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Innovation in law – Roundtable Report

29 June 2010     London
Hosted by theHRDIRECTOR.
Chaired by Jason Spiller.

DELEGATES
Lucy Bolton, Head of Employee Relations – Microsoft UK Ltd
Richard Boon, HR Director, England 2018 – The FA
Richard Brown, HR Director – Jacobs Engineering
Kathy Coshan, Head of Human Resources – Tristar Worldwide Chauffeur Services
Jim Devine, Head of HR – Centrica
Roger Newport, HR Business Partner – Volkswagen
James Rapinac, Marketing Director – Gallup
Justin Roberts, Solicitor – DAC
Christopher Syder, Partner – DAC
Robbie Wheeler, HR Director –Aramark Ltd

Innovation, productivity and commercialism are now the most important characteristics that HR Directors require from inhouse and external lawyers in order to keep pace with the ever changing face of Employment Law compliance.

In this Roundtable, we focus on some of the key issues, the level of legal service, whether service from legal representation is adequate, and how prevention, if possible, is the best approach. Traditionally, employment lawyers became involved with disputes when disputes have arisen. However, in today’s economic environment, employers need to be proactive and need to be fully up-to-date with existing and emerging employment law. There is a real necessity to be fully aware of corporate policies and procedures in order to mitigate against the frequency and severity of workplace issues and disputes.

How can UK employers best manage employment law risk today?

Jim Devine: I guess it’s the classic case of whether or not you look at it as a distinct subject. It forms part of a range of risks. How it sits in your contracts, pensions. We’ve got big legacy costs because we’re an ex-National Utility, we had a lot of call centres and field-based engineers, quite young team leaders and I think people in general are risk averse.

Robbie Wheeler: As a big outsourcing organisation, the risks associated with the labour are huge. Ensuring that senior management must recognise, when they’re doing their analysis of risk in the business, financial and compliance risk, that they consider labour risks as a significant part of the organisation, managed, measured and viewed with equal importance.

A little bit of information is actually a dangerous thing when it comes to law.

Roger Newport: Regarding line managers avoiding tackling people issues, one of the other risks I see is that the business can feel that its hands are tied as a result of what it perceives it can and can’t do. In other words you can become so risk averse that it starts restricting how you operate.

With increasing regulation, how can you keep your organisation up-to-speed?

Richard Boon: I’m not sure you treat it as a total risk category just on its own. It’s one of the many business risks. Its about education – you want your managers to pick the phone up to you. If you try and educate an entire workforce on every piece of Employment Law, we’ll all become lawyers. We’re senior HR professionals, we don’t know all the answers ourselves, hence the reason why we’ve got the lawyers.

Lucy Bolton: But we’ve got the luxury of being able to do that, being a fairly large HR team. We can’t train everybody on everything though. And we have to try to think of the value. It’s maternity cases, it’s the diversity, it’s the discrimination. Those are the high value ones for us. It’s also about risk as well. We will often go to tribunal because again, it’s sometimes riskier for us not to. If we don’t go to tribunal, we become known as an employer who will settle.

Christopher Syder: It’s PR for your own internal HR function, as well.

Lucy Bolton: When we do a redundancy, we do it properly. We do it professionally and we do it with respect. And if someone wants to then take it to a tribunal, we stand there and go, actually, let’s go for this one. And yes, you could argue, commercially, if they’re not looking a for huge amount of money, maybe that’s the wrong thing to do. But actually we found the cost of not doing it sometimes is larger.

Richard Boon: When you think how long a lot of this legislation’s been around, it still surprises me the level of ignorance at senior levels. In a previous company, we used to run quite a lot of training, bringing our Employment Lawyers in on the high risk things.

Justin Roberts: If you get the policies in place, then you’ve got to make sure that you get the buy in, the financial buy in from the Board, who understand that they’re there. And there’s no point getting a policy in place or educating some of the people if you don’t then educate all of them and let them know where it is.

Is that a case for making the individuals, or the employees aware of their position?

