As incoming employment rights spark further concerns about rising business costs, Duncan Brown asks, what’s the real cost of failing to treat people with dignity, respect and fairness at work? From sick leave to screen industry scandals, Brown, a principal associate at the Institute for Employment Studies, explores the risks, returns, and moral imperatives, of investing in decent work.
“Sharp rise in demand for Acas services ahead of employment rights changes” was the Benefits Expert headline that drew my attention last week.
With its finger, as usual, on the pulse of its employer and reward and benefits audience, it noted their concern “as a swathe of employment rights are about to change” and that their costs of compliance and tribunal claims are thereby set to increase. This comes on top of the “significant hikes” earlier this year to employer national insurance contributions and the National Living Wage rates. Acas reported that it dealt with 113,000 early conciliation cases over the past 12 months, up over 10 percent on the previous year.
At nearly 300 pages and containing over 30 employment measures, the impact of the Employment Rights Bill, which is still progressing through parliament and subject to various additions and amendments, should indeed not be under-estimated.
“Employment Rights Bill could overburden businesses”, was the Institute of Chartered Accountants (ICAEW) conclusion on its recent member survey on the bill, contained in the briefing note they just sent to members of the House of Lords as they were debating its passage. This reported the feedback that “with SMEs in particular feeling the impact of increased employment costs, elements of the Employment Rights Bill could make hiring untenable, when businesses are already under pressure from rising costs and the increase in employers’ national insurance contributions (NIC)”.
Employment rights and enforcement
A conclusion apparently endorsed at the macro level by the spring report on the UK economy, from The Office for Budget Responsibility (OBR), who suggested this greater regulation at the workplace would have “material, and probably net negative, economic impacts on employment, prices and productivity”.
Hmmm….
I wonder if they and the ICAEW factored in that almost three million UK employees have been unable to work for more than six months due to sickness? That in 2022/23 17.1m working days were lost due to stress, depression or anxiety – equivalent to an estimated £5bn in lost output? Around 2 million employees reported anxiety due to a lack of clarity over the number of hours they will work, or shifts suddenly being changed, as is common under the zero hours contracts which the Employment Rights Bill will outlaw.
A lack of adequate employment protection and enforcement adds to the problems and means for example, that some 4,000 pregnant women and mothers returning from maternity leave lose their jobs each year (how much does that cost OBR?); and that the Low Pay Commission estimates that almost 2 million employees last year were not actually paid the National Living Wage rate they are legally entitled to.
For the self-employed the situation can be even more precarious. One of my concerns is that this significant strengthening of employment rights (and hopefully enforcement with its promised, powerful and much-needed Fair Work Agency) under Labour may encourage unscrupulous employers to re-classify their employees as self-employed, as we saw at the height of the ‘gig economy’ boom in the 2010s.
The Financial Times reported on their investigation last week into the illegal use of unregistered migrants by large employers in the food delivery sector “placing already vulnerable people at even greater risk… and encouraging the erosion of employment law for all”. James Farrar, from Worker Info Exchange, told them that by delaying plans to legislate on workers’ status, the government was “in a position where it is really facilitating these companies in evading employment law”.
My research with the CIPD found the UK spends around 1/7th of the French expenditure on labour market enforcement. Good cost saving?
The case of the Screen Sector
The UK’s incredibly successful screen sector (including television, games and special effects), the OBR might note, contributes an estimated £21 billion in gross value added to the UK economy and supports over 200,000 jobs, according to their employer body PACT.
The industry is also known for its reliance on short-term, freelance, and casual work, particularly in areas like post-production. A recent report by the TV Industry Human Rights Forum, Let’s Fix It in Post, found that many “illegal and barely legal” working practices “undermine dignity” and in some cases “approach human rights violations”, breaking existing, never mind new, laws in some cases. Examples identified in the research included:
- Individuals routinely working without written contracts, despite the existing legal requirement to issue written terms by day one;
- Delayed or non-payment for freelance work;
- The use of ‘phantom’ weekend work on fixed-term contracts to deny staff holiday pay;
- Entry-level and freelance roles paid below the legal minimum when compared against actual hours worked.
- “Closed hiring practices and opaque recruitment processes, reducing access and undermining fair progression, particularly for people from underrepresented backgrounds”.
