Proposals would benefit UK but may get lost in red tape

By Mark Scanlon, Wednesday 30 May 2012

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The recommendations set out in the Beecroft report would, broadly, be good for UK businesses. However, implementation of the most controversial employment reforms is likely to get tangled up in Coalition debate; they may not see the light of day during this Parliament. That would be disappointing, since the motivation for reforms to the current outdated regulations is to invigorate growth and help kick-start the UK economy. Many of the proposals would also enable employers operating in static or declining industries (of which there are many, including print) to adapt more quickly to adverse changes affecting their markets, improving their competitiveness and financial position.

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Much comment will, no doubt, be focused on the relaxation of certain regulations protecting employees – particularly ‘compensated no-fault dismissal’, which would make it easier to remove underperforming employees – and overhauling the tribunal process. However, business owners and managers, particularly those of sub-10 employee enterprises, should welcome these reforms, since they would reduce the risk and cost of hiring new employees and, importantly, allow them to opt out of unnecessary and burdensome regulation. In short, managers would be able to focus more on improving their profits rather than worrying about inappropriate compliance. With over 9,500 print businesses falling within this category, this must be good for our industry.

The recommendation to change TUPE, so that it would not be applicable when a business is either in administration or bought as a going concern, is likely to be contentious. In the case of insolvency, the buyer of the defunct business would be able to take on only those employees it wanted. Those not transferred would be made redundant and the buyer would not be liable for any claims which, under the current EU Directive, they could bring. This would improve the attraction and marketability of the failed business; there would be fewer liquidations. It would also reduce the cost and risk of buying it out of administration. Finally, it would present the buyer’s combined business with far better trading prospects, which would ultimately preserve jobs. The downside of being able to customise the exact headcount of transferred employees is that it would make phoenixes more attractive. For this reason, I hope appropriate counter measures are introduced through insolvency legislation.

 Overall, Beecroft’s proposals would increase employment, particularly in the private sector. I am doubtful that the effect would be as great among public sector bodies where the need to achieve efficiencies, cost savings and profit is often compromised by the duty to provide service. Overall, if these recommendations are introduced, the UK will become an even more attractive destination for inward investment.

 Print will continue to erode and shed jobs. I cannot see Beecroft’s proposals having a substantial impact on employment creation – the sector has lost 48,000 workers since 2002 and shows no sign of abating. Instead, the cost of managing that decline will become less punitive to employers.

Walstead Investments chairman Mark Scanlon

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