Justin Roberts: I think it’s certainly a case for, if you’ve got a policy, you want to use it. So you want the manager, or whom ever might implement it from the ground up, to know that it’s there. So yes, I think it is. It’s education from the beginning. Because as individuals develop through their organisation, they will encounter situations that they haven’t encountered before.

Richard Boon: I’d be fascinated to know how people here deal with interpretation, because a lot of you around the table, are with big, multi site set ups. One of the problems, again in a previous role, we used to have was interpretation.

Is there a case of making Boards of Directors more accountable?

Robbie Wheeler: I think you do have to do that. I think you do have to place accountability with the managers that are managing the people. And that’s really important.

Is it possible to make people individually accountable?

Christopher Syder: I would traditionally shy away from going that far because you’ve got the simple scenario in every contract of employment there’s the implied term of mutual trust and confidence. And ideally you’ve got reasonable expectations as to how senior management would behave set out in, say, a job specification or in appropriate HR policies. The liability issue there is one of vicarious liability for the employer because the employer is ultimately accountable for an employee’s actions in the workplace.

Justin Roberts: That’s smart as far as I’m concerned. Using that knowledge to get by.

Jim Devine: It would be very cheap to do nothing. If it costs too much to make that decision to defend the case. I’ve been in situations where commercially, that does make sense to dismiss the claim when you’re with a senior manager.

If risk aversion comes from the top and goes all the way through the ranks, you’ve got the legal hot potato that nobody wants to touch.

James Rapinac: It really comes down to manager accountability. And certainly, we need to develop, you need to have clear policies, senior management has to be behind them.

Roger Newport: I think you can manage a lot of risk really through the procedure by which you identify, select and then develop your managers. I’m not talking about specific Employment Law training as such, but about having a process that includes a focus on making sure that line managers have the necessary people skills to get the best out of their people.

Robbie Wheeler: I think that’s absolutely right andit’s a shame sometimes that when managers have issues that they deal with, that sometimes it doesn’t get talked about enough.

Roger Newport: When dealing with grievance and disciplinary matters we have a policy that these will be led by a senior manager from the business rather than HR, albeit that HR will provide support and advice. We see this as part of their learning and development, to have to deal with some of these tricky people issues, and believe it makes them better, more rounded managers.

Richard Boon: It’s all very well, we educate the managers, and HR backs them up. What about the staff, can we educate on that side? Staff immediately think ‘HR, you’re on management’s side’ straight away. It is about educating the staff as well as the people that were trying to implement the policies.

Lucy Bolton: We do have a group of ER HR, a centre of excellence, who do work with those managers day in, day out. I think that does help. We’ve only been working with this model probably three years now. We used to have a generalist HR function. So it is still fairly new. We get to know the managers.

The employer/employee relationship model has changed significantly?

Richard Brown: First you must maintain the management focus and second to put some learning in. We just basically insist on two things. Nobody gets fired without notification to the Centre to begin with. But we basically insist that the line manager stays with that problem all the way through to it’s conclusion. And then do the standard after the issue is over, of lessons learned. But the manager owns the problem. It is not passed to HR to solve.

Kathy Coshan: At Tristar, we’re quite lucky, as we’ve got a very diverse group of chauffeurs working for us. Many of which are extremely intelligent ex professionals that have decided to opt out of a highly pressurised and corporate work environment and elect to become chauffeurs. The majority of our employees know their rights. Therefore, our managers are more risk averse.

Presumably there’s greater command, management of control, from a centralised point of view?

Christopher Syder: It’s about giving managers enough information so they can more easily identify the risk. That’s the key theme that I want to say as an external advisor helping companies. We want to avoid a scenario when it becomes apparent that the managers didn’t know how to manage that particular workplace scenario.

Do you think the current employment legislation allows for common sense and do you think that if people apply common sense, then that’s a fairly safe route to take?

Christopher Syder: There’s always a balance to be struck. I’m experienced enough to remember when you typically advised a client, (can you go and have a chat and solve it without the need for formalities)? Employers have understandably become much more risk averse because the old statutory dispute resolution procedures encouraged procedure over substance.

