Employers are split on how to manage the cost rises they expect to come from the Employment Rights Bill.
Almost four in five employers (79 percent) expect the bill to increase their employment costs, according to a CIPD survey with 2,000 employers.
However, while close to a third (32 percent) of employers plan to try and raise productivity and improve efficiency in response to the bill, a similar proportion (30 percent) plan to manage the cost by reducing headcount with redundancies and/or recruiting fewer workers.
The wide ranging bill includes an upgrade of statutory sick pay, changes to unfair dismissal rights and guaranteed hours for zero hours workers.
Peter Cheese, CEO of the CIPD, said: “Our research shows that employers are already starting to seriously think about how the Employment Rights Bill could affect their workforce plans and costs, even without the full detail being clear and it not being implemented for at least another 12 months.”
Employers also told researchers they plan to manage the cost of these changes by introducing or increasing automation (23 percent), slashing training spend (22 percent), cutting the hours staff work (17 percent), and upping the percentage of their workforce that is temporary (17 percent).
The government’s planned overhaul of unfair dismissal rules and new rights for trade unions are two of the areas of most concern to employers. The CIPD said there is “still very little detail” from the government on these areas.
Unfair dismissal
Part of the government’s plan is to end the two year unfair dismissal qualifying period, which would potentially be replaced by a new, shorter, statutory probation period. The CIPD said that this change is the most likely to prompt employers to make redundancies.
Further changes, to make it easier for unions to gain recognition and access workplaces, mean unions and employers will need to put more emphasis on developing social partnership and employment relations skills, the employer body said.
Large and complex bill
The size and complexity of the bill, and its impacts, has prompted the CIPD to urge the government to offer employers more support and guidance to smooth implementation and address concerns.
It said the bill could compound the cost increases employers already face as the rise in employer national insurance contributions, national living wage and business rates are due to come into force.
Survey respondents were asked what type of support would help them manage the impact of the bill as well as implement rule changes. Two fifths (40 percent) said they’d like guidance from the government on implementing the changes, 33 percent would like guidance from professional bodies, such as the CIPD, in implementing measures in the bill, 34 percent said support with training materials for HR and managers would be good, and 31 percent said support in developing policy to align with legal requirements would help.
The CIPD said these responses highlight the important role of HR in understanding the new legislative requirements and how they impact work policies and practices.
Accidental non-compliance
In addition to the cost increases, employers also risk accidental non-compliance with the complexity and scale of the changes.
The CIPD said that smaller firms with fewer or no HR resources are particularly vulnerable, while the changes could also ramp up pressure on an “already over-stretched” tribunal system. It highlighted the government’s own impact assessment that showed that the bill could cause an estimated 15 percent rise in employment tribunal claims.
Cheese said: “It’s positive the government has committed to phasing in elements of the bill, with amendments this week underlining the complexity of the changes facing employers.
“It’s essential that businesses, and smaller firms in particular, have adequate understanding and time to prepare for the changes.
“The success of the bill depends on effective consultation, a clear implementation plan, appropriate support and proper enforcement. Without this, there is a risk that new laws which the government hopes will improve working lives, could have the unintended consequences of undermining job creation and efforts to boost labour market participation and growth.”
The CIPD also highlighted the importance of additional resources for Acas, the Central Arbitration Committee and the employment tribunal system.
