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Evidence of the Association of Legislative Change to Range of Professional Practice in Home Care UK - Coursework Example

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"Evidence of the Association of Legislative Change to Range of Professional Practice in Home Care UK" paper discusses how legislative change has affected professional practice, whether the practice is consistent with neoclassic theory, and the existence of differences in the theories…
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Crime prevention and security management [Name] [Professor Name] [Course] [Date] Contents Contents 2 Abstract 3 Key Legislative Changes 4 Professional practices and worker performance 6 Major problems at Cake UK 8 Theoretical perspectives 9 Analysis and evaluation 13 Differences and effects on professional practices 14 Proposed future studies 16 Conclusion 17 References 18 Abstract This essay examines the evidences of the association of legislative change to a range and depth of professional practice in organizational contexts, in this case the Home Care UK. The major problems in the area identified are high turnover rates, poor customer satisfaction and low productivity. Further, relevant studies on the impact of legislative change to economic performances of the organization, are reflected on how they are helpful in finding solutions to the problems identified. More specifically, the essay discusses how legislative change has affected professional practice, whether the practice is consistent with neoclassic theory, the existence of differences in the theories and how the legislations align with practices and theories. In addition, the paper undertakes an analysis and evaluation of detailed proposals that will enhance contemporary practice in light of the findings and assessment of current practice, policy, legislative framework and organizational or institutional culture, in light of extant research. Overview Crime prevention has, in the last three decades, become an integral part of criminal justice policy in the UK, specifically since it is no longer feasible to develop such policies as merely a set of technical solutions to an established problem. The concept of crime prevention entails the idea that it is better to prevent crime from happening rather than employing punishment as a means of deterrent (Lea 1997a). In principle, although the role of criminal justice system is to detect and punish crimes that have already happened, the chances of detection of crime by police and the punishments have been as ways of preventing crime. Indeed, the Crime and Disorder Act 1998 became Britain’s key legislation that set out crime prevention plans. However, the Act merely gave local authority and the police the mandate to prevent crimes (Lea 1997b). Extensive literature findings, however reveals that in the institutional and organizational context, legislations have not adequately addressed the issue of crime prevention with regard to worker and employer relationship. Even though changes in the Enterprise and Regulatory Reform Act 2013 gives tribunal powers to levy penalty on rogue employers, analysis has revealed that this has not been effective. Employers who are in breach of employment rights are liable to penalties of between £100 and £5,000. Employers can however qualify for a 50 percent reduction if they pay the penalty within three weeks. The most sensitive changes in the legislations have been the Labour Laws, specifically on minimum wage which have been inefficient leading to unwarranted practices by the employers. This has led to decline in employee performance and morale. The changes in minimum wage legislations have not adequately addressed the issue of employers who cynically avoid paying their employees the national minimum wage, making the government to be unable to act against such abuses (Morris & Quine 2013). The Low Pay Commission estimates that over 100,000 adults receive wages below the legal rates, while the TUC believes that up to 300,000 workers could be unlawfully denied the minimum wage. Indeed, although the employers in Britain use a range of tactics based on the legal loopholes to sidestep the rates as well as to avoid criminal prosecutions, the changes in legislations have not been able to prevent crimes by the employers. Key Legislative Changes The recent legislative changes in Britain’s Labour Law have not adequately addressed the issues of how crime prevention can be achieved in organizations, specifically on the part of the employer. This has significantly affected the depth of professional practice at Home Care UK as employers have continued to pay workers low wages (Machin & Wilson 2004). With a case scenario of legislative changes in Britain, the legislations has experienced radical movements in the last seven decades (Hanson 1987; Low Pay Commission 2009; Stewart & Walsh 1992). Indeed, observers have criticized the legislation for its inefficiencies, such as for its failures to punish employers who flout the legislation. Reports have indicated that just eight criminal prosecutions have been successful in the last 13 years, the regulator suggesting that the maximum fine should be raised from £5,000 to deter further non-compliance (Morris & Quine, 2013). The result is that high turnover rates, poor customer satisfaction