Employment Law to Human Resource Management - Burden or Benefit - Case Study Example

Historically, after industrial revolution businesses have continuously been under the constraints of government regulations and amongst thememployment regulations are directly related to labour protection, safety and human resource management. This study is conducted to evaluate the impact of these employment regulations on the human resource management strategies that either these laws are burdens only or have some benefits too. Contents Abstract 1 Introduction 3 Literature Review 5 Managing compliance burden 9 Benefits of Employment Laws 10 Conclusion 11 References 12 Introduction Human Resource Management in any organization refers to the recruitment, management and facilitation of people/employees into the organization. Human resource management is performed to hire and develop employees with the sole purpose of organizational development. In this management process job analyses, trainings, orientations, wages, benefits, incentives and compensations are looked after for performance and growth (Gilmore & Williams, 2009). Managing human resource in turn requires leadership qualities along with effective negotiation skills and extensive knowledge and experience of industry but beyond these characteristics experience of employment laws and regulations is also an integral part of the process. Since in human resource management companies mostly look at the performance and growth indicators whereas the employee perspective may go unattended. Employees’ performance, workplace wellness, employee motivation, safety, benefits and communication may consequently rule in favour of employer but in such circumstances employment laws enforce companies and employers to abide the rules and regulations and comply in this endeavour. Besides the lone purpose of employment laws is to protect the employees from the misconduct and mistreatment by the company. Employment laws if considered specifically vary from country to country as every state has its own laws but generally these laws are put in place to protect employees from overwork, from dangerous work environment, from payment irregularities, from exploitation, from discrimination, from unfair promotions and compensations etc. (Davis, 2007) The debate does not end here rather it starts from this point that in the presence of more and more employment regulations, how the human resource management of company would react to the situation. Historical analysis provide a greater insight about the increasing employment regulations to comply as in 1900 there were only two employment regulations in United States of America which companies had to overlook before employing workers. In 1940, there were 10 employment laws placed for companies. In 1980 after 40 years, these employment compliance laws extended up to 34 and interestingly nowadays in 2013, there were around 70 separate employment laws in place which make companies to treat their employees fairly at their knees otherwise they can be charged with considerable limitations and restrictions depending upon the nature of the violation (U.S. Dept. of Labor, 2005). So, it is clear that business environment has totally changed within the last century and now businessmen and employers will have to adapt human resource management and operation strategies accordingly. Given the increasing nature of employment laws for companies and human resource strategies seems to be a great burden for employers to carry forward if they want to survive governmental restrictions. On the other hand if we look at the purpose of these employment regulations, it is crystal clear that such regulations are targeted to protect employees and public citizens from humiliation. Besides provision of safe workplace environment also has certain benefits too such as employee motivation, performance and intimacy. Academic researches and theories along with industry surveys have concluded that rewards, compensation, recognition, involvement and benefits are the best motivator of an employee. This study is conducted to explore the relationship of employment laws to the human resource management as if more laws and regulation are burden at company’s human resource management strategies or these laws have benefits too. This study will explore extensive literature for qualitative analysis on the issue that do we need more laws for progressive organizations and blissful employee or these employment laws are only a burden for compliance and hinder organizational growth. Literature Review Debbie Sidman in her study about the legal framework of human resource management stated that existence of legal obligations and regulations was next to zero in 1932 in United States of America (Sidman, 2007). In the year 1932, the first ever significant and organized Norris-LaGuardia Act was passed representing policies for labour unions. The act affirmed the rights of workers and provided them the bargaining power. Beyond that date, the history for labour protection and employee rights started to contemplate pieces of protection and provided US citizens with complete set of laws. The US history has witnessed around 30 legislation acts which conclude about 70 rules and regulations as Norris-LaGuardia Act (1932), National Labour Relations Act 1935, Social Security Act 1935, Fair Labour Standards Act 1938, Labour Management Relations Act 1947, Labour Management Reporting and Disclosure Act 1959 etc. During the first thirty years of employment laws, there were only 6 acts passed but beyond 1960s, history has witnessed around 25 legislations which demonstrate extensive response of government towards business operations. These laws are diversified as equal pay act, minimum wage act, civil rights act, age discrimination, safety, rehabilitation, health maintenance, retirement security, immigration policies, pregnancy related acts, drug free environment act, disability related act and many more. She finally concluded her study with