Richard Boon: Most employment law, no matter how much it’s grown, is still common sense. Most people understand that you shouldn’t discriminate or bully. Yes, there’s intricacies of each piece of legislation, but I don’t think much has changed over the years. Granted, there’s more legislation.

Christopher Syder: The most practical guidance I’ve produced in my career to date is a checklist of things not to do upon receipt of a grievance. I wish I was joking but, it says, ‘don’t send the person to Coventry, as this regretfully does still happen. Don’t start changing their job description – it’s classic poor management behaviour.

Lucy Bolton: Half the time they don’t even know what a grievance is, though, do they?

Christopher Syder: Yes, that’s it, and that’s where the guidance is often needed. A grievance could actually be a whinge, a concern. If in doubt, the best advice is ask the individual with the concern.

Lucy Bolton: There are new challenges for example people raising grievances on Facebook. That’s something on our radar because it doesn’t have to be in an email entitled ‘Grievance’.

Presumably, within legislation, the margin for error is where legal expertise comes into its own?

Christopher Syder: Well, it’s all within the band of reasonable responses for an employer. And that’s when you take into account the type of employer, it’s size, it’s resources, previous decisions, commercial considerations and what they are trying to achieve.

To what extent is legal risk mitigation driving internal governance?

Christopher Syder: Over the last twelve months, there’s been a financial squeeze on internal HR budgets with regard to reducing their own headcount and/or a squeeze on how much they can do, operationally or strategically. The typical element that’s being cut is training of management and those soft skills that we’ve been talking about. And therefore that is creating more complex disputes.

Do you measure the number of disputes, grievances, you deal with?

Lucy Bolton: We look at what the solicitors are going in at, in terms of settlement figures and what we end up settling at. We keep a database of solicitors so we know where a firm of solicitors will start off at and what they’ll end up with. And we literally go to town on the stats. We have a scorecard and that’s what we look at.

Christopher Syder: That’s a resource issue, is it?

Lucy Bolton: I’ve been able to get more heads because of it. Because we are saving money, definitely.

So where typically are people cutting their cloth with this particularly dangerous area?

Christopher Syder: A typical scenario, is the lack of ongoing management training. That’s the issue where we’ve seen a real drop off. We do a lot of work with external HR consultants and they’re invariably saying there isn’t the market anymore with regard to soft skill training of management and this therefore creates the greater risk that there are going to be disputes because you’re getting people who are mismanaging situations due to a lack of knowledge.

But it’s that horrible phrase, ’the elephant in the room’, tough times/tough measure equals increased litigation… cut backs in legal terms, will leave employers very vulnerable.

Robbie Wheeler: You have to be one step ahead and we’ve had to look at different ways of tackling it. For our bulk litigation, as we describe it, and that proved very beneficial to us to do that. Outsourcing is another route, clearly, in terms of first line response and basic administration. And your point about keeping your policies and procedures up-to-date, that all comes with that.

Isn’t there a risk that with outsourcing, there could be a reduction in sensitivity in the actual business?

Christopher Syder: It’s not something I’ve observed. Invariably, the link is with HR, maybe inhouse legal. Because they’re often acting as a filter so that management can get on with the day to day task. I’ve certainly not seen any evidence that Boards are saying let’s take more legal risk, because we’re in a recession and I don’t mind going to tribunal and losing a few. In my experience, that is not happening.

Richard Boon: And don’t forget the pressures from both sides, because if it’s a Unionised environment they are in the same recession as we are. People will be taking decisions on whether they can afford the membership. Unions have got their own legal fees to pay.

Richard, dealing with the Unions as you have done in the past, how does that change the dynamics of the situation when litigation comes? Is it much more in your face, is it more combative?

Richard Boon: I preferred it, because, the union reps were usually well educated, well trained and if they were representing someone who they thought was bringing a completely spurious claim, they would tell them and that would actually help.

Robbie Wheeler: Employees that go for “the no win, no fee” option, this is a real challenge. Common sense does go out the window to the point where it can get stretched out, which is just really unfortunate for the employee and employer.

