Topic 3 – Employee Relations &

Employment Legislations

Higher Business Management

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Learning Intentions / Success Criteria

Learning

Intentions

Employee

Relations &

Employment

Legislations

Success Criteria

Learners should be able to describe and explain the following aspects to do

with employee relations & employment legislations:

• the meaning of ‘employee relations’ and the impact of positive employee

relations

• industrial action that can occur due to negative employee relations

• the use of appraisal methods and the costs and benefits of these methods to

the organisation and the employee

• legal and company policies (grievance, discipline, dismissal, absenteeism,

downsizing, de-layering) and their impact on employee relations

• contemporary working practices and their impact on the employee

relations

• the role of external institutions e.g. Trade Unions, ACAS, CBI and their

impact on organisations and employees

• current employment legislation and its impact on employee relations e.g.

Health and Safety, Equalities Act.

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Employee Relations

Employee relations refers

to the relationships that

exist between management

and employees in an

organisation.

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Methods to Promote Positive

Employee Relations

• Appraisals

• Contemporary

working practices

• Negotiation

• External

institutions

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Appraisals

• A two-way meeting between an

employee and another member of staff

to discuss the employee’s performance

and to set targets for the future.

• An appraisal is traditionally a formal

meeting between an employee and their

line manager; however, modern methods

include:

- peer appraisal

- 360-degree appraisal

- informal appraisal.

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Advantages of Appraisals

• Positive feedback can be given which motivates the employee.

• Targets will be set for the employee which motivates them and gives

them a goal to work towards.

• Training needs can be identified which can motivate staff and

increase quality standards.

• Pay rises and bonuses can be awarded after a successful appraisal

which will motivate staff and ensure their work rate improves

further.

• Employees can be identified for promotion, which will increase their

loyalty to the organisation.

• Strong relationships are formed between managers and employees

as they are given the opportunity to have a professional discussion.

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Disadvantages of Appraisals

• Negative feedback can be given which demotivates

employees.

• An employee might be set unrealistic targets which puts them

under pressure.

• Too many development needs may be identified which will

stress the employee.

• Some employees resent the appraisal system. They feel under

pressure and as if they are being checked up on.

• Appraisals are time consuming to carry out which will result in

lost work time during the time they are being conducted.

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Informal Appraisal

• An informal appraisal

takes place whenever the

line manager feels it is

necessary.

• This is just a quick chat,

while working or during a

coffee break, perhaps

highlighting something an

employee is doing well or

to give advice on how to

improve.

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Advantages/Disadvantages of Informal

Appraisals

Advantages

• Feedback is current to the

employee’s tasks and actions,

so it’s more likely to affect

change than waiting until a

formal review.

• Employees are more relaxed

than in a formal appraisal so

are more receptive to advice.

Disadvantages

• Informal

appraisals can

become too

informal and

advice can fail to

be taken on board.

• No record of

feedback or

targets is kept.

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Peer Appraisal

A peer appraisal is when

the review interviews is

carried out by a colleague

at the same level in the

organisation as the

employee.

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Advantages/Disadvantages of Peer

Appraisals

Advantages

• Employees may relax

more and react better to a

review given by a

colleague.

• Relationships with line

managers are not harmed

through judgements or

weaknesses being

highlighted.

Disadvantages

• Personal relationships

between peers could

result in the appraisal

being ineffective.

• Bias could wrongly

highlight an employee

for a pay rise or

promotion.

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360-degree Appraisal

The most complete method

is the 360-degree appraisal.

In this scenario, whoever

conducts the appraisal, such

as an HR manager, peer or

line manager, interviews

fellow employees,

supervisors and subordinates

about the performance of the

employee.

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Advantages/Disadvantages of 360-

degree Appraisals

Advantages

• A complete profile of

the employee is gained.

• Areas of subjectively,

such as character and

leadership skills are

measured.

Disadvantages

• Some employees may

find it difficult to be

critical of their

colleagues.

• Time constraints can

limit the quality of

responses from so many

people in the

organisation.

