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The legal risks of strict working practices

Following a number of high-profile media investigations into employment practices, working conditions and the harsh treatment of staff have come into the public spotlight just as the legal and business risks associated with corporate abuse have grown. Making sure employees work efficiently is crucial to most organisations, but failure to meet minimum standards regarding the national minimum wage, health and safety or dignity at work can cost employers far more in long run. The difficulty can be knowing where to draw the line.

The BBC’s 2015 probe into retail giant Sports Direct’s treatment of workers illustrated the darker side of British employment; there were claims that the company operated a ‘six strike’ policy, with workers who get six warnings in six months being dismissed. Warnings were reportedly issued for having ‘elongated’ toilet or water breaks, taking time off for illness and 'excessive' chatting. A subsequent government inquiry found that many workers were not paid the national minimum wage and criticised the use of zero-hours contracts, concluding that Sports Direct’s business model treated workers as commodities.

Covert investigations have since sought to expose other unscrupulous employers. Online fashion retailer ASOS faced accusations of exploiting workers who are reportedly kept on zero-hours contracts and have their assignments ended for falling ill at work or taking time off to look after ill relatives. Reports also surfaced of workers being afraid to take toilet or water breaks in order not to miss targets.

More recently, online clothing retailer Boohoo was the subject of a Channel 4’s Dispatches programme, which alleged that the company ended agency workers’ contracts after three minor indiscretions such as checking the time on a mobile phone, or even smiling. An undercover reporter found that arriving one minute late for work cost her 15 minutes’ wages.

Legal risks

While these kinds of stringent working practices may assist in meeting short-term demand, in the long term they are often reflected in poor performance, high levels of stress and absence, and reduced productivity. These issues don't just cost management time, but carry serious legal and reputational risks, too.

Failure to respect workers’ minimum statutory rights, including rights to rest breaks and annual leave, can lead to myriad claims, from unlawful deductions from wages to unfair dismissal. HMRC has various enforcement powers in relation to failure to pay the national minimum wage, including the ability to impose penalties of up to 200 per cent of any underpayment.

Health and safety compliance is also critical. New sentencing guidelines in England and Wales herald a new era of significantly higher fines, with signs that the guidelines will also be considered in Scotland. These new turnover-linked guidelines mean that fines can be truly crippling to any company.

Good practice

While the increasing requirement of both employers and individuals for flexibility must be recognised and accommodated, it is important to ensure this does not leave workers vulnerable to exploitation. Just assuming you're a fair employer isn't good enough. A thorough audit is advisable at any sizeable organisation – looking at the use of agency workers, staff turnover and any flexible working policies in place can help to ensure the working environment is suitable for the business and workers alike.

Dealing with workers you are unhappy with is a key issue, which can result in legal claims. Do you have robust but fair procedures in place, and do they reflect the company's culture and values? Does your disciplinary procedure meet Acas code standards? It is also important that managers receive proper training on disciplinary and grievance procedures, and equality and diversity.

Ultimately, most employers and HR professionals will be confident that their standards are higher than the kind of practices exposed on TV investigations. The key is to take a regular look at the whole organisation and make sure your employees agree.

Laura Morrison is a lawyer in the employment, pensions and immigration practice at Maclay Murray & Spens


Added: 20-03-2017

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