Employment rights
Labour's New Deal and the impact on retail and hospitality businesses
The morning after a leader’s debate in the UK election which generated more heat than light, it is with some trepidation that Moving Tribes puts its head in the political lion’s den, but this week’s post covers a topic key to all of our businesses.
Here are two quotes:
“Our people are considered to be our biggest asset and we strive to treat colleagues like family”
and
“Your normal working hours will be 30 hours per week; however, whilst the Company will endeavour to give employees their normal hours of the work … these hours are not guaranteed and may increase or decrease in line with business requirements.”
It may not entirely surprise you to learn that the first of these quotes is from the annual report of a regional hospitality group, whilst the second is from an employment contract given by the same company to a new employee.
That second quote is worth considering from the perspective of the employee. The wording might sound reasonable enough, but the practical implications have been:
Planned (e.g. rota) hours have rarely if ever actually been 30 hours or more
Additional shifts have generally been available but only at the last minute and usually through negotiation between employees
And rota shifts have been cancelled at the last minute or even shortened in real time.
Any cursory examination of the economics of a hospitality business would offer an explanation for that, of course. Trading margins for restaurants and bars have been hit by inflation of all kinds, whilst subdued consumer demand means business is hard to come by. No surprise, then, that there is huge pressure to ensure that payroll hours are matched to trading volumes as closely as possible.
However, the impact on the employee experience of this kind of contract is marked - you can’t be sure at the beginning of a week how many hours you will work, you can’t plan to do anything else with your time in case a last minute shift comes up, and you can’t be sure you’ll be able to pay your rent at the end of the month.
In many ways, then, this contract is worse for the potential employee than a zero hours one, which would at least set the right expectations up front and allow the individual to sign up to other contracts and manage their own hours.
Why dig into this now? Well, as keen as Moving Tribes is to avoid politics there is a General Election happening, and if you believe the opinion polls then a Labour government arriving - and that means their “New deal for Working People”.
What does that mean for those of us running businesses? That is still a little vague, with lots of key clauses using the phrase “we will consult on”, but the kinds of things it is likely to bring include:
ending zero hours contracts, or at least ending ‘one sided flexibility’ where employers retain scheduling rights but employees lack security
Reducing the 2 year period of employment after which full employment rights kick in (though retaining the concept of probationary periods)
Ending ‘fire and rehire” processes
Clarifying the complex UK law that draws distinctions between ‘workers’, ‘employees’ and the self-employed
Increased support for flexible working
A ‘right to switch off’
Updating union recognition regulations
The full document is a big one and contains both a lot of detail and also a lot of those ‘we will consult’ get outs. It has prompted 2 kinds of reaction - from unions and left-wing commentators complaining that it has been watered down at the behest of ‘big business’ and from businesses worried about the impact of employment law changes at a time when trading is tough and margins wafer thin.
From a business point of view, there are definitely some reasons to be worried:
There is a risk of some inconsistencies in the objectives the document is seeking to achieve - creating a presumption of flexibility in working hours, for example, sits a little uncomfortably with the ‘right to switch off’.
There is the danger of unintended consequences when new rules are written. I recall running a business in one European country where labour rules were much tighter than in the UK, for example, and finding that the rules against things like zero hours contracts were so tightly written that it was very difficult to hire part-time colleagues at all, with the result that the country just had higher unemployment than it would have with a more flexible approach.
There is also a danger of regulatory overload if rules are not written carefully - create something which is complex to measure and manage and requires heavy regulatory involvement and you risk repeating the debacle of the Apprenticeship Levy we wrote about a few weeks ago, which had exactly the opposite effect intended.
And of course, the history of union recognition in the UK is a mixed one, and many employers, even those massively committed to their colleague experience, will look at the prospect of industry-level collective bargaining and secondary industrial action with some trepidation.
Notwithstanding those concerns (and there is plenty of time for an incoming government and trade associations to work them out), I find myself reading the New Deal document and feeling that it represents not so much a set of tighter regulations on businesses, but rather a set of things that we should all be doing anyway.
I’ve written many times here at Moving Tribes about the critical role that colleague engagement and experience plays for every retail and hospitality business. The annual report paragraph that opened this piece is one that everyone writes, but it is the businesses that actually mean it who tend to succeed in the long term. We cannot reasonably expect our brands to be brought to life for our customers by colleagues who are worried that they won’t pick up enough shifts this week to pay their rent, or by colleagues forced to work in ways which are inconsistent with their family obligations.
The challenge, then, is not to set the debate about employment law up as ‘left versus right’ or ‘business versus union’ but instead to frame it as finding the way in which businesses, challenged by a difficult economy, can still create colleague experiences which are enriching and rewarding and offer security whilst at the same time enabling the crucial matching of working hours with trading volumes that is so important to trading profitably.
In the end, only by making that “people are our biggest asset” annual report statement true will our industries really thrive.
This topic of employment law, regulation and best practice is going to be a key one for all of our businesses, particularly with a new government. What do you think? What would you change about current regulations? What worries do you have for the impact on your business? Have your say - it is as easy as leaving a comment!
P.S. This post is free for subscribers thanks to the generous support and partnership of the team at Barracuda Search, though all the views expressed are mine alone.