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Contemporary Working Practices

Modern working practices have evolved due to the following factors:

• More woman are taking up managerial and professional roles so

organisations need to be flexible to work around family

commitments.

• There are been a dramatic increase in tertiary and quaternary

employment which do not require the same 9-5 hours, in a set place

of work, in the same way as factory work in the secondary sector

requires.

• There has been an increase in self-employment due to government

training schemes and incentives for entrepreneurs.

As a result of these changes, employers have had to introduce a range

of flexible working practices.

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Advantages of Flexible Working

Practices

• Greater choice and flexibility to suit changing needs and lifestyle, e.g. it makes it easier to combine work and family life especially for single parents or carers.

• Part-time workers tend to have lower stress levels as they have some time to ‘recharge’ themselves on days off.

• Freedom to choose when and where to work.

• Reduction in travel time and costs.

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Disadvantages of Flexible Working

Practices • There may be fewer opportunities for staff development and

training.

• There can be feelings of isolation when working from home.

• Hot desking may result in depersonalisation of space, leading

to a feeling of not belonging to the organisation.

• It can be more difficult to develop new relationships.

• Difficult to balance work and home commitments, need for

discipline to work working hours.

• Question of security of job if contracts are increasingly of a

temporary or fixed-term nature – implications for e.g.

pensions, ability to get a mortgage, etc.

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Negotiation

• Employees and management often need to come to an

agreement on very serious changes, such as changes to pay

and working conditions.

• In this situation, employees benefit from using collective

bargaining.

• This means to speak as a group and not as a number of

individuals, which gives employees a strong voice when

negotiating.

• For large employee groups, this can be done through a trade

union.

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External Institutions

Often, employees need assistance from external

institutions in order to come to agreements with

their employers, especially if disputes occur.

• Trade unions

• ACAS (Advisory, Conciliation and Arbitration

Service)

• CBI (The Confederation of British Industry).

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Trade Unions

• An organisation that represents a group of

employees.

• Members benefit from the collective

bargaining power of the trade union, the

experience of the union leaders who represent

them and the legal powers the union has

should matters need to be taken to court.

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ACAS (Advisory, Conciliation and

Arbitration Service)

• When a trade union cannot come to an

agreement with an employer on behalf of its

members, the organisation can involve ACAS.

• This is a government-funded organisation

which attempts to solve disputes in the

workplace to stop them going to court.

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CBI (The Confederation of British

Industry)

• The CBI is a large and powerful business group that represents

many employers.

• While employees have trade unions to go to for assistance,

employers have the CBI looking out for them.

• The CBI represents all major industries and can use its size

and voice to campaign (known as ‘lobbying’) for government

influence that will benefit their members, such as campaigning

for more investment in ‘green’ infrastructure or subsidising

broadband developments.

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Grievances

• Grievances are concerns, problems or

complaints raised by an employee.

• Examples could include working

conditions, disputes between staff and

changes being introduced.

• The employee should raise these

concerns with their manager.

• If a worker has a grievance against their

manager, they should contact their HR

Department, their trade union or ACAS.

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Discipline

• Organisations should have company policies (rules)

regarding employee conduct and set procedures in

place to deal with employees who fail to follow them.

• These rules could cover: poor attendance, conduct

and personal use of telephones and the Internet.

• For minor offences, employees could escalate

through these sanctions until the sanctions are

exhausted; however, serious offences, such as theft

from the organisation, could lead to immediate

dismissal.

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Dismissal

• A dismissal is when an

employer terminates the

employee’s contract.

• Dismissal should be the last in

terms of sanctions for breaking

company policy and should

only be used after formal

disciplinary procedures have

taken place.

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Impact of Positive Employee Relations

• Employees will have their chance to discuss changes or

grievances so will feel happier and more secure in the workplace.

• Disputes are less likely to raise as the workers will have been

consulted and understand why changes are necessary.

• The workplace will be committed to the organisation and will

help ensure it meets its objectives.