In response the British Film Institute at the end of last year launched WorkWise for Screen, a pilot “programme to support screen businesses and employers to prioritise equality, dignity and respect in the workplace and sector specific guidance on the government’s incoming Employment Right’s Bill”, led by the excellent Keith Arrowsmith.
Note the launch headline here, “BFI invests (not costs) £1.5 million to address practices negatively impacting the industry’s workforce”.
They rightly emphasise that: “These issues are not merely administrative oversights; they have real human consequences, including stress, financial instability, and reduced access to family life. In a legal and reputational sense, they present significant risks to businesses.”
Creative industries minister Chris Bryant said at the launch that: “Everyone must feel safe in their chosen career, including in the creative industries. That’s the only way they can thrive. We’ve all read disturbing stories of bad practice… WorkWise for Screen will help ensure everyone working in our first-class screen sectors has the tools and resources needed to create more inclusive and productive workplaces.”
So big risks, but also huge opportunities. Keith Arrowsmith notes: “Across an amazing sector, jobs in screen have the potential to be great … but many people are struggling. Getting to the bottom of this is vital, both for people’s working lives and for ensuring a sustainable thriving industry.”
This is not just “to meet industry standards for working conditions (and minimum legal requirements), but also to go beyond these (so as) to build healthier, more productive and more diverse workforces”. Far more UK industries and employers need to learn, or re-learn, that lesson.
My colleague Jonny Gifford at IES has been helping them to define what is good work in the screen sector? And thereby to realise more of these good jobs in great, high performing work contexts that the minister talked about.
A history lesson…
Parliament finally passed the Abolition of Slavery Act in 1833, which was actually 10 years before women and children were banned from working down our coal mines. But there followed a remarkable and powerful backlash from slave employers, with one questioning: “Is it just that the unfortunate proprietor should be the only sufferer?”
Three years later the Slave Compensation Act was passed, providing financial compensation to slave owners in British colonies following the abolition. Around £20 million was paid out in total across more than 40,000 awards – that’s worth £16.5bn, the OBR might tell you, in today’s money, and back then represented a staggering 40 percent of the British Treasury’s annual spend.
Mine owners weren’t compensated for the loss of their female and child workforce, and I haven’t yet heard any business groups arguing for similar compensation for the outlawing of zero hours contracts. But….
And just in case you think slavery did actually end in 1833, last Thursday Parliament’s Joint Committee on Human Rights published a damning report on the issue of forced labour in supply chains reaching the UK:
“The inquiry has found evidence that goods which are produced or part-produced with forced labour are being sold to consumers in the UK…The UK is falling behind international partners in its approach to addressing forced labour in supply chains.”
The report recommends: “The government should legislate to introduce mandatory human rights due diligence requirements throughout supply chains for businesses trading in the UK.” And also that: “The government should introduce an import ban to prevent goods produced using forced labour from entering the UK market.” This is 2025 remember, not 1833.
Would you believe it, yet more intrusive and expensive employment legislation?! Now where’s my compensation claim form to fill in?
…to invest in our people, then and now
Late last year, as Benefits Expert reported “Employer cost challenges increase, as 6.7 percent living wage hike unveiled”, and concluded with the wise observations of Lush Cosmetics ethics director Hilary Jones on the pay increases resulting for these lowest-paid workers.
She said: “Lush staff making and selling our products are crucial to our success. So we commit to the Living Wage Foundation’s independently-calculated real living wage rates each year, to feel confident our rates of pay are fair and that our staff can afford what they need to thrive, not just survive. In these tough times where the cost of living continues to rise, it is great to see the government increase minimum wage closer to these calculations to support the hardest working and most vulnerable workers across the UK.”
Thirty-seven percent of those receiving Universal Credit, almost three million people, are in employment. Perhaps if their wages were at the real living wage level then this would fall and employers’ national insurance contributions could be reduced as well.
HR, reward and benefits professionals need, like Hilary, to be the champions for making and acting on the clear business case for achieving improved performance and productivity by investing in our people. We must not fall into the trap of being apologists, even cheerleaders, for short-sighted business leaders moaning about the costs of achieving dignity and respect at work for all, instead investing in high-performance working, good jobs and working practices, and ensuring that equal opportunity and human rights prevail in practice in our workplaces.
They pay off for everyone.