Richard Brown: We actually need to try to go back to the initial concept under which tribunals were set up, it was meant to allow the little guy to have his day in court, without a lot of complications. And now, when you just look at the documentation you have to submit, just before you’re even in the Tribunal, it drives too many people into looking for professional help.

Justin Roberts: Do you find there’s a difference now with the absence, of the statutory procedures? Arguably, makes it a little bit easier for the little guy?

Christopher Syder: We had difficulty educating clients, simply by saying, you can now have more flexibility in your dispute resolution procedures. Mediation hasn’t really taken off, in our view, because managers who are aware now understand that procedure.

Are employers adopting alternative dispute resolutions such as workplace or judicial mediation?

Christopher Syder: With regard to workplace mediation, our experience is the more sophisticated the employer, the greater the dispute resolution resources/techniques have been considered. Judicial mediation is being taken up if and when the employment tribunal offers it. An assessment takes place with regard to commercially how much the case is worth, how much time is involved, who are the protagonists who are involved, is the case suitable for mediation.

No fee, no win, must seem appealing to aggrieved employees.

Kathy Coshan: We are finding that if an employee phones one of these companies they’ll say, “Yes, your claim is going to be £20,000, £25,000. It’s not going to cost you anything” They sell their services on the back of pretending to get the employee false expectations. Another situation you have out on the markets is the Free Representation Unit (FRU) which costs absolutely nothing. Many of these companies will look for situations which do not exist Robbie Wheeler: I think that’s absolutely right. And what we tend to find now is the first question you ask is, what are they not claiming for? Rather than what is the claim for?

Richard Boon: Throw enough mud and it will stuck.

Surely that’s where effective mediation comes in?

Lucy Bolton: We tried to bring in mediation, before we get to that stage. We had a recent case, we’ve actually settled now, but when we went to ACAS and said, this is a ridiculous claim and we’d like your intervention here for mediation. And they came back and said, ‘I’m sorry, we just don’t have time, it’s not going to get done before the date of the tribunal’.

Christopher Syder: Because ACAS is regretfully under resourced, they’ve lost a lot of their experienced conciliators a number of years ago and it’s just not the same quality service that we used to enjoy Richard Boon: We used to train HR people in preparing the case, and completing the rest of it. We used to bring our legal teams in to train the HR people in a), how to prepare your case, b), how to represent your company. But now they could probably be facing a QC.

Lucy Bolton: In terms of mediation, that’s a decision I have to make this year. Do I spend money on mediation training, because at the moment we haven’t done any mediation work, or do I put that pot of money into more tribunal training, because tribunals have been shown to us to be actually advantageous.

Jim Devine: The most Unionised environments I worked in, I actually had less tribunals. Because they didn’t spend members fees. The district would not sign off members fees. You had some very, very fiery internal meetings round a table like this that went on for a long time that were a lot more painful, as painful as a tribunal.

Richard Boon: You will always look at tribunals with one eye on the financial implications, the amount of times I’ve had Unions come back and say, you can make this go away.

Kathy Coshan: It’s going down very well with our Union team. Because I brought them in and we’ve done training just to our Union committee, explaining what we are going to be doing. And that’s gone down very well. Our Union committee received training earlier this year on disciplinary processes, however I said “before we go down that route to that, you know the analogy, “it’s good to talk”.

Jim Devine: They don’t see it as bypassing the trade Union by having mediators and going round the side?

Kathy Coshan: No, they see it as they are supporting their members to get the resolutions they want.

Richard Boon: We often used to involve the Unions and employ reps too, so that there wasn’t any secrets. They were grateful because they couldn’t afford to do it themselves and you got the added benefit of showing you that we’re not hiding anything. We are trying to educate so you don’t think all our money is to discriminate against your members. And that works.

Richard Brown: I think the comment you made is actually about what kind of culture do you have inside your business. Is it that one, we’re going to have arguments from time to time, let’s try and sort them out. Or is it adversarial from the off, ‘I’m going to empty your pockets, if I can’.

