Is the Labour government about to write a new chapter in the history of British employment relations? That is certainly the declared intention of the Employment Rights Bill currently before parliament, with ministers describing the provisions contained therein as the biggest expansion of employment rights for half a century. It is certainly the case that these measures represent a decisive break with the approach adopted over the past fourteen years, with individual rights subjected to deregulation or a gradual erosion of protections, alongside the increasingly stringent regulation of the activity of trade unions, exemplified by the Trade Union Act 2016.
Ministers have also been equally clear that the new measures are only the first phase of a programme to make work pay, fix the foundations of the economy, achieve a higher rate of growth and address the UK’s woeful productivity record. The ambitions are bold and are focused on ensuring that workers secure their fair share of the nation’s rising prosperity, through sustainable wage increases and decent work. In principle, these are unexceptionable goals, but it remains an open question whether the policies are commensurate with the scale of the aspirations.
Viewed in a different light, the contents of the bill offer a menu of the exotic and the prosaic. The micro-level regulation of zero hours contracts, for example, is new and genuinely different; it is the first example, perhaps, of government intervention in a specific form of employment contract. Similarly, the abandonment of any qualifying period for unfair dismissal protection is also new. Hitherto, all governments had required employees to have held their jobs from anywhere between six months and two years before the right crystallised. The proposed changes to the trade union recognition regime, on the other hand, are entirely “normal” and are rooted in a well-established, if somewhat traditional, model of collective bargaining on pay, hours and holidays.
If one takes a step back, it is challenging to find a philosophical approach that gives coherence to these measures. Rather than a comprehensive new settlement, it could be said that the government is engaged in a process of labour market whack-a-mole: “we have identified a problem and we will regulate to solve it”. Moreover, it is difficult to argue that a social consensus exists about the legitimate province of labour market regulation. Employers still express concerns about burdens on business and trade unions apparently measure their success in terms of the number of new rights added to the statute book. There is ample (although slightly dated) evidence to show that the world of work is characterised by unfairness and bad practice in mainstream employment, that levels of trust are low in many workplaces, that people management often falls short of decent, let alone best practice, and that these phenomena help to explain the UK’s poor productivity record.
Successful policy interventions depend on an accurate diagnosis of the problems confronting workers and their employers, the fostering of institutions to encourage dialogue and a shared understanding of how better outcomes can be achieved and sustained in the future. At the very least that requires a common frame of reference, which is conspicuous by its absence today. Progress is likely to be impeded by the absence of adequate information – the quality of the official statistics is less than desirable, the most recent Workplace Employment Relations Study dates from 2011 and it is arguable that policymakers lack the information they need to design efficient and effective regulation.
All this helps to explain why the responses to the following questions remain hotly contested. How, for example, should one judge whether people at work are being managed fairly and effectively? What is the appropriate role of trade unions in a growing, competitive economy? Which precise models of collective bargaining are consistent with sustained, non-inflationary growth? Is it desirable for trade union membership to be higher and collective bargaining to be the principal method for the determination of terms and conditions of employment? What role do employers’ associations play in this process? Does the UK simply lack the institutions needed to secure a more effective dialogue between workers and their employers, assuming such a dialogue to be desirable?
One might say that the bill offers implicit answers to these questions, but it falls short of a comprehensive analysis and does not, viewed in isolation, create an opportunity for an open discussion about the various avenues of advance. Very different answers will be given by trade unions, workers and employers and, in the absence of a national conversation leading to a sustainable settlement, there is a high risk that the role of labour market regulation will continue to be the subject of intense, damaging, disagreement.
Avoiding this outcome suggests an irresistible case for a comprehensive, dispassionate assessment and the development of an appropriate policy response. A Royal Commission, along the lines of the Donovan Commission, appointed in 1965 to review the role of trade unions and employers’ associations, may offer some inspiration for what is required. If the objective is to fix the foundations, then all participants must turn their minds to the task and work co-operatively to achieve a shared goal. A new and comfortable home cannot be built with half the workforce simultaneously trying to demolish the building.
David Coats, director Work Matters
January 2025