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Employment Act 2002

Overview of the impact of the Act

169.The overall intention of the Act is to support the development of more productive workplaces in the UK by encouraging participation in the labour market through the retention and development of skills, and by improving the way that disputes are managed, both at work and within the employment tribunals system. This impact assessment considers the individual proposals and their overall effect. Where they overlap or enhance each other this will be addressed. Self-standing impact assessments are attached for each element of the Act expected to affect business.

170.All the provisions in the Act will have some impact on the productivity and competitiveness of UK employers, and on the workforce as a whole. Those parts of the Act which relate to dispute resolution are intended to bring benefits, both quantifiable and unquantifiable, to employers and employees through encouraging in-house resolution of disputes without recourse to Employment Tribunals. Unresolved conflict in the workplace can damage morale, increase stress, and may lead to employees quitting their jobs. Equally, disputes taken to Employment Tribunals reduce productivity because of the resources taken up in the legal process and because of their effects on the morale and motivation both of the individuals directly affected, and in the workplace more generally.

171.The parts of the Act dealing with maternity, paternity and adoption pay and leave are intended to encourage greater participation in the labour market, and the retention of skills, for parents who might otherwise leave the labour market. In addition, there are motivational and productivity benefits through relieving the stress and strain felt by new parents. The provisions in the Act which place union learning representatives on a statutory footing will also enhance productivity by encouraging workforce development. The proposal to extend the European Directive on fixed term work to include pay and pensions will ensure that fixed term contract employees are not discriminated against and will thereby increase employee security and remove a potential distortion in the labour market. The provisions that introduce work-focused interviews for partners of people receiving working-age benefits will also have a positive impact on participation in the labour market but are not included in the Impact Assessment as they do not impose any cost or burden on business.

172.Quantified costs and benefits are expressed in current (2000/01) prices with the exception of the provisions for maternity pay, paternity leave and pay and adoption leave and pay. For consistency with public expenditure plans, these are expressed in 2003/04 prices.

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