Do you think increased mediation shows a more open business or a more accommodating company?

Lucy Bolton: I guess we’re relying on managers to be doing that mediation unofficially. So by the time it gets to a raised grievance, for example, it possibly is because it’s just gone as far as it’s going to with that particular manager. I’m probably saying, shall we get HR trained in mediation as the second step?

James Rapinac: Creating an open culture promotes effective mitigation. But again, the right training is empowering.

How can legal services best facilitate successful HR strategies?

Lucy Bolton: I think it’s important that HR really does keep up with the law. Gone are the days of us being HR administrators. We’ve all got to be really on top of it and you need to have in-house expertise, and having those external people that you trust.

If you’ve got a legal problem, the damage has already been done.

Richard Brown: I know some managers feel if they lose a tribunal case, does that reflect badly on them because they didn’t manage that situation properly? I don’t think there’s any silver bullet, except good professional practice, and early bird warning.

Robbie Wheeler: It’s the nature of the relationship that you have with your legal partner – the more they understand your business the better.

Roger Newport: Once a quarter we’ll invite our legal firm in for an afternoon and they’ll update us on issues in employment law and we’ll update them on what’s going on in our business, so there’s complete visibility.

Richard Boon: I’ve worked with law firms that you think, you don’t fit with us. And I’m pretty sure, that law firms do exactly the same. From the HR side it’s just having the pulse of the whole business. A chief exec said to me, “your job is to know what’s happening in the business fifteen minutes before I do”.

Surely if you get too friendly with your legal partner, the costs must go through the roof… is there a cheaper option?

Kathy Coshan: We had to look at costs last year and I went on the HR Forum to specifically investigate and benchmark legal costs, and to look to see what was out there, you need to go out to the market on legal costs on a regular basis. I then came back, sat down with the legal partner, and I explained that I could not keep paying partner cost fees, and that we had to find some ways of making this a bit cheaper. They offered me a couple of newly qualified solicitors as an alternative option, so far it has worked and helped.

Christopher Syder: There’s a practical issue here as well. We want to understand the business, we are trained to excel with regard to our knowledge, and we’re trained to excel with our application of that knowledge. Nothing frustrates a good lawyer more than not actually being able to apply the law to a situation, because he doesn’t know the particular nuances/preferences of the business.

There must be some organisations that are tempted to bring law in-house?

Richard Boon: Some things it’s sensible to centralise, and others not. You can get it completely wrong. What might work in London, might not work elsewhere, so you pick a legal firm that is local to you and works with you.

Richard Brown: I know we’re talking about relationships there, but how often do we actually give the legal firms what you would call permission to come in on the commercial route?

Richard Boon: That again, is back to building that relationship over time so that both parties understand where they’re coming from.

Robbie Wheeler: Ideally, you want a relationship whereby you can call and say: ‘can I talk to you’ without the worry of the ticking clock?

Christopher Syder: I feel I’ve become a better lawyer in the last three and a half years, because at DAC, I manage recruitment and flexible working – it does give you a different perspective than simply advising upon the issues. You have a better empathy with your client.

Jim Devine: In big companies with shared services, I think that’s significant for HR people.

Can a business focused approach to managing legal cost and risk play a significant role in enabling HR and business objectives to be met?

Christopher Syder: Learning my job, learning my trade, it became abundantly clear for me acting for employers that if I was giving more commercially focused legal advice, that was more appreciated than just the pure legal advice. There’s not really a need for innovation, it’s about, going back to the basics of good management, good HR practice.

Richard Boon: Are you seeing, a squeeze? because frankly, from my point of view, I don’t think I’ve ever been in a time when you haven’t tried to save costs.

Christopher Syder: We’ve certainly adjusted our cost model and adopted more flexibility in our cost options in order to respond to this pressure, and we’re supporting clients with an arrangement with junior council to go for the day at a cost effective daily charge, and we are looking at blended hourly rates, fixed rates, so we can compete.