and general low productivity by the employees have substantially affected the financial economy of the company, leading to lower revenues and reduced government funding (Machin & Manning 1994; Howarth & Kenway 2004). The UK National Minimum Wage (NMW) stipulates the minimum hourly wage rate that must be paid to employees in the UK. Since its introduction in 1999, the NMW has insignificantly changed. In 1999, it was introduced at a rate of £3.60 per hour for all employees aged 22 and beyond. Those aged between 18 and 21 years at of £3.00. The change in legislations has however seen the minimum wage rates for adults change to£5.52 per hour from October 2007after upgrades during in 2001 and 2003 (Low Pay Commission 2009). Further changes in the minimum wage in October 2013, are expected to see wages increase to £6.31 per hour. Additionally, the youth rate is expected to increase to £5.03 from £4.98 per hours, while the worker’s rate, for those aged between 16 and 17 years, rose to £3.72 from £3.68 per hour (Personnel Today 2013). The expected direct effect has been increase in wages for the lowly paid workforce in Britain, as wages have been expected to increase significantly in real time relative to the Retail Prices Index. In principle, this has not been the case, as more employers have engaged in criminal acts of sidestepping the set wage rates. Other key changes to UK employment law in 2012 include the minimum period of employment that a worker has to serve before being liable to bring a claim against unfair or wrongful dismissal. Wrongful dismissal is defined as an employment termination that contravenes the terms of contracts, whether implied by the court or agreed expressly. This is a shift from section 86 of the Employment Rights Act (ERA) 1996, which specified that employers can give the employees a one-week notice before dismissal after a month’s work, a two-week notice after a two-year work and increasingly up to a 12-week notice after working for 12 years (Bryan Cave 2012). Professional practices and worker performance The changes in the legislations, specifically the minimum wage regulations, have not had a significant effect in boosting worker morale at Home Care UK since they have failed to address the issue of rogue employers. Instead, the new legislation appears to have worsened the employer’s professional practices, who manipulate the law in their favour (Machin & Wilson 2004). This has made the employers at Home Care UK to continue paying low wage rates. The result is low productivity, high employee turnover, slow growth of the company, hostile work environment, poor customer service, low sales and poor performance, individual workers and high employee turnover rates (Metcalf 2007; Colema 1987; Draca, Machin & van Reenen 2005; Forth & O’Mahoney 2003). Of all the consequences, the worst scenarios, in my view, have been poor customer satisfaction and high employee turnover rate. The employee turnover rate has been the prevalent issue that has affected the company’s overall performance and individual performances. Indeed the rate at which employees have left the company prompting the company to replace them with new members of staff has been worrying. Evidently, high turnover rates have interrupted the productivity and customer satisfaction (Forth & O’Mahoney 2003). The cost of recruiting and training new workers has also proved to be expensive (Colema 1987). It is possible that among the factors that have affected the turnover rates include low morale because of the low wage rate the company set, after reviewing the minimum wage set by the existing British labour laws, since the employees have seemingly been in search of better paying jobs. Since joining the company, I have noted that those who have been extremely desperate for a job, especially semiskilled or unqualified workers, comprise the set of workers that have taken to working for the company, while in search of better paying employment (Flinn & Mabli 2005). The legislation has also contributed to unsatisfactory performance appraisal, since the low wage appears to have led the company to view the set of affected employees as insignificant workforce who must be paid the low wages. This is also a major reason that has led to workers lacking in performance (Hissom 2009). Indeed, the criminal practices in the area of minimum wage have meant that the substandard or unequal wage structures fall under this category (Draca, Machin & van Reenen 2005). For instance, in cases where two or more journalists at Home Care UK perform the same type of work, or where they are assigned similar responsibilities, differences in pay rates have causes the lowly paid workers to quit. In the same vein, since the company has appeared to pay less than other companies, employees have opted to shift to those companies that pay higher wages. Based on these perspectives, it is evident that the major cause of employee turnover rates at the company has been the issue of unlawful wages. Indeed, most employees at the company have felt “betrayed” by the minimum wage legislations, which has disappointed most workers who hoped that it would specify conduct of the employers (Lam et al 2006; Laser 1980). While a number of studies have supported this view, its significance in professional performance cannot be underestimated (Hissom 2009; Draca, Machin & Reenen 