If the government wants to develop fairer and more productive workplaces it needs to help organisations to rebuild managerial capacity, argues Professor Richard Saundry (University of Westminster).
On 17th July, King Charles III announced in parliament that the Labour government ‘will legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights’. For anyone interested in employment relations this was a ‘pinch me’ moment – arguably heralding the most radical changes to the legal framework of work and employment for more than 50 years.
This may seem like hyperbole. In the run up to the election, the media focussed on accusations that Labour were watering down their proposals in order to ‘curry favour with big business’. There was undoubtedly some truth to this and an extensive consultation process will possibly weaken these commitments. Nonetheless, as things stand it is hard to argue that the Employment Rights Bill 2024 represents ‘the biggest upgrade to workers’ rights in a generation’.
A key theme of the ‘New Deal’ is that employment insecurity undermines productivity. Consequently, it seeks to regulate the use of zero-hours contracts and limit the ability of employers to use ‘fire and rehire’ to force through inferior terms and conditions. But perhaps the most significant change will be the right to claim unfair dismissal from day one of employment. No previous government has gone this far. Employers will still be able to use probationary periods to ‘assess new hires’, however, it is likely that even here there will be a requirement for ‘fair and transparent rules and processes’. This would be a huge change to the regime in place for the last decade whereby employers can simply fire workers without two years’ service without any risk of legal challenge (unless the reason is connected to a protected characteristic).
The ‘New Deal’ is also underpinned by a belief that ‘good faith negotiation and bargaining’ can provide a foundation for investment and growth. This means simplifying the rules around industrial action and union recognition; creating a more conducive environment for union organisation and representation; and using collective bargaining to set pay in social care. It is striking that the ‘New Deal’ is not framed simply in terms of fairness, but positions fairness as key to economic success. Stronger rights and unions make it more difficult for employers to profit from low pay and ‘one-sided flexibility’. Instead, employers will be directed towards a higher road to productivity – investing in their workforce to build more stable productive relationships with their workers.
So far so good – the snag is that organisations also need the capacity and capability to seize this opportunity. Day-one rights should incentivise managers to address and resolve potential problems at an early stage, minimising the risk of litigation. Unfortunately, evidence suggests that line managers lack the capability to do this and could instead hide behind increasingly defensive procedures, with negative impacts on the worker experience. Similarly, collaborative working with unions has the potential to forge creative solutions to issues that might otherwise spiral into industrial action. However, the erosion of union organisation and influence since the 1980s has arguably hollowed out employment relations know-how and expertise on both sides of the negotiating table.
Fundamentally, the quality of work is inextricably linked to the quality of management. Therefore, if the government is to realise the promise of the ‘New Deal’, it needs to think hard about how it can support organisations to provide their managers with the skills, space and support they need to build better relationships at work.
Professor Richard Saundry is a leading academic authority on the management of workplace conflict and is currently working on the Skilled Managers project at the University of Westminster.
