Featured Profile

Will Hutton

Will Hutton

Principal, Hertford College, Oxford University and chair of the Big Innovation Centre

Monday 14 Jan 2013
Employment law changes well intentioned but delivery drives complexity

Employment law changes well intentioned but delivery drives complexity

Over the last few years, the complexity and cost of adherence to employment legislation has increased substantially. 

In Ceridian’s experience, much of this legislation, until recently, has been in the employee’s favour, and the costs of getting it wrong, for the employer, can be large. 

Recent legislation, in the main, has been well-intentioned activity, designed to reduce the risks on employers who behave responsibly. Often, the original thinking has been simple and clear – and the principles not overly contentious. The implementation of those principles has often proved much less well delivered. The delivery often drives complexity, thereby workload and cost for employers. 

The key legislation-related requests received by Ceridian recently include:- 

1. Redundancy – emergency payments to leaving employees 

2. Working time directive – setting up technology to track those most at risk of working excess hours 

3. Equality/diversity – enabling access to key employee data and analytics to address issues, for example, inequality of gender pay 

4. Right to work – storing the proof of process followed to reduce employer liability, should a subsequent investigation occur 

5. Pensions auto-enrolment – how to get the most efficient solution at the most cost-effective price 

The largest additional cost from any legislative impact, without question, affecting many UK companies in 2013 is pensions auto-enrolment. The costs arise from both the additional pensions contributions and also from the administration surrounding it. 

Some of the more interesting, and less well understood, aspects are a good indicator of this complexity, for example: 

1. Who qualifies as a 'worker'? Freelancers, contractors, secondees? 

2. Every time you pay someone, you must assess if they are eligible to be enrolled in a pension scheme 

 3. The calculation periods for payroll and pensions calculations are not aligned 

4. Variably paid employees can cause substantial complexity 

5. Employees in existing pension arrangements (or who are contractually enrolled) are still subject to all the same requirements 

6. Salary exchange can minimise costs for both employees and employers 

Some of the list above presents a real challenge (and the iceberg below takes it a bit further too). Once you have these things under control, many other aspects need consideration; preparation, communication and engagement of colleagues. The balance between cost, time, effort and approach here is a fine line to tread. 

Also, as these rules apply to every employer, how can you leverage this to improve your own 'employer brand' when all others around you are doing this too? 

A complex lot of challenges to think through afresh, and ones deserving of your board’s attentions (not just the HR team); the employee and financial impacts could be huge. But then again, no-one suggested that the job of an HR leader was an easy one… 

Nick Laird, chief commercial officer, Ceridian