2005). In fact, it is widely argued that since individual employees often identify salaries and wages as the major excuse for leaving, it has made organizations and their pay scales a target for their frustrations (Hissom 2009). Major problems at Cake UK Over the past one decade, Britain has experienced relatively low labour productivity and high unemployment rates. Statistics have confirmed the national consciousness of a comparative decline over the past thirty years. This is however related to inefficient legislations to address crime prevention on the part of employers, specifically with regard to minimum wages (Low Pay Commission 2009). With regard to the outcome of the legislation on employer practices and ultimately on employee performance, the company has continued to report poor customer satisfaction and a series of industrial actions due to claims for better pay (Jones 2013a; Jones 2013b). The criminal activities signifying the manipulation of the wage rates include: First, the company assumes the staff will benefit from tips and thereby deducting some money from their wages. In some instances, managers deduct national insurance contributions from the pay brackets. Next, the company pays employees piece rates instead of hourly rates. For instance, the hotel pays employees based on the number of rooms and areas they can clean other than the time they spend working. Additionally, employees are not paid for the period they travel between hotel chains, rather, they are paid for the time they actually spend at their specific sites. In some instances, employees have been incorrectly classified as volunteers and hence should not be entitled to the minimum wage. In some instances, staff has been classified as interns although they are expected to perform the same duties as the permanent staff. Further, apprentices who are entitled to certain wage rates based on their experience or age are underpaid. Additionally, the company charges the staff for benefits such as uniform, meals and transport. The employees are also paid cash-in-hand, so that the wages and hours worked go unrecorded. The company also deliberately records the number of hours worked, thus limiting liabilities and paying less than the minimum wage (Morris & Quine 2013). Theoretical perspectives Research literature on the implication of legislations, specifically labour laws, has been significantly supported by theoretical concepts, especially those originating from the neoclassical labour economics. This theoretical perspective has been interpreted to mean that inefficient labour law rules functions as a derived intervention that interferes with the effectiveness of the market forces. This idea is greatly enhanced by the Stigler’s (1946) analysis of minimum wage, which is greatly credited for having set the tone for majority of the studies of labour law regulations, and which has motivated the economic analysis of labour laws that were later undertaken by Posner (1984). With respect to neoclassical model, employment and wages are determined by the interaction between demand and supply for labour. The market functions as the regulator or determiner of decisions to trade, whereby manufacturers who pay their workers law wages risk losing experiencing high turnover rates to competitors, the same as employees who bid for higher wages risk being excluded from employment. The market further promotes equality with regard to equal wages for equal value of work. The movement of market equilibrium checks that a definite wage is set for labour whose productivity is comparable. In instances where imperfections or inequalities are considered, they are attributed to non-market factors including disparities in endowment of the individual employees or indiscriminate practices on employees. Labour laws are in fact viewed as external contributors to imperfections, as their origin is from policies made by policymakers in the political sphere and depict distributional demands by collective groups. Distributions demands, which are aimed at redistribution instead of value creation, impose burden on the economy, thus can be seen as contributing to inefficiencies. In relation to the theory, additional inefficiencies may emerge from alterations in the market forces induced by interferences by legislations in bargaining (Iversen & Soskice 2007; Deakin 2009). In my view, wage legislation, such as the new minimum wage, has the capacity to depress demand for labour. As a result, it can lead to the exclusion of the lowly paid from the market. Hence, minimum wage law, for instance, are projected to have specifically adverse impacts on semi-skilled labourers or workers without qualifications or formal skills. From this perspective, labour legislation is seen as not being inefficient, but being discriminatory and unfair in its outcomes. Towards this end, the neoclassical model has proved unyielding to empirical challenge. This is particularly due to the simplicity of the principal theory, as well as the lack of agreement over alternatives, since most theorists have taken the view that ‘a theory defeats a theory while facts only support the theorist’s concept (Kaufman, 2007: 8). Indeed this concept demonstrates the idea that minimum wage legislation has caused higher unemployment rates in Britain. For this reason, if the change in legislation considers raising the minimum