The Employment Regulation Enacted since 1997 - Essay Example

Critically evaluate the extent to which management prerogative has been notably constrained by the regime of employment regulation enacted since 1997. INTRODUCTION Prerogative in literal terminology stands for the exclusive right and power to command, rule or judge, and hence it confers superiority of position and rank in any particular category (Webster, 1990, 1066). With regards to businesses, management prerogative refers to any legitimate exclusive rights which the manager and his subordinates can exercise, without intervention from trade unions. Hence it is essential to understand the relation shared by the management with regards to control and the employee’s resistance to these controls in accordance with the distribution of power within the business. This relation is directly affected by the laws and regulations enacted by the State Government, and hence rely upon the ideological approach of the political party in power (Storey, 1983). EMPLOYMENT REGULATIONS BEFORE 1997 The fairly recent history of British political scenario has been the time span of conservative regime from 1979 to 1997, which focused on the collective bargaining approach to determine regulations, rather than resorting to legal regulations by the parliament, for the party’s ideology supported the stance that collective bargaining was the most effective method to initiate healthy industrial relations. Hence the UK population witnessed employment regulations implemented by the Conservatives in the form of promotion of anti-unionism, and abolishing the compulsory union membership system, it focused on restricting trade union actions such as strikes and the penalties for illegal actions saw a major hike; they removed minimum wage laws and the security provision to the workforce, and thus weakened the labor laws significantly. They narrowed protection for the employees, and on the contrary increased the management prerogative by restricting the labor from taking actions lawfully (Dickens, 2008, 4-5). This could also be viewed in the light of political debate over authority, and since there is no way to reconcile the demands of the two major opposing centers, the Capitalists in the form of managerial office bearers and the Socialists in guise of the workers, thus there is deadlock and the need for intervention by a third party, which in such a scenario is the Government. Therefore, the practical workability of the arbitrative plan would result in the collaboration between the power elites, i.e. the state and the businesses, to suppress the labor force to fulfill their corporate aims (Ecumenical, 2010). EMPLOYMENT RELATIONS SINCE 1997 In May 1997, the United Kingdom underwent a major political change, with the election of the Labor Government, the policies also switched to a pro-employee position. Labor party was reelected in June 2001 and May 2005, and their initiation to the position of power resulted in important changes in the employment relations regulations, and established an extensive and considerate system of minimum employment criterion. This in turn abolished the right of the managerial office holders to exercise authority, and hence reduced the horizon of legal management prerogative in the UK. The key considerations in the employment relations development laws enforced by the Labor Party were: Working Time The minimum wage level Recognition of the respective Trade Unions (TUs) Family friendly policies; such as maternity and paternity leaves, flexible working times for employees and burden on employees with dependants Unfair dismissal European Works Councils (EWCs), consultation services for the employees in case of redundancies and other job related matters, and information provision Part-time and Fixed-time jobs Equality and discriminations at work, such as gender, race, caste, language, nationality issues Wholesome effects of the laws and regulations The above mentioned aspects underwent major changes; however the laws pertaining to the resolution of industrial disputes or internal conflicts of unions remained as passed over by the Conservative government (Dickens and Hall, 2005, 12). IMPACT OF EMPLOYMENT REGULATIONS SINCE 1997 ON MANAGEMENT PREROGATIVE AND EMPLOYEES Working Time The research into the implementation of the Working time regulation indicated that employers did not ponder over this law beyond the minimal criteria, and left the extension unattended unless they suffered opposition from the market to revise their working time regulation to meet the legal standards. The employers were able to escape these regulations since they never came in the main light, and 19% of all full time employees in the UK worked more than the maximum working time i.e. 48 hours per week. Hence showing that the management was able to retain control to some extent over the workforce, and evade the legal regulations, without suffering intervention from the workforce, due to workers resistance for any disruption in the existing process, and 34% of the workers exceeding the working time were paid additional payment for overtime hours and 75% entered into voluntary agreement with the employer. The management prerogative thus remained dominant and extensive, and they were able to escape the regulations due to the loophole in the labor industry in the form of increasing need for finances, which the firms took advantage of (Dickens and Hall, 2005, 14-15). The National Minimum Wage Level (NMW) The introduction of the NMW has resulted in the reduction of the gap that marks the lower distribution of wage income amongst the males and females, and when initially implemented, it covered about 1.1 million jobs approximately in the UK. The acceptance of the NMW has been high throughout, owing to the self interest maximization principle applicable on every individual. However, in the case of the informal sector, the level of compliance has been low, where the maintenance of account data is not accurate enough to substantiate any discrepancy occurring in the employers practices with regards to the