the agreement towards HR professionals that no doubt government have put more focus on social responsibility and security of employees at workplace but on the other hand these legislations have made the jobs of HR personnel more complex and challenging. Complying with these rules and regulations has an additional cost to businesses and will put more burden at businesses. She further suggested that in future he pace of these regulations is likely to slow down but still Human Resource personnel will be on the losing side. Malcolm Warner in his study on labour markets and human resources in Asia Pacific economies wrote about labour unions, industry relations and human resources and stated that in Asia Pacific economies industrial relations are still at the primary stage including state, employers and trade unions. He stated that the relationship of these actors in determining labour policies and labour laws is contrastingly different than any western states either its United States of America or United Kingdom. Warner reported the fact that labour laws in Asian states have been poorly managed only because of national puppetry of labour unions. Lack of free trade union has created complexity in the development of employment laws while the existing employment laws are designed with collaboration of employers which undermines the effectiveness of social protection and social security doctrine. Apart from some of the less democratic political country, states like China, Hong Kong, South Korea, Taiwan and Malaysia have organized labour unions and have implemented employee protection (Warner, 2001). The study further brought issues of labour policies to light as labours have very limited bargaining power. So, in Asia the issue of employment law and their impact to human resource management is rarely witnessed in most of the states. Some countries like China, Japan, Indonesia, Malaysia and Vietnam who have their human resource strategies and employment laws in place are mostly influenced by the cultural and local values concluding the benefits of human resource structure along with employment laws. The local and cultural resonance in human resource and employment regulations are deep rooted with long lasting motivation whereas propensity of strikes and confrontation is also very low. Such amalgamation of culture into businesses has turned out be very easy to comply along with productivity. Jordon, Thomas, BlackBurn and Kitching conducted a research study to examine the Employer perceptions and the impact of employment regulation on their businesses in United Kingdom. The study aimed at exploring the current working practices of companies in response to employment regulations and struggled to evaluate the real impact of these regulations on human resource strategies of companies. The study revealed perspectives of employers and their HR practices in response to employment regulations. Most of the employers stated that adopting HR strategies associated with regulations profited in number of ways as by compliance to regulations, they succeeded to gain employee retention, motivation, morale and growth whereas they could facilitate their employees with safety, time direction, redundancy benefits etc. Employees further publicized their benefits of equality legislation for foreigners, benefits of reduced litigation and managerial autonomy (Jordan, Thomas, Kitching, & Blackburn, 2013). An interesting aspect of employment legislation came to light as companies were relieved with the prescribed framework for letting people go otherwise in case on internal human resource strategic framework, ending employments usually ended up with disputes and conflicts which in turn had destroyed repute of many organizations. Now with specified guidance, it made their operations quite easier. The research explored a stimulating perception of employers, when small and medium size employers were inquired about the regulations they simply replied that regulations are burdensome and were worried about what would happen if they fail to comply with rules and legal obligations. Whilst contrary to small and medium scale employees; large scale employers were less anxious about consequences rather they were confident of benefits. ADP Research Institute conducted a study on HR compliance and its increasing cost to companies in regulations for provision of Patient Protection and Affordable Care Act in United States of America. The study explored that among all employment regulations, provision of health care was the biggest challenge faced by companies in United States. The findings of this study reflected disappointment among employers that they will not be able to fulfill this responsibility given the cost of health care in USA. Employers protested about the ACA and stated that escalating costs of health insurance for employee will take their organizations away from their goals and objectives (ADP Research Institute, 2012). The survey conducted ADA Research Institute revealed the perceptions of small, medium and large sized companies about the regulations in which 8% of the small scale firms ruled in favour to uphold the law and 10% of medium and large scale companies supported the cause. Large scale corporations resented strongly and responded against the law that they should strike down the entire Affordable Care Act. 22% of small sized firms and 17% of medium sized firms had the same perspective. Since the law included health care reforms as medical aid programs and health insurance. 22% of the small sized industries responded to that question to strike down the individual requirement for health insurance. 