wage, then Britain is likely to experience increased employment levels and earnings (Machin and Manning 1994). The standard economic analysis of legislation is based on the concept of self-equilibrating market, which adjusts itself in response to the temporary alterations. In addition, it also represents a theory of operations of legislations and regulations (Manning, 2003). There are two associated features to this, the first being the idea that legislations are exogenic to the market relations and hence function as external burden on them. Secondly, the assumption that the legislations are complete with regard to being definite in the way they are applied and the way they execute themselves. On the other hand, neo-institutional account of how the legislations operate in labour market, views legal rules as endogenous solutions to management problems, offers an alternative point of view that has implications for empirical analysis (Deakin and Sarkar, 2008). This approach interprets legislations as tools for coordination of the expectations of the employers and employees under uncertain circumstances. Legislations are not merely imposed using a top down approach, however, shape up conventions which first appear at the level of exchange relations before they are made official in contractual agreements. Since they are responses to market failures of several forms, they are derived from certain political or economic setting. Legislations, specifically labour laws, may also have redistributive aims as well as give expression to concepts of fair treatment that pose as focal points in bargaining between the employees and the employers (Hyde, 2006). With respect to this, the employment contract is an intricate legal institution that represents a form for labour transactions depending on trade-off between the responsibilities to manage, which is reserved to the employer, and the workers’ access to income. The major institutions of labour law systems, such as minimum wage regulations, show this basic trade off in several ways. In my view, interpretation of labour laws in this manner is to view it as being endogenous to political structures and market operations rather than exogenous force imposed on the labour market. Endogenous legislations offer solutions to coordination problems that are imperfect in their requirement and imperfect in the way they are applied. In addition to not being self-executing, they have the capacity to be made operational specifically through enforcement. Its successful implementation is dependent on the understanding and belief among the players in the labour market and beyond the span of the legal system. Similar to the way in which the form and the content of legislative rule largely results from the evolution process that is path-dependent and content-specific, the process of legal regulations is dependent on contextual factors that differ across space and time (Deakin 2009). Further, the employee turnover rate resulting from the change in minimum legislations has generally remained steady among UK’s private sector organizations. A survey by the Chartered Institute for Personnel and Development (CIPD), which conducts annual surveys on employment trends in UK, showed the rate of around 18 percent, with that of the private sector organizations at 23 percent. The survey further showed the rates being higher among the professional, highly skilled and managerial staff. The search theory offers a commonly used model for examining the worker turnover in the labour market. Recent studies by Rogerson et al (2005) and Eckstein & van den Berg (2007) show increased costs of searching for employments or employees as a major aspect in labour market adjustment. According to PricewaterhouseCoopers (PwC), turnover rates cost the UK an average of £42 billion a year (Peacock 2010). Analysis and evaluation Several empirical studies have examined the effects of employer practices, employee performances and the employment laws since the conception of modern social legislation. Nevertheless, little attention has been given to the impact of legislative systems as a causal variable that can shape social and economic outcomes until relatively recently (Deakin & Sarkar n.d.). Indeed, particular regulatory initiative such as minimum wages has been extensively studied to assess its impact on the output variable such as unproductively, employee turnover rates and unemployment, although with little regard to their legislative forms. For reasons of economic modeling, laws have generally been assumed to be self-executing and matters on the flaws of legislations have been explored. In addition, the role of legislations in determining the nature of regulations and the economic impact has been given a priority by several hypothesis of legal origin (La Porta et al., 2008; Deakin & Sarkar n.d). As significant as it is, the legal origin hypothesis is among the emergent paradigms in social sciences that has connotation for the empirical study of the efficiency of legislations, specifically the labour laws. A variety of capitalist models in comparative political economy have developed key insights that have placed emphasis on the legal origins literature, the endogeneity of legislative and the related institutions to the broader economic frameworks (Hall & Soskice, 2001). The two approaches have both placed emphasis on