wage regulations. Thus there is a loophole where the business is small (Small and Medium Scale Enterprises) or operates in the informal sector. The SMEs however also suffered financial constraints in the situation where they had to abide by the NMW system, and some even went bankrupt and had to shutdown. The larger firms were able to retain their managerial prerogative by increasing the intensity of the work they imposed in the workers, due to an increase in the minimum wages, and also maintained quality through quality checks. However, the moderate level of the NMW depicted the continued practice of the Third Way principle, for the regulation did not affect the employers to a great intensity, resulting in satisfying the workforce as well as the employers (Dickens and Hall, 2005, 16). Trade Union recognition The Employment Relations Act of 1999 gave the trade unions the right to attain recognition from the employer, for the purposes of collective bargaining, and hence the establishment of trade unions became legal. The workers received positive responses from the employers; however, this does not ensure that the relationship between the two entities was successful. The success of this clause has largely been the result of independent factors, such as change in the employer’s attitude, who by 1999 considered that good relations with the workforce would result in increased productivity, increased quality, increased efficiency and also loyalty of workforce which would result in low employee turnover, thus the recognition of trade unions has been mostly a voluntary or pre-emptive act rather than an adherence to the legal order. The management let go of its prerogative willingly in this case, but did maintain a control over the employees due to the decision making power being the authority of the employer. The employers in this regard were also able to maintain control because they framed the issues which were brought up for collective bargaining, and the intense issues of ‘pay, working hours, and holidays’ were usually kept outside the discussion sessions, and hence the management was able to figure out the loophole, which was the weak representation of the trade unions, who were ineffective in negotiating their rather sensitive issues, this escape for the employers however was diminished when the Union Learning Representatives (URLs) were appointed by the TUs to deal with the employers on the important issues pertaining to the workforce (Dickens and Hall, 2005, 17). Family Friendly Policies This strand of the employment regulation is the major factor which determines the return to work desirability of women, and hence has major impact on the size of the workforce and the dependant population. According to a CIPD survey, 23 percent employees had demanded flexible timings, and thus in accordance with the legal regulation, employers had to grant the parents of young or disabled children the demanded flexible timings, and hence according to the CBI index, in total the employers had approved the requests of 77% employees. The response of the employer however was highly dependant on the sector and the size of the firm. The smaller firms, which employed less than 50 employees, had to submit to the demands of its workforce (approximately 82% small firms’ accepted flexible timing requests). However the larger firms had the opportunity to escape this legislation since they had a larger workforce, and the capacity to employ additional labor, this loophole served to fulfill the purpose of the larger organizations, and their management prerogative was maintained due to the economies generated by the size of their business. However, the SMEs had lost their management prerogative and it became the Worker’s prerogative since they were the ones who had the pressure imposing power following the 1997 employment regulations. In addition, the very basic level of paternity pay offered to the male was so low that they themselves preferred to work or get a paid holiday entitlement rather than paid paternity leave (Dickens and Hall, 2005, 18-19). Unfair Dismissal This regulation has been put into effect, however it must not be ignored that despite the improvement in employments standards resulting from increased compensation for unfair dismissals and extending the minimum protection standards to encompass the entire workforce, there do remain drawbacks for those who exercise this right. In such cases, the employers can get away after the payment of compensation rather than following the workplace procedures which must be kept into account when dealing with the labor force. The employers know that they can escape the sanctions that could legally be imposed on them by the payment of compensations, and hence unfair dismissal does provide a loophole to the employers in this regard, and they are able to retain their management prerogative by financially silencing the unfairly dismissed worker. It is difficult thus, in the case of SMEs to practice the power of paying a compensations to the unfairly treated, and hence they abstain from this legally prohibited act, and lose their management prerogative to the government and the employees, and hence resort to accepting sanctions, however, they basically stay away and discourage such a practice, and on the contrary, larger organization have the financial capacity to maintain their prerogative by offering larger sums to the subject and hence evading any legal charges (Dickens and Hall, 2005, 19-20). European Works Councils and other consultation services The major hindrance in the path of EWC development is the clause that a group of employers need not establish it unless a majority of their workforce demanded their establishment, and thus resulted in only 40% multinationals setting up these councils for their workforce. Most employers realized that these councils were in effect aiming for their benefit, for a healthier workforce would result in higher productivity, hence they accepted the establishment of EWCs; it did not hamper their existing employment practices and actually reinforced communication