We don't have the power?

Welcome to this week’s Discuss HR.

So it’s the first full week for some time and I’m in real need of another Bank Holiday weekend to rest!  Pretty much the main topic on everyone’s lips this week is the return of The Apprentice.  We’ve already seen Lord Sugar wield his pointed finger twice and utter the words “you’re fired”, but as this week’s Discuss HR illustrates, it’s not Lord Sugar who holds the power, but in fact his employees. (Ed Scrivener)

We don’t have the power?

I have been looking at the responses to the government’s ‘red tape’ consultation on employment law, particularly those from employer’s organisations (though the individual ones make fascinating reading).

Q. Why do employers feel that employment law gives all the rights to employees?

A.  Because it does.

Parliament and the EU tend to give obligations to employers, and corresponding rights to employees.  It’s true.   What’s going on?

Network Rail in 1873

If you go back to the early 19^th century, employers in the UK could contract their workers in any way they wanted.   Children and pregnant women worked through the night, in mines, with no leisure time, no breaks, not even any decent toilet facilities.   The employers had the power to contract for what they wanted.  If you didn’t like it, the theory was you could work elsewhere.

Since then, the law has progressively chipped away at employers’ freedom to do whatever they wanted.   It has rarely created new rights for employers in the process.    

Employers’ rights derive from two main sources:

·         Common law

·         Contract law

The ability to use these rights in any practical way is fundamentally affected by:

·         Psychological contract (motivations and relationships, reputation)

·         Economic power in the market place

It is really for the employer to assess what they need, what they are prepared to pay for it, and to contract to get it.   Employment law moderates that contract by overwriting clauses to pay less than minimum wage, less than statutory minimum holiday.  It will not write into a contract a right the employer meant to obtain but forgot.  There are provisions for reading into a contract terms that aren’t there, these are generally:

·         Custom and practice

·         Business efficacy test

However, the business efficacy test is there to enable terms to go into a contract to make it work (at all) not to make it work profitably or well for the employer.

So, why is it that we see so many employers who fail to contract for the rights they need to run their business?   Employers and HR need to understand that the government is not, and never has been in the business of giving them rights.  It is their job to do that within the broad limits of the law.

The latest T&Cs took some reading

More often than not we see contracts where organisations have contracted to do far more than they are legally required to do, without taking any useful corresponding rights for themselves.  It is no wonder the executives start to feel ‘employment law’ is against employers.  If you do it this way, it is bound to have this result.

A typical purchasing manager will develop strategic and long term relationships to ensure quality and continuity within the supply chain, but not at the expense of making a contract in the organisation’s interests.  Yet HR people do not think this way about employment contracts.

HR can be pretty smart about what to put in a contract – but not always.  We have to start with the idea that it is legitimate (and necessary) for the organisation to contract for the rights it needs and move on from there.  We have to bring the commercial needs into the contract drafting process, as we do with every other kind of contract drafting process. 

About the author

Annabel Kaye has been specialising in employment law since the seventies.  She founded Irenicon in 1980 and has spent the last thirty years helping HR, line managers and everyone else look at employment law in a way that gets some organisational gain. She likes to think about things from a different angle and making the complex simple – despite the government’s best efforts.   She has traded through three recessions and advised clients from multi-national corporations to the smallest organisation. The toughest thing has always been to balance the competing needs of staff and organisation and that never goes away whatever the legal details.

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Discuss HR is the blog for Human Resources UK, the leading LinkedIn group for those involved with HR in the UK.  Next week’s Discuss HR will be published on Thursday 19^th March and will be written by our next guest writer, Wendy Mason.  Wendy will be writing about the barriers public sector employees find when trying to move into the private sector.