20% of the medium size also favored the cause whereas only 16% of the large scale firms were in favour. When companies were asked for their preparations to comply with the regulations, they stated as only 30% of the small size firms were ready for implementation while the remaining 70% were not prepared neither financially nor mentally. Among medium scale industries, 50% of the companies reported yes for their preparedness towards the legislation but still 50% of the medium size firms were not aligned with the public regulations. The highest statistics of preparedness was seen among large scale firms where 66% of the firms has concluded their strategic operations for new rules but still 34% of the large sized firms were not on board. So, the survey report clearly suggest that complying with the employment laws and regulations is a costly and is nothing more than a burden to small sized firms. Though medium sized and large scale companies got better statistics but still the fact of compliance burden cannot be ignored. In today’s human resource management scenario, complying with the employment regulations is the continued challenge. Spending once on the Affordable Care Act (ACA) and providing medical aid and health insurance to employee is not going to end the misery rather the burden will stick to the employers or the rest of their lives. Managing compliance burden After having the detailed analysis of history of employment regulations, one can easily deduce that employment regulations will never get shorter rather will expand rapidly. In such scenarios, it is advised that given the cost and financial penalties of non-compliance companies should understand the importance of compliance. Managing compliance burden of employment regulations is the last resort for companies to survive, although coping up with the costs would be difficult for small sized firms but ultimately they will have to learn how to manage compliance burden. Small sized companies lack times, resources and confidence to switch their primitive practices into contemporary human resource framework. It is an accepted fact that compliance complaints and litigation have increased by 200% in the last decade. The process of tribunals’ investigation and litigation has a destructive impact on company’s repute and financial base which can only be avoided through managing compliance burden. Benefits of Employment Laws It has always been debated by the employers that employment laws are a burden of compliance but in contrast to burdens, the actual benefits of employment laws have been ignored. Employment laws have benefits for both employees and employers. Employment Laws benefits constitute as group insurance, disability income, unemployment benefits, retirement benefits, sick leave, daycare, tuition reimbursements, maternity leaves, vacations, drug free and safe environment etc. Above benefits are enjoyed by the employee but in return employers also earn the courtesy to enjoy certain intrinsic benefits as trainings, health insurance, safe environment, orientations and HR compliance keep employees highly qualified and in the presence of intrinsic and extrinsic motivation forces, employees perform efficiently to their best which makes them highly competitive and ultimately business growth takes place. Given the ideal and progressive environment, companies can attract and recruit the most talented associates. In a continued compliance environment with flexible employee benefits, employees can earn employee intimacy to perform and can easily retain them. Employers look at the costs and burdens associated with regulatory compliance but in fact they miss the whole point of trade off in which employers can manage high business risks at a very marginal cost. No doubt companies spend on regulatory compliance but in return employees’ performance and progress ease up the actual financial risk and burden through his skills which is more profitable. When employers offer social benefits and facilitation to the employees, the productivity of employees boost up automatically whilst the motivational force is the social security of their family which keeps workers motivated of their continued performance and motivation for continued benefits in return. The fear of losing such benefits will never allow employees to perform below their potential. Finally the ultimate benefit that employer enjoy in turn is the tax evasion and deduction offered to organization in response to their social service funding. If we look at the employee benefits then one can only state that all employment regulations are for employees’ protection, betterment and satisfaction. Besides employees enjoy peace of mind and feel pride of their value in the markets through the benefits they yield. Conclusion After processing through the detailed costs and benefits of employment laws and regulations on human resource strategies, it can be said that such laws are devised for the betterment of both employee and employer. Those who have complied with the laws have felt relieved of employee retention, disputes, litigations, motivation and performance whilst those who failed or deferred to comply with the regulations and rules have only tasted burden of compliance rules. Integrating employment laws into corporate human resource strategies has benefits for both employees and employers but the only need is to look beyond the burdens and costs. References ADP Research Institute. (2012). Competition, Cost Control & Compliance:Strategies to Navigate a Changing HR World. Roseland, New Jersey : Automatic Data Processing, Inc. Davis, T. A. (2007). Employment laws made simple. Eau Claire: National Business Institute. Gilmore, S., & Williams, S. (2009). Human resource management. Oxford: Oxford University Press. Jordan, E., Thomas, A. P., Kitching, J. W., & Blackburn, R. A. (2013). Employment Regulation: Employer perceptions and the impact of employment regulation. EMPLOYMENT RELATIONS RESEARCH SERIES 123, 69. Sidman, D. (2007). The legal framework of contemporary human resources. New York: Jones & Bartlett Publicatons. U.S. Dept. of Labor. (2005). Employment laws: Overview & resources for employers. Washington, DC: Office of Disability Employment Policy. Warner, M. (2001). Labour Markets and Human Resources in Asia Pacific Economies. Research Papers: The Judge Institute of Management, 24. Read More