Labour Laws and Level-Playing Fields
How long before the employment and labour law “level playing field” provisions in the EU/UK Trade and Cooperation Agreement (TCA) become an issue as the UK “silently diverges” from the EU?
Last Wednesday, we had the King’s Speech, the British tradition whereby the monarch of the day reads out to a combined meeting of the House of Commons and the House of Lords, the government’s legislative program for the year ahead.
The Speech had some interesting things to say about employment and labour law.
During the fourteen years of Conservative government, with the exception of the Modern Slavery Act, it is difficult to think of any significant piece of employment law that was adopted, save for laws which made life more difficult for trade unions.
The King’s Speech made it clear that there was a new government in power and it had a very different agenda to what had gone before.
As Andrew Rawnsley writes in the Observer, labour’s employment law program is unabashedly “workerist”.
“After a long period when employment rights have been eroded and restraints on trade union activities tightened in the name of ultra-flexible labour markets, that trend will be significantly reversed. The “new deal for working people” represents the biggest enhancement of employment protections in a generation.
An Employment Rights Bill will be introduced shortly. It will implement Labour’s New Deal for Working People, including:
Day 1 employment rights, including rights not to be unfairly dismissed (though employers will be able to operate probationary periods).
A ban on zero-hours contracts, ensuring workers have rights to a contract reflecting average hours worked and more security over shift scheduling.
Restrictions on ‘fire and re-hire’ and ‘fire and replace’, a practice where companies fired their entire workforce and then offered to rehire them on less favourable terms. Think P&O Ferries.
Making flexible working the default from day 1, so that employees can ask for flexible work arrangements.
Pulling all the enforcement into a new structure: The Fair Work Agency, an echo of Australia’s Fair Work Commission?
New rights for unions to access workplaces and other union-friendly reforms. The government will also move to introduce sectoral collective bargaining into the social care sector and, if it works, could become a template for such bargaining in other sectors.
Of course, the devil will be in the legislative detail. The government has said it will introduce the Bill within its first 100 days in office, which suggests a mid-October deadline. How quickly it will go through the legislative process thereafter remains to be seen, and whether the government will consult with unions and employers is also an open question.
One way or another, change is coming, and it will come fast.
When you look at the above list, most of the proposed measures touch on the rights of individual employees. The ban on “fire and rehire” might be seen as collective, but it is also really an individual measure, stopping the ability of employers to fire individual workers and then offer to rehire them on less favourable terms, even if it fires a lot of them at the same time.
There will be some “union-friendly” reforms such as new rights for unions to access workplaces and the use of electronic voting, but are such measures really going to shift the dial on ever-declining union density? I somehow doubt it.
It will be interesting to see how the government approaches sectoral bargaining in the social care sector. Now, it is my own view that governments cannot impose sectoral collective bargaining on reluctant employers and that across Europe, where such bargaining does not already exist, it is unlikely to appear anytime soon. The law can force people into a room together. It cannot make them agree with one another.
For example, just look at the complexities of the Australian system. I may be wrong but two years into the new law brought in by the Albanese Labor government, I have yet to see any order handed down by Fair Work Australia mandating sectoral bargaining.
But social care in the UK is a different matter. Social care is largely funded by the government which gives it a lot of clout with the multiple, individual employers who deliver it. Run a Google search and this is what comes up:
In England, publicly funded social care is commissioned by the 152 local authorities, which receive a grant from central government. In 2022/23, around 835,000 adults received publicly funded long-term support.
In labour relations, whoever ultimately pays the piper gets to call the tune. So, if the government wants a sectoral collective bargaining structure in the social care sector, it can make it happen.
However, it is unlikely to be a template for other sectors of the economy. Anyway, in a modern economy, how do you even define a “sector”?
So where does Brexit come into all of this?
A great many UK labour and employment laws are based on European Union Directives. Think, for example, of the Collective Redundancies and the Transfer of Undertakings laws. Or laws on gender equality and non-discrimination.
There is language in the Trade and Cooperation Agreement about the maintenance of a level playing field on labour issues between the EU and the UK to ensure fair competition.
Since the UK finally walked out the European door at the end of January 2020, the EU has enacted a suite of laws that are either primarily employment and labour laws, or which have a significant labour and employment dimension.
Since the UK left, the EU has passed:
· The Pay Transparency Directive, designed to close the 13% pay gap that still exists across Europe between men and women, with extensive involvement for employees’ representatives in the process.
· The Adequate Minimum Wage Directive, which also urges governments to “promote” collective bargaining until it covers 80% of the workforce.
· A law on the rights of Platform Workers. Also, the Commission has said that competition law will not be used to prevent solo self-employed workers from organising and looking to bargain collectively.
· The Corporate Sustainability Reporting Directive which requires companies to report publicly on a wide range of issues, including employment and working conditions in their own operations and in their supply chains.
· The Corporate Sustainability Due Diligence Directive, will require businesses to identify and remediate labour and human rights risks in their own operations and in their supply chains.
In the pipeline are:
· A rewriting of the European Works Council Directive
· A draft Directive on Remote Working and the Right to Disconnect
We are also likely to see calls for a Directive on the use of AI in the workplace, which will make it mandatory for employers to inform and consult employee’s representatives about its implementation and use.
The centre-left in the European Parliament would like to go further and is calling for laws to limit the depth of sub-contract supply chains, while the European Trade Union Confederation wants a law to prevent businesses from relocating operations either within the EU or outside of it.
Now, I am far from convinced that all these laws will deliver what they set out to deliver. Some of them are grounded in the belief that if you pass a law, especially laws that touch on collective issues rather than laws that give new individual rights, socio-economic issues will magically be resolved. They won’t but this is a discussion for another day.
But the point I want to make in this piece is the extent of the “silent divergence” on labour and employment law that is happening between the EU and the UK. It is not that the UK has scrapped any of the existing EU-derived laws on its statute book. There may have been a bit of tinkering here and there, but nothing fundamental.
But as the EU pushes ahead with new laws, the gap with the UK becomes wider. The opening of such a gap would probably have been welcomed by the former Conservative government. After all, an intense dislike of EU labour law was always a driving force in the growth of Eurosceptism. Remember the UK government’s attempt to scupper the Working Time Directive back in the early 90s, a law which for the first time ever gave workers in the UK the legal right to annual holidays?
But a widening employment and labour law gap between the UK and the EU might be a more sensitive issue for a Labour government, especially if European political actors begin making something out of it. How long before the centre-left in the European Parliament starts asking questions?
Labour has said that it wants to improve on the Johnson/Frost Trade and Cooperation Agreement with the EU to “Make Brexit Work”. The TCA is due to be reviewed in 2026, five years after it came into force.
You will see a lot of comments saying that the TCA will not be renegotiated in 2026. The review is simply to look at its implementation. But I have been too long in labour relations to know that there is no such thing as a simple “implementation” review. Once you start talking, the conversation can go anywhere. If one of the parties raises an issue, the other party has to respond. Problems simply cannot be ignored if the two sides are committed to making the relationship work.
So, for example, if the UK raises the issue of the mutual recognition of professional qualification, why would the EU not respond by asking about the level playing field of employment and labour law and whether the UK is still in alignment?
I, obviously, have no idea where these discussions might go. But once you open the box, Pandora is likely to go walkabouts.
As I have said before in these scribblings, Brexit is done. The UK is out of the EU. But that does not mean that the UK is free of the gravitational pull of Brussels. It never will be.
Labour will learn that lesson soon enough.