• It will be easier to introduce change within the organisation as

staff will be more flexible with suggestions from management.

• The organisation will gain a good image for treating its

employees correctly and maintaining good employee relations.

Customers, investors and potential employees might be attracted

to the organisation.

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Impact of Negative Employee

Relations

If employee relations are poor, an organisation can

experience:

• poorer employee performance due to low morale

• increased staff turnover as employees leave for a

better work environment

• increased staff absenteeism

• less co-operation of staff during periods of change

• an increase in grievances and discipline problems

• industrial action in extreme cases.

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Industrial Action

Employees who are unhappy with their

working conditions or terms of

employment, and where discussions have

not reached an agreement, have the option

of undertaking industrial action.

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Types of Industrial Action taken by

Employees Strike Employees refuse to enter the workplace. They might

have a picket line or demonstration outside the business

to raise awareness of the issues they are facing.

Work to rule Employees only carry out the tasks and duties written in

their job description and no other tasks are performed.

Sit in Employees refuse to work and ‘sit in’ the workplace.

Go slow Employees work slower than normal in order to reduce

productivity.

Overtime ban No hours above the minimum required (as per the

employee’s contract are worked.

Boycott Employees refuse to carry out a new task or to use a

new piece of machinery.

Demonstration A gathering of people raising awareness of a particular

issue. 28

Types of Industrial Action taken by

Employers

Overtime

withdrawal

Management refuses to give employees

extra hours.

Lock out Management locks employees out of a

factory or workplace.

Close A factory or branch is closed completely.

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Employment Legislations

Below are legislations that deals with the rights

of employees and the responsibilities of

employers:

• The Equality Act 2010

• Employment Rights Act 1996

• National Minimum Wage Act 1998

• Health and Safety at Work Act 1974

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The Equality Act 2010

• The Equality Act brings together a number of different aspects of

equality under one piece of legislation.

• The Act states that people must not be discriminated against on the

basis of ‘protected characteristics’.

• These protected characteristics are race, gender, sexual orientation,

age, disability, religion, pregnancy and maternity.

• This applies not just to employees of a business, but also to the

people who purchase goods and services.

• Managers of a business need to be aware of this legislation because

they will need to take certain actions to ensure the business remains

within the law.

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Employment Rights Act 1996

An employee must be given a written contract of

employment particulars within two months of

starting, this contract will state:

• Rate of pay, hours, holiday entitlement, etc.

• Type of contract, e.g.

Permanent: employment lasts until either party

gives the required notice of termination.

Temporary: is usually for a set period of time

to fill a vacancy, such as a maternity leave.

Fixed term: a fixed and definite period that the

contract will run for, e.g. a seasonal contract,

such as a summer job.

Employees have a

right to:

• an itemised pay

slip

• maternity and

paternity leave

• flexible

working

• redundancy

payments if

they are made

redundant.

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National Minimum Wage Act 1998

This act sets out the lowest amount of

pay a person can receive per hour. The

current minimum wage (As of

October 2014) is:

• This act makes it illegal to pay an

employee below a certain amount

per hour.

• Employees must meet the age

criteria to qualify for each

minimum rate and can take action

if they are not paid the correct

rate.

• Employers must calculate work-

related costs, such as renting tools

or cleaning uniforms, and ensure

employees are paid above the

minimum wage after these costs

are deducted.

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Age Rate

21 and over £6.50 per hour

18 to 20 £5.13 per hour

Under 18 £3.79 per hour

Apprentice £2.73 per hour

Health and Safety at Work Act 1974

It is the duty of every employer to ensure the

health, safety and welfare at work of all

employees, for example:

• The provision and maintenance of machinery

and equipment so they are safe and without

risks to health.

• The provision of training and instruction on

safety issues, particularly regarding dangerous

chemicals and equipment.

• Employers should prepare a written statement

of their general health and safety policy and

ensure employees are aware of it., including

any updates.

Employees’ duties

include regarding

care of their own

and other

employees’ health

and safety, such as

reporting of

incidences or

accidents, for

example.

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