Kathy Coshan: What, they risk manage? Christopher Syder: Yes we’ve certainly noticed clients who’ve gone elsewhere and then come back later saying ‘help us, get us out of this contract, because we’re locked in for another three years’. On the employment side, obviously we do a lot of due diligence corporate support work with our corporate department and invariably, they work on fixed fees that will have an abort fee and a success fee attached to it. So as employment lawyers we’re used to that. The question, therefore, is how do you measure success with regard to a grievance that doesn’t go to a tribunal. Is that actually applicable, does that work?

Is legal insurance a viable and flexible option?

Christopher Syder: It’s like most things in life, Jason, it very much depends upon the premium, the one off cost, giving them the option, and then it’s the assessment of, how many claims they typically get, or do we take the risk that we won’t pay the premium and we’ll have a good year. What we try to build into the insurance route is it gets linked to an HR audit, a review of HR practices and HR compliance.

Richard Boon: I think the worry for a lot of companies would be, it’s almost like your own personal house insurance. You can go five years without a claim, but the premium will stay the same, and that will be the fear for companies as you go forward. Again, it’s the cost argument.

Christopher Syder: That’s why we partner with insurance companies, actually reward companies who have a good claims record and, therefore, they are insured on the basis of the company’s claims records, not that of others. It depends upon the insurance provider. You are perfectly entitled to have that conversation, and lets face it commercially as it depends on the size of your organisation and on on how keen the insurer is for your business.

Lucy Bolton: Would you always end up settling though, if you were insured?

Christopher Syder: No, because provided your defence of the claim has prospects, fifty one percent or more prospects, then as long as you’re case is proportionate when it comes to costs, which as you can imagine is continuously assessed, then your case will continue until resolved.

Surely it’s not good PR that an organisation always grinds employers with grievances into the dirt?

Lucy Bolton: And sometimes we uphold grievances, and that’s important.

Richard Boon: It is, I think it’s quite nice to have it from both sides. Who’s to say the fact that I’ve taken them to a tribunal and won is a success. I don’t know that it always has been.. There’s been times where I’ve actually thought, probably, fair play, they’re right, but from a commercial point of view we’ve got to defend it.

Christopher Syder: Look at the Sunday Times one hundred best employers, they don’t measure success on the basis of how much money you’ve saved by not going to tribunal, it’s about retention, support issues and policies, procedures, training, investment in people, and that’s where the debate is really about, is how can employment lawyers help with your core business strategies, rather than being seen as a bottom line issue.

Jim Devine: You can get no grievances, but it doesn’t mean to say you’ve got a great culture. And I must admit, the tribunal employment law cost is relevant because it’s a cost, and it’s relevant in its own sense, but I would never extrapolate it to say that’s the way I’d measure engagement in the business.

Christopher Syder: It’s such a conflict between the culture, the employee engagement piece, that we’ve obviously taken on board from the HR model. And then the natural conflict with regard to the employers wanting the employment solicitors to save costs, to reduce spend, and measuring success by how much you spend on lawyers that has been an interesting insight.

James Rapinac: It all comes down to good management practices, open communication, the right kinds of policies, the right balance of top down and bottom up.

Richard Boon: Yes, but how do you change the negative ones?

So what do businesses really expect from its legal advisers?

Christopher Syder: Well, I don’t think you can ever cure and remove the risk of people falling out, because that’s human nature. What’s come across loud and clear is one, the trusted adviser message, and second the education message with regard to supporting HR, and educate.

Kathy Coshan: It’s training and informing. We’re quite lucky, as I say, we have a legal firm where we have a good partnership who also send out regular news letters and legal updates as well as offering free training.

Roger Newport: Train and inform, yes, and also crucially I would add a legal partner understands our business. This helps them channel their advice in the right areas so that they can give advice relevant to the business.

Justin Roberts: You can’t really separate or do away with prevention or cure. You have monthly HR meetings where you all sit together and share knowledge, and that sort of model is fantastic, because then you get the hands-on experience. Christopher Syder: The reality is, you’re always going to have people disputes and businesses need people. The key issue is about working efficiently and effectively to support HR professionals and the business as a whole.

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