The aim/objectives of this assignment are to explore employee relations in detail, including the psychological contract, differences between fair and unfair dismissals, redundancy, and the direct link to my organisation. Pershing is a medium sized financial services company, who has seen strong growth over the last two years during the economic downturn.
1.0 Internal and external factors that impact on the employment relationship
1.1 When an employee starts a new company, there are many external and internal factors that impact on the employment relationship.
One external factor is the state of the economy, in recent years the economy has experienced a recession. This has impacted businesses in many ways; one example is the case of redundancies, less capital means companies can no longer afford to keep all staff.
1.2 A second external factor is the social impact, for example, the retirement age has increased in recent years which has resulted in an older retained workforce, meaning that the retention of specialised skills and knowledge of the company will be a positive impact on the employment relationship.
1.3 On the other hand, there are also internal factors that impact the employment relationship. Firstly, employee participation, one example of this is to give employees a voice by distributing employee engagement surveys; this allows employees to express their views on the company and can motivate employees when actions are taken from their opinions.
1.4 Furthermore, control of performance can also be a vital internal factor. Managing employee’s performances in the process of appraisals can motivate staff to continue reaching individual objectives which contribute to company goals.
2.0 Three types of employment status and three reasons for the importance of identifying an individual’s employment status 2.1 One employment status is ‘self employment’ whereby a person will work for themselves rather than an employer. If you hire this type of worker it is important to make this definition as the company will not be accountable to make NI contributions or pay any employment tax on behalf of this type of worker.
2.2 A second employment status is a ‘worker’ which includes individuals working under a variety of contracts. It is important to establish this type of worker as they will be entitled to the core legal rights, they will be entitled to receive the National Minimum Wage and be protected against unlawful deduction from wages.
2.3 The Final employment status is an ’employee’. This is the most common status, and applies to the largest group of people in the workplace. The difference between workers and employees are that as an employee you have a wider range of employment rights and responsibilities to and from your employer, such as Statutory Sick Pay, and Statutory Redundancy Pay.
3.0 The importance of work life balance and how it can be influenced by legalisation. Work-life balance is achieved when an individual’s right to a fulfilled life inside and outside paid work is accepted and respected as the norm, to the mutual benefit of the individual, business and society. (Works Foundation). At Pershing we believe that it is important for employees to be able to balance their life at work and at home, as having an equal balance can lead to a motivated and retained workforce. Legalisation plays a vital role on how work-life balance can be implemented. The Working Time Regulations (1998) means that an employee cannot be forced to work more than 48 hours a week on average; meaning all employees can ensure they participate in personal external activities outside of the workplace, which in turn should reward Pershing with a dedicated and committed workforce.
4.0 Four areas of legal support given to the employee as a family member. 4.1 Pershing very much supports legislation that can offer legal support to employees with families. Firstly there is the support of the Paternity & Adoption Leave Regs 2002; this legislation allows employees to take paid adoption leave following their choice to adopt a child.
4.2 Secondly, the Maternity & Parental Leave Regs 1999. Maternity allows female employees to have the basic rights including, time off for anti natal care, not to be unfairly dismissed, and the choice to return to work after their child has been born. Parental leave provides the right for employees to take unpaid leave to support dependants in an emergency which we at Pershing fully support.
4.3 Thirdly, the Flexible Working 1997; this legislation provides a statutory right for employees to request flexible working. At Pershing this is seen in the form of a change to working hours, working times, and which location the employee is based.
4.4 Finally, the Employment Act 2002 which includes Paternity Leave. This entitles employees to take Statutory Paternity Leave (2 Weeks). Pershing will grant this leave as long as employees can provide documentation to support the child’s birth and give the required notice.
5.0 Two reasons that justify treating employees fairly in relation to pay 5.1 The purpose of the Equal Pay Act 1970 is to eliminate discrimination between men and women in terms of pay. One reason that justifies treating employees fairly in relation to pay is that lower earnings make it harder for women to take care of their families. A report from the Institute for Women’s Policy Research found that if women were paid fairly, single women’s income would rise by 13.4%, single mothers would earn 17% more. “This would greatly increase the ability of women from all economic backgrounds to provide basic support to their families”. (Smith 2009). If salaries are particularly lower for women this would reflect in their benefits package, however at Pershing these benefits are based on the annual salary, and salaries are benchmarked to job levels which are assigned to the role. This ensures salaries are fair for the job being performed, regardless of gender, race, or age, to ensure there is no discrimination among employees.
5.2 The psychological contract can have a significant impact on the organization, if employees feel they are not treated fairly in relation to pay. At Pershing a case occurred where an employee felt they were not being paid what they deemed to be fair, which resulted in decreased morale, lack of customer service, and early departure from the organisation.
