Bosses begin to lose faith in ‘pro-union’ New Labour

Cracks in Labour’s relationship with business were beginning to appear this week, as industry leaders accused the government of over-burdening firms with red tape.

Cracks in Labour’s relationship with business were beginning to appear this week, as industry leaders accused the government of being too pro-union and over-burdening firms with red tape.

The publication of a new employment bill yesterday (Thursday), to introduce changes to the industrial tribunal system, was delayed by a dispute between the Confederation of British Industry and the Trades Union Congress over the legislation’s small print.

The CBI called on the government to bar access to industrial tribunals until employees exhaust all company grievance procedures. The CBI is angry that tribunals have tripled in the past few years, while in 64% of cases employees have not exhausted company procedures. Cases are often taken on a no-win-no-fee basis by lawyers who later offer to drop the case for a cash settlement, CBI director-general Digby Jones said recently. The government must do something to address this abuse, and ‘take on’ the TUC, he said.

Companies are facing claims from employees when they are often not even aware there is a problem, said Nicola Fenny, policy advisor at the CBI. ‘We feel there are significant advantages for both parties in sorting out matters internally,’ she said.But the TUC said the CBI was wrong to see the issue as a ‘test’ of their influence over government policy.

At the time of going to press the bill was expected to propose a three-stage process, requiring workers to put their grievance in writing, approach a manager, and finally discuss the problem with another manager. Small companies will be exempt from the regulation, and arbitration and conciliation service Acas will be given a role in the procedure.

Unions say the government is in danger of leaning too far towards business with the new proposals. Sarah Veale, senior employment rights officer at the TUC, said ‘If a company’s procedure is shoddy and relies on the goodwill of the employer, then that will not be much compensation for employees having to wait a month and go through the whole process before they can go to a tribunal.’

The TUC has welcomed the thrust of the government’s proposals – to ensure disputes are settled in the workplace as far as possible and to make it obligatory for most firms to have their own grievance procedures. But the organisation is concerned about the absolute bar on employees going to tribunals, she said.


The employment bill has provoked fresh controversy over the level of red tape facing UK companies. Stephen Dunn, lecturer in industrial relations at the London School of Economics said UK employers still have a fairly easy time of it compared to European countries. ‘At the moment, there is no doubt UK managers are the least regulated in relation to labour laws.’ But they are understandably worried about when the flow of red tape will stop, he said. ‘More and more directives will come in, and if they don’t keep fighting, they see things getting worse.’

The increasing amount of employment legislation is causing particular concern at a time when manufacturers are struggling against recession. The employment bill was also expected to reveal whether women will be given the right to return to work on a flexible basis after maternity leave.

David Yeandle, deputy director of employment policy at the EEF, said it is not the individual legislation that worries companies, but the amount of red tape the government has been producing in the last few years. ‘On their own most regulations are not an enormous issue, but when you look at them together, they become quite a serious problem.’

‘If the government is going to introduce legislation, it must do it in a way that enables us to talk to our members about the consultation process – and gives firms plenty of time to understand the impact of the legislation before it comes into effect,’ he said.

But a spokesman for the department of trade and industry denied the government had recently been over-burdening business with regulation. ‘A lot of the regulations are about standards in the workplace, such as the minimum wage.’