New employment laws have cost firms £37bn since 1998, the CBI reveals in a new report published today (Monday) that calls on the Government to get smarter in the way it regulates workplaces.
Firms have little faith in the Government’s commitment to tackle the number and complexity of these regulations, according to the report. Only two per cent of employers were confident the Government would deliver on its promises of simplification and deregulation.
The figures are published on the first working day that major new employment laws come into force, including far-reaching rules on age discrimination and extensions to maternity leave and pay.
The cumulative impact of 35 new employment rights over the last nine years, and the administrative burdens they have created, is revealed in the CBI publication ‘Lightening the load: The need for employment law simplification’. Their total cost is based on the Government's own 'Regulatory Impact Assessments'.
Three-quarters of employers told the CBI that time spent administering and complying with new rights was damaging their business. Half say that labour costs have increased, two-fifths think workplace regulations have harmed the UK’s reputation as a place to do business and a third say they have adversely impacted on their ability to compete.
The CBI’s Deputy Director-General, John Cridland, said:
"Companies don't want to turn back the clock. They accepted many of the new rights, but they feel they are being strangled by too much complex and unnecessary red tape, which is holding back the growth of the business.
"Employment laws alone have cost businesses a massive £37 billion in the last nine years. Regulation has its place but the red tape they generate must not be allowed to undermine a company’s ability to get on with the day-to-day job of delivering to customers, increasing competitiveness and developing the business.
"Far too much time and money has been wasted on bureaucracy and firms are struggling with unnecessarily complicated and unclear changes to regulations.
"It is little wonder firms lack confidence the Government will deliver on its promises of better regulation. It has already failed the first test of its own ‘one in one out’ principle, by implementing the Work & Families Act without taking back administration of statutory maternity pay, as proposed.
“We now have an appropriate and balanced framework of employment rights. What the Government must now do is simplify these regulations where they are complex, return to the key principles of the rights and remove the clutter.
“There should be a focus on encouraging a partnership between employers and employees rather than returning to an adversarial based approach. More support is needed, particularly for smaller firms, who need help in increasing workforce skills, productivity and innovation.”
In its report, the CBI argues no further rights should now be introduced until after the next election and is calling on the Government to restrict itself to one employment bill per Parliament. It should also review the impact and effectiveness of new regulations no more than two years after implementation, the CBI says.
In addition, the report makes a series of recommendations to the Government across a range of employment regulations, including:
GOLDPLATING OF EU DIRECTIVES MUST BE REMOVED
Too often regulations implementing EU Directives are more onerous than they need to be – all that is required is a clear statement of principles. The Working Time Directive can, for example, be distilled to the principle that no-one should be forced to work more than 48 hours per week, but employees are free to choose to work longer if they wish.
GOVERNMENT MUST REDUCE HOME-GROWN RED TAPE AND HELP SMEs COMPLY
The Government has pledged to simplify guidance on maternity leave, but the CBI believes it should apply this approach across all employment legislation.
Furthermore, the cost of administering state benefits on the Government's behalf is significant. The Government must take back the administration of statutory maternity and statutory sick pay where employers wish it to do so.
Small and medium-sized enterprises (SMEs) often cannot afford dedicated HR staff and the CBI recommends that the Government should establish a low-cost, shared HR resource delivering common sense, comprehensive advice on the full range of employment issues.
REFORM OF THE EMPLOYMENT TRIBUNALS SYSTEM IS ESSENTIAL
The tribunals system also comes under fire in the report, with over half of employers saying the system is too adversarial and more than a quarter citing cost as their main concern. In one in four cases brought, companies felt they had to settle out of court despite being advised they would win.
Two years after statutory procedures for resolving workplace disputes were introduced, employers believe too much emphasis is being put on procedure over substance – and that too many minor disagreements are elevated into formal complaints.
The CBI believes more costs awards should be made against unsuccessful claimants to discourage weak and vexatious cases. Automatic findings of unfair dismissal should not be made just because employers fail to follow the statutory procedure to the letter.
FURTHER EQUALITY LEGISLATION IS UNNECESSARY
Employers recognise the value of a diverse workforce and improving guidance must be the key priority rather than extending discrimination legislation, for example by allowing class action tribunal claims or naming and shaming those falling foul of the law. This would only foster a minimum compliance culture and inhibit progress, according to the report.