Are laws to protect employees killing jobs?

BELFAST BRIEFING:SHOULD THE North's political leaders make it easier for businesses to lay off staff in Northern Ireland to help the local economy?

It might seem like a contradiction in terms, particularly given unemployment statistics which show there are now 62,900 people claiming benefits in the North.

But the question of how easy or not it may be for businesses to lay off staff is just one aspect of a long overdue debate that has finally got under way. Dr Stephen Farry, the Northern Ireland Minister for Employment and Learning, kicked it off a couple of months ago when he formally asked workers and employers for their opinions about laws governing the workplace.

The UK government’s department for business is carrying out an extensive review of all UK employment workplace laws. In order to cover the Executive’s collective backside when it comes to workplace legislation – the North is the only part of the UK where employment law is devolved – Farry got in on the act.

Despite its unforgivably dull title, his department’s Employment Law discussion paper has highlighted some crucial issues about the rules that currently apply to firms in the North – particularly when it comes to imposing redundancies.

Under current legislation, any business that intends to axe 20-99 staff has to begin consultation with employees at least 30 days before the redundancy notices take effect. If companies plan to make more than 100 people redundant, the consultation must begin at least 90 days before the notices take effect.

In the UK, there has been some discussion on whether this 90-day consultation period could be reduced to 60, 45 or 30 days. The UK government wants to find out what impact current rules have on business confidence and flexibility “to respond effectively and appropriately to market conditions”.

Overall, it claims, there is a need to “bring clarity to the existing arrangements”.

So where would that leave Northern Ireland and, more importantly its workforce, if new changes were brought in? Would Northern Ireland firms want to follow suit if Westminster was to make it easier for businesses to get rid of employees?

As Farry himself warns, Northern Ireland finds itself in “challenging times”.

“It is critical we work together to develop innovative regional solutions that stimulate business confidence whilst maintaining the rights of individual employees,” Farry says.

Redundancy may be one of the big issues raised in the new employment debate, but it is not the only one.

There are also questions about how workplace disputes should be resolved, how industrial tribunals should operate and whether a new code of practice should be introduced for the Labour Relations Agency.

Farry is also keen to hear what local businesses think about a controversial proposal that has been discussed in the UK – the introduction of a “no fault dismissal for micro firms”. This would allow small firms with 10 or fewer staff to dismiss staff with basic redundancy pay/notice and rule out any recourse to an unfair dismissal claim.

If Farry’s discussion paper achieves nothing else, it has created an opportunity to look at how the current framework of employment legislation might be improved to help businesses for the first time in many years. According to one of the North’s largest business bodies, this is crucial if the Northern Ireland economy is to grow and create jobs.

The Confederation of British Industry is one of 24 groups or individuals to respond so far to Farry’s paper. Its opinion is that red tape is strangling job creation.

“We know from our members that our robust employment law regime in Northern Ireland represents one of the most complex and challenging areas of regulation, which can act as a potential barrier to growth and may make us uncompetitive to attract inward investment,” it states.

According to a recent survey carried out by the Confederation of British Industry and law firm McGrigors, 49 per cent of businesses surveyed said current legislation “discourages job creation within their own organisation”. A further 79 per cent believed that, in relation to employment law obligations, “Northern Ireland has become a harder place to do business since 1997”.

Eighty-four per cent concluded that “employment law in Northern Ireland has become overly burdensome”. Not exactly confidence-inspiring.

Against the backdrop of “rising unemployment and a fragile economic recovery”, the employers’ group believes it is time for bold reforms in the North.

Nigel Smyth, Confederation of British Industry Northern Ireland director, said: “We need to accelerate our efforts to ensure we keep pace with our competitors in reducing the regulatory burden on business to support growth, and create much-needed jobs opportunities for our young people.”

Perhaps the bigger question is for whom is the current employment legislation actually working. What Northern Ireland needs are laws that both protect and encourage – and ultimately create – jobs.