level within the organization and also inter-organizational communication. EWCs affect those companies which have a larger international base, and their main focused product is just one in number, and which production takes place across borders as well, hence these were the conditions wherein the management prerogative was lost, because EWCs relate to overall European works councils and does not specifically pertain to the UK organizations, hence where the above mentioned factors were not visible, in that case the management prerogative was dominant, and the employers did not lose control in decision making or resort to accepting the demands of the workforce. Hence it is completely dependant upon the size and the sector in which the business operates to determine the impact of the establishment of EWCs on their business. The loopholes that existed in this establishment were that the local employees were usually unaware of the European structure of the EWCs and they did not have direct contact or relations with the senior management in the councils, hence their incomplete or imperfect information resulted in them being overshadowed by the employers, who were able to maintain their management prerogative in such a case (Dickens and Hall, 2005, 20-21). Part-Time and Full-Time Jobs Even though the government legislated that firms had to uphold the rights of the part-time workers, and cannot deny them the employment opportunities and proper stipend because they are not regular employees, it has not affected the hiring patterns greatly. The employers intentions to employ the amount of part time or full time labor has not reduced, and the employment patterns have not changed, however this legal rule could result in a structural change in the employment patterns, with the amount of part-time jobs increasing in demand, and reducing the demand for full-time employees, this would increase the costs for the employers, especially the SMEs, since they cannot afford to have a an increased differentiated workforce, it would affect their quality as well as their costs, since they have to abide by the laws protecting the part time employees, while the same finance could have been utilized by protecting the fulltime employees (Dickens and Hall, 2005, 21). Non-discrimination There has been a limited amount of usage of this regulation directly; however this regulation has affected the business’s operations in terms of agenda setting, workplace procedures, page differentials, initiating equal opportunity policies etc. There are areas to escape this law, for the government has not included every form of discriminatory practice in the clause, such as age, so that discrimination on age basis would not result in any legal repercussions for the employer. This clause is related to the unfair treatment at work, and hence is not dealt with in solitude. The employment setup and the cultural factors, as well as the meritocracy criterion of jobs result in some sort of discrimination, which is not intended by the employer but when practicality of employment is considered, these discrimination factors automatically surge to the top. Hence the government is also considerate towards the employers in this regard. Unless the discriminatory treatment occurring requires great attention. The management thus has not lost its prerogative due to the inefficiency of the regulation itself, and it can maintain control over employment related decisions as long as the state does not initiate necessary efforts to make the clause more plausible (Dickens and Hall, 2005, 22). Conclusion With the changing times, there is a transformation in the mechanisms used for interaction between management and employees. There is increased interest in the use of two way communication, project teams, joint consultation, electronic media, attitude surveys and partnership values. Delivering consistent results is very important and it is only possible through effective human resource practices. It has become very essential that talented employees are trained, developed, rewarded and allowed to meet their individual goals to create sustainable business models and successful organizations (Storey, 2007). Global competition, customer focus and the need for speed and flexibility has transformed the equations between management and employees wherein both need to work in a congenial way towards harmonized goals, and the government has intervened in the form of establishment of the Employment Regulation since 1997. The following of these laws, however, is dependant upon the varying sector and sizes of the business, and the extent to which the employers can escape the hold of these legal requirements due to lack of information of the employees, or the management having the pressure role in negotiations. At some points, the state is responsible for the inefficiency of these regulations, but in most cases it has led to the betterment of the employees as well as the employers, for when the workforce is satisfied, the employers would indirectly reap the benefits. The employers have managed to retain their prerogative in many situations, such as NMW, TU recognition, EWC establishment, and it was obvious that the SMEs were the ones who lost their managements prerogative due to these laws, thus depicting that there does remain a Third Way political scenario which enables the management to manipulate the workforce according to their demands. References Dickens. L and Hall. M (2005) Employment Relations Research serried no. 45. Department of Trade and Industry. Retrieved May 25th from http://www.bis.gov.uk/files/file11342.pdf Dickens. Linda (2008) Legal regulation, institutions and industrial relations. Warwick Papers in Industrial Relations Number 89. Ecumenical News International (2010) THE THIRD WAY: Politics of The Radical Center. Retrieved May 25th 2010 from http://watch.pair.com/thirdway.html Storey, J 1983, Managerial Prerogative and the Question of Control, Routledge & Kegan Paul Plc, London. Webster’s College Dictionary (1990) Prerogative. 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