6.0 Four areas of discrimination legalisation
6.1 Direct discrimination is whereby an employer directly discriminates on the grounds of the person’s age, race, sex, disability, religion or sexual orientation. At Pershing all employees are treated equally by not discriminating between an older candidate and a younger candidate going for the same job.
6.2 Indirect discrimination occurs when the discrimination is less obvious than something direct such as sex. An example which occurred at Pershing was a change to a shift system that meant that staff who previously started at 6am and finished at 2pm now had to start at 8pm and finish at 5pm. A mother may be able to claim she has suffered indirect sex discrimination, as the shift changes particularly disadvantage women who may wish to collect children from school.
6.3 Victimisation in a discrimination context is where an employer treats an employee less favourably for one reason or another. At Pershing an employee had given evidence in connection to a discrimination claim, and 6 months later they felt that they were being victimised by their line manager due to these events that had happened.
6.4 Harassment is where an employer or an employee violates another person’s dignity or creates an uncomfortable or offensive environment for them. This situation has not yet arisen at Pershing but The Harassment Act was introduced in 1997 to protect individuals from harassment situations in and out of the workplace.
7.0 Good practice that underpin organisational policies and can contribute to the psychological contract. “The beliefs individuals hold regarding the terms and conditions of the exchange agreement between themselves and their organisations”. Rousseau (1989). The function of the psychological contract is to reduce insecurity, as not all aspects of the employment relationship are addressed in a formal written contract; the psychological contract is a concept that attempts to balance mutual expectations and encourage discretionary effort. “The psychological contract gives employees a feeling of influence on what happens to them in the organisation” (McFarlane Shore and Tetrick 1994) David Guest believes that managers are at the centre of performance management, and “establishing and maintaining a positive psychological contract, is essential to organisational performance”. (CIPD 2005). For example at Pershing, a line manager promised full responsibility on a project to an employee but did not deliver, therefore the trust was affected, the psychological contract was broken resulting in decreased loyalty, lack of discretionary effort and an earlier exit.
8.0 Fair and unfair dismissal
9.0 Exit interviews
9.1 The exit interview at Pershing provides an opportunity to allow the employer and employee to express and capture their reasons for leaving. Exit interviews can sometimes prove difficult to collect information, as some employees prefer, or are not willing to disclose their reasons for leaving or any problems they have had.
9.2 The importance of an exit interview to employers is that, if conducted well provide an excellent opportunity for Pershing to gain insight into employees’ perceptions of the organisation overall, underlying workplace issues and managerial leadership.
9.3 The importance of an exit interview for the employee is to voice their views on their working experience during their time at Pershing. This also gives them a chance to suggest improvements to their role and to draw a line under their employment relationship.
10 Managing redundancies
10.1 A redundancy occurs when an employee is dismissed which is out of the control of the employer, this could be a closure of a line of business, location move, or job diminishment. During the past year, Pershing have made many employees redundant due to a diminishment of their role or a workplace move from the UK to Liverpool/India. Pershing have to be able to prove that a redundancy situation exists to ensure a cost save to the business.
10.2 The following stages are met by Pershing when managing the redundancy.
The first stage of redundancy is planning, whereby HR and line managers liaise to discuss the departmental structure. This is where the risk of redundancy at Pershing becomes apparent. The next stage is fairly identifying the pool of employees that are due to be put at risk by devising redundancy selection criteria. The next stage is to inform the employees and hold a consultation meeting. Once we consult the employees that they are at risk of redundancy, this is followed by at least one further consultation meeting. As the employer we must be seen to consider any argument that the employee puts forward. If redundancy occurs employees will be informed in writing and be given an explanation of the redundancy payment that they will receive. The employee is then able to appeal against the decision, to show that we have actively considered alternative employment within the company for the employee.
If there isn’t alternative employment and no appeals have been made, the next stage is to make the redundancy payment. After a redundancy has been carried out, employees can often feel deflated, so at Pershing advice is offered on seeking alternative employment and in some cases counseling is suggested.
Conclusion To conclude, this assignment has shown that Pershing have clear policies and procedures in place. By having these procedures in place Pershing can deal with issues that arise by having a clear structure to follow e.g. redundancies, disciplinary or exit interviews. Pershing has also shown that they abide by the Equalities Act 2010 and protect the umbrella of characteristics such as discrimination on the grounds of age, race, sex, disability, religion or sexual orientation. By having strong organisational policies and practices in place, Pershing are more able to support and maintain a healthy psychological contract, which results in employees feeling motivated, high performance levels and reduced absenteeism. The organisation is then better placed to delivery on its aim to be.