mandates, unemployment insurance, and in the US the Americans with Disabilities Act serves to choke off hiring and drive the best jobs overseas.
    Government never stops at good enough, it never says “that is all we need to do, nothing follows” it always increases regulation, favors political cronies, and hampers economic growth until it can no long be tolerated and then it collapses. We see is happening in Greece, Spain, and Portugal in the present and there are likely many more countries to follow.
    Thank you for your reply, and I want to admit here that the best option might lye somewhere in the middle.

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