Donna Obstfeld (FCIPD), HR Specialist / Managing Director
I’ve been in Human Resources (HR) for over 20 years. When I was first introduced to the discipline, it was known as Personnel and today when I am speaking with clients, I refer to it as ‘managing employees’ or ‘staff management’. Why give a fancy name to what business owners just need to be able to do to run their business effectively?
10 years ago I set up my own business. I didn’t have a clue what I was going to do with it or what it could become, but it was mine. I knew I didn’t want to be an interim HR Manager for large businesses, I wanted to help small businesses to grow and through their staff, achieve greater success. Over time my own business grew and like so many of my clients I had to take the decision whether to take on staff. This was an absolutely terrifying decision. Could I generate enough income for two of us? Would my clients trust someone else with their ‘HR’? How do I transfer my approach to managing employees (which is very different) to my team?
Fortunately, being in the profession, I knew how to do the people things ‘right’. How to hire, how to induct, contract of employment, how to monitor performance etc. But I was still scared. However, I had a safety net – the ‘zero hour contract’. I could guess how much time I would need the staff for and if there wasn’t enough work, they didn’t work. For one member of staff, if the work in a day dried up or she was waiting for 5 different people to come back to her and couldn’t’ move on, she would take a break for 3-4 hours and come back on later in the day. It suited my staff and it suited me and my business. It meant I could hire a number of people with different skills and deploy them as the business needed. They were employees, so bound by our policies and procedures, invested in – in terms of training and coaching, and supported with their personal development, but able to collect kids from school, take holidays or meet friends for lunch as they wanted. As a small business owner this was the flexibility I needed.
As time has gone on, my business model has changed, we have expanded and the inflow of work is more sustained, being able to pay staff at the end of each month is less scary and I know I have staff to deliver client work as needed, but I still have concerns and I believe that all small business owners feel the same:
• What happens if someone decides to take a hit at the business?
• What happens if someone thinks they have been treated unfairly?
• What happens if someone resigns and fails to work their notice period?
• What happens if someone leaves and takes your clients with them?
• What happens if someone leaves and takes your staff with them?
These are realities for almost all of my clients and some have had to shut up shop as a result!!!
Contracts of employment are great because, if written properly, they set out certain rules, policies and procedures which employers and employees commit to when signing the contract. However, as I warn many of my clients, they are not worth the paper they are written on unless you are prepared to enforce them.
Let me describe a scenario at this point –based on a real client: A firm of gardeners. Employees were provided with tools and a van. Employer came in one Monday morning to find the van unlocked in the yard with a note from the employee saying “I quit”. No notice provided. The employer then has to cancel and reschedule work at very short notice.
If the employee had been fired, the employer would have had to pay 1 months notice or the employee could take him to the employment tribunal for failing to do so. However, in this instance it is the employee who has breached his contract and not given the required notice, but what options has the employer got – in reality, none!
The situation gets worse – Over the next few weeks the business owner starts to receive cancellations from clients no longer wishing to have their gardens maintained by the company. No one would say why, but a pattern emerged. They were all clients who had been serviced by the former employee. Not only had he left with no notice, he was now poaching clients as well.
What options has the employer got? Well he could try to take out an injunction, but if the clients choose to leave, that is their right. They can purchase their gardening services from whomever they wish! Same gardener, same services but cheaper… why wouldn’t you?
So the business owner is left feeling ‘had’. The contract of employment, although legally binding, costs too much in time and effort to enforce. So is there another way?
I believe there is, but it requires a change in the law. Theresa May’s 10 point plan for the post-Brexit UK economy ‘supporting businesses to start and grow’ is one of her main objectives for Government intervention. This points towards the entrepreneurs, the micro and small business owners, those which account for 99.3% of private businesses in the UK and employ over 15.7million people.
With Brexit around the corner and a once in a generation opportunity to create our own laws as we come out of Europe, this is the time to really look at our employment legislation and to balance the needs of employers and their businesses with the protections required for employees.
Frances O’Grady of the TUC together with other Trade Unions and their officials claim that the fees that an employee has to pay in order to take their employer to an employment tribunal are unfair and prohibitive and should be scrapped. There is a consultation taking place at the moment on this very subject and while the whole subject of employment tribunal fees is under review, I ask the question “is the system of employment tribunals even fit for purpose?”
Another scenario for you: A customer service call centre with a sales team of 2. Both employees are new and being trained. Both have contracts and are on a 6 month probation period. One of the employees is really struggling. Extra help is bought in to support her, extra supervisions are provided and weekly meetings are being held. It emerges that the employee is spending about 3 hours a day surfing the internet. At 3 months she is given a performance review and told she is not at the required standard, reminded that she is on a probation period and that she needs to start making some profitable sales. At 5 months she announces she is pregnant. A week short of her 6 month end of probation, there is a review meeting in which she is told that as she has failed to improve, failed to take on board the training she has been provided with, is still spending too much time on her phone surfing the internet, her employment is being terminated by reason of failing her probation.
It is stressed, that she is not being fired for being pregnant (there are plenty of other workers who have been pregnant, had babies and returned to this workplace), but because she is just not capable of doing the job for which she has been employed.
A week later ACAS contacts the employer to advise them that the employee is taking a case against them. It eventually emerges that the employee wants £28k and is threatening a sex discrimination case on the grounds that she is pregnant.
The employer does not want to settle as they have done nothing wrong, but they now have two choices, settle and pay something or fight it and incur a lot of time money and stress with no guarantee of the outcome. ACAS makes no attempt to resolve the issue, they purely act as a go between for what should be 4 weeks, could be 6 weeks or could be less if the other side play stupid games. At the end of this period the ACAS system automatically issues a certificate saying that conciliation has failed and the employee can now take the employer to the employment tribunal. Until this point, the employee has not had to pay any money, but if the employer refuses to pay a settlement they are now likely to end up in the employment tribunal.
The TUC claims that Employment Tribunal claims have dropped since the introduction of the fees and yes they have, but not for the reasons that the TUC and others would have us believe. The figures have dropped because employers want to get on with running and managing their businesses. Business owners do not have the time, money or energy to fight with the risk of losing, with the costs of solicitors to defend the case or with the time wasted in preparing for an employment tribunal just because an ex-employee has decided to take a chance.
They are after a settlement. Their solicitors often don’t want a settlement as they earn more from defending a claim in the Employment Tribunal, but the employee wants a quick pay-out and I frequently come across people who have already taken one employer to the tribunal (or threatened to). Employers end up paying at the ACAS stage to make the employee’s claim go away, to know what the financial impact is as a fixed amount and to enable them to move on and focus on their business.
There are lots of different systems across the world and while I recognise that some are better than others, if this government is serious about enabling small businesses to grow and succeed, the noose has to be removed from around their neck and the laws need to be equalised between employer and employee.