comparative methods. They have also contributed to the development of new data sources for measuring cross-national differences in legal regimes. Based on these developments, an understanding of the nature of the relationship of law and the economy have been explored, along with several acceptable wisdoms on the negative impacts of legislations on the economy (Forth & O’Mahoney 2003; Neumark & Wascher 2006). To the policymakers who are responsible for formulating the legislations, the policymaking process should in principle take advantage of the enhanced understanding of the role of national and local contexts in facilitating the emergence and implications of the labour laws. Differences and effects on professional practices The changes in legislations cause differential outcomes on employer practices and worker performances as they involve various combinations of three outcomes, namely expropriation effect, price effect and rigidity effect. Price effects transpire when legislations raise the cost of labour, while expropriation effects are connected to the bottleneck effects that transpire when legislations enable employees to be part of the return of the employer’s investment. This is the expected scenario in instances where legislations increase the employee’s ability to start and maintain industrial disputes (Lang, K. & Majumdar 2004). The rigidity effect on the other hand occurs when the legislations adjust labour making it more difficult and costly. Legislations that increase the price of labour effect expropriation outcome effects are hoped to negatively impact the demand for labour. As an alternative, legislations that raise the cost of adjusting employment do not have clear-cut effects as they are likely to reduce job creation and destruction (Bertola, 1990). In the end, regardless of whether legislations have a positive outcome on employment and productivity or not, their negative impacts on job creation are balanced by the reduction in job destruction. The impact on capital is also likely to depend on which of the three effects is dominant. Although the rigidity and price effects may lead the organization to alternate labour for capital, the risk of expropriation is likely to cause a strong deterrent to capital and investment creation. Legislations that particularly target employment adjustment can on the other hand induce rigidity effects and large price, as well as expropriation effects since the bargaining power of workers in relation to that of the employers increases, thus making workers to feel secure as a result reducing the turnover rates (Lang & Majumdar 2004). Conversely, legislations that increase the cost of solving industrial disputes can trigger expropriation effects related with the rise of uncertainties on the organization’s capability to solve the industrial disputes or employee turnovers in their favour. They can also trigger price effects, since the price of labour comprises the additional costs of recruiting and training new staff or handling worker disputes (Bertola 2009). Ultimately, they may further trigger some rigidity effects as recruiting and training new employees may become more costly to the organizations. This implies that the outcomes of a specific legislation on organizational outcomes are ambiguous and rely on one of the three effects that is most dominant. As a result, the issue of the outcomes of various forms of legislations on employment as well as other economic outcomes is in principle an empirical issue that should be addressed by future studies (Williamson, Wachter & Harris 1975). Proposed future studies The impact of legislative change on the professional practice signifies that a major legislation change is taking place which even as is not driven by empirical findings, can open up new opportunities for empirical inquiry and in the end for a redeveloping of theory. First, the use of evidence-based researchers to set and ascertain policies and legislations is critical. There is therefore a need for future researches on the impact of conducting evidence-based researches before setting legislations or policies and the impact of the policies on employer practices and employee performances. The recent events of the Low Pay Commission in Britain, has shown that when empirical evidence is incorporated into the policymaking process, it is only practicable within tightly specified parameters. Secondly, there is a need for future studies on the content of law, how they should operate and the context in which they should be applied in a way that is consistent with the industry-specific or national conditions with the corresponding institutions in labour markets. The studies should further place emphasis on how the outcome of legislations on the economy of institutions can be predicted theoretically or in a priori manner using models that have universal applications (Flinn & Heckman 1982). Conclusion From the discussion, the changes in legislations touching on minimum wage have failed to institute measures that deter criminal practices by employers, who pay low wages to employees. From the discussion, it is evident that the system has failed to include ways in which the criminal practices that manipulate the system to pay low wages to employees can be prevented. The result is that high turnover rates, poor customer satisfaction and general low productivity by