Resolution Foundation – “labour market violations remain far too common”
The think-tank, the Resolution Foundation, has reported that workers across the labour market are not getting their legal entitlements. As employment lawyers, we read on in disbelief. Why is it that businesses still aren’t getting it right? Is it really true that these employers are all deliberately and unscrupulously seeking to exploit their workers?
Another interpretation is that a number of business are simply struggling to keep up with the ever-changing world of employment law. At a time when the government is investing millions on an information campaign for Brexit (which may or may not happen with or without a deal on 31st October 2019) there is a paucity of information on recent developments in employment law which are applicable to all business. Where were the posters and advertising campaigns (like the ones you might remember when the new pension auto-enrolment rules came into force) about the new right for workers to receive itemised payslips? What about the fact that it is now settled case-law that overtime which is regularly worked, and commission which is regularly earned, needs to be taken into account for the purposes of holiday pay?
If you read the reports in the media covering the Resolution Foundation’s findings, they are full of phrases like “tackling firms that break the rules”, “abuse”, “violations”. Shadow business minister Laura Pidcock said, “behind these statistics are… an unchecked class of bad bosses and legions of workers who feel like they have no choice but to accept illegal poor conditions”.
It is certainly true that there are “bad bosses” out there and that there should be sanctions for serious abuse of the law. However, one of the biggest criticisms of the report is that workers in small firms (those employing less than 25 people) are most likely to not get payslips and paid leave. This could be because some small business owners are deliberately exploiting their workers. In our view a more likely explanation in most cases is that they lack the information and resources to keep up with what is a complex and fast-changing area of law.
The Department for Business, Energy and Industrial Strategy has said that it is committed to enforcing workplace regulations and want to create a Single Enforcement Body for this purpose. This approach emphasises penalties and sanctions for those who break the law, such as the “name and shame” list of employers who fail to pay the minimum wage. However there is little evidence that heavy and inflexible enforcement mechanisms such as this are an effective means of tackling the problem, particularly at small business level. They don’t help the workers who have been affected by the employer’s failings and can have serious consequences on small businesses who may suffer fatal reputational damage for what may be inadvertent failings.
Plenty of people will take the view in relation to employers who fail to provide workers with the correct entitlements: “tough, that’s the law”. Ultimately, it is the employer’s responsibility to ensure that they keep themselves up to date and we try to assist our clients with that as much as we can. However, it is our experience, that the majority of our clients do want to treat their workers fairly and in accordance with the law and would be mortified to know that they had failed to provide their workers with their correct entitlements. We would suggest that it is harsh to label employers as “bad bosses” in such circumstances and that the focus of government policy should move away from 'naming and shaming' to promoting greater information and resources and legal clarity so that both employers and employees know exactly where they stand.
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