the employees have substantially affected the financial economy of the company (Deakin & Sarkar n.d). The trend has also been evident in other organizations. This has in turn affected the overall economy of the country, as low output by organizations has meant low revenue from taxation. Additionally, it is seen that there is a strong association between legislations and economic outcomes of organizations. A lingering concern however is that such association my result from reverse causality, in which case, it is likely that expectation of low productivity in the future may increase the chances of further changes or reforms on the legislation, which may either increase job security to make conflict resolutions between the employers and employees more costly (Ahmad & pages 2007). Such instances would lead to a negative association between the legislations and the economic productivity at workplaces. References Ahmad, A. & pages, C. 2007. Are All Labor Regulations Equal? Assessing the Effects of Job Security, Labor Dispute and Contract Labor Laws in India. (Online) Retrieved from: Accessed 17 July 2013 Bertola, G. 2009. ‘Labour Market Regulation: Motives, Measures, Effects’, ILO Conditions of Employment and Work Research Series, forthcoming. Bryan Cave. 2012. UK employment law changes for 2012. Bryan Cave Briefing. (Online) retrieved from: Accessed 17 July 2013 Colema, W. 1987. Stabilizing the Workforce: A Complete Guide to Controlling Turnover. In J. E. Gardner, Personnel Psychology .Westport: Quorum Books, a division of Greenwood Press. pp. 40(4), 877-879 Deakin, S. 2009. The Evidence-Based Case for Labour Regulation. Paper prepared for the Regulating Decent Work Conference, ILO, Geneva, July 2009 Deakin, S. and Sarkar, P. ‘Assessing the Long-run Economic Impact of Labour Law Systems: A Theoretical Reappraisal and Analysis of New Time Series Data’, Industrial Relations Journal, Vol 39, 453-87. Draca, M., Machin, S. & van Reenen, J. 2005. The impact of the national minimum wage on profits and prices. Research Report for the Low Pay Commission, Centre for Economic Performance, LSE and University College London. Eckstein, Z. & van den Berg, G. 2007. ‘Empirical labour search: A survey’, Journal of Econometrics Flinn, C. & Heckman, J. 1982. ‘New methods for analyzing structural models of labor force dynamics’. Journal of Econometrics, Vol 18, pp.115-168. Flinn, C. & Mabli, J. 2005. On-the-job search, minimum wages, and labor market outcomes in an equilibrium bargaining framework. Working Paper, C.V. Starr Center for Applied Economics, New York University. Forth, J. & O’Mahoney, M. 2003. The impact of the national minimum wage on labour productivity and unit labour costs. Research Report for the Low Pay Commission. Freeman, R. 1978. “Job satisfaction as an economic variable”, American Economic Review, Vol 68, 135-141 Hall, P. and Soskice, D. 2001 Introduction to Varieties of Capitalism. P. Hall and D. Soskice (eds.) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford: OUP. Hanson, C. 1987. 'Economic Significance Of British Labor Law Reform.' Cato Journal, vol. 6, No, 3, pp.852-860 Hissom, A. 2009. Human reource management: Understanidng and controlling employee turnover. (Online) retrieved from: Accessed 17 July 2013 Howarth, C. & Kenway, P. 2004. Why Worry Any More About The Low Paid? London, New Policy Institute. (Online) retrieved from: Accessed 18 July 2013 Hyde, A. 2006. ‘What is Labour Law?, in G. Davidov and B. Langille (eds.) Boundaries and Frontiers of Labour Law, Oxford. Hart. Iversen, T. and Soskice, D. 2007. ‘Distribution and Redistribution: the Shadow of the Nineteenth Century.’ Paper presented to the conference on Changing Institutions (in Developed Democracies): Economics, Politics and Welfare, Paris, May 2006. Kaufman, B. 2007. ‘Doing the Impossible: Showing the Minimum Wage is a Good Idea, and using Institutional Economics to Do It’, Paper presented to the conference on 100 Years of Minimum Wage Regulation, LSE, December. Landau, P. & Snowdon, G. 23 Nov 2011. Employment law: what the changes could mean in the workplace. The Guardian. (Online) Retrieved from: Accessed 17 July 2013 Lam, K., Ormerod, C., Ritchie, F. & Vaze, P. 2006. ‘Do company wages policies persist in the face of minimum wages’, Labour Market Trends, Vol 114 No. 3, pp69-82. 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The Economic Journal, Vol. 114, No. 494,, pp. C102-C109 Machin, S. and Manning, A. (1994), ‘Minimum Wages, Wage Dispersion, and Employment: Evidence from UK Wages Councils’, Industrial and Labor Relations Review, Vol. 47, pp319-29. Manning, A. 2003. Monopsony in Motion: Imperfect Competition in Labor Markets, Princeton. Princeton University Press. Metcalf, D. 2007. ‘Why Has the British National Minimum Wage had Little or No Impact on Employment?’, CEP Discussion Paper No. 781, LSE. Morris, N. & Quine, O. 2013. Scandal of firms that dodge paying the minimum wage. The Independent. (Online) Retrieved from: Accessed 17 July 2013 Neumark, D. and Wascher, W. 2006. ‘Minimum Wages and Employment: a Review of Evidence from the New Minimum Wage Research’, NBER Working Paper No. 12663. Peacock, L. 2010. Staff turnover costs UK £42bn a year. The Telegraph. (Online) Retrieved from: Accessed 17 July 2013 Personnnel Today. 2013. Legal Timetable: Future Deadlines. 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