Since we published this article, the Labour party has updated its plans for reforming workers’ rights. For the latest position on what Labour is pledging to do if it wins the general election on 4 July 2024, see our UK election 2024 employment law reform tracker.

The next UK general election is required to be held by January 2025. While the outcome remains uncertain, the Labour Party continues to lead in most polls and is widely expected to form the next government.

In its 2021 Employment Rights Green Paper entitled ‘A New Deal for Working People’, Labour outlined a major package of proposed reforms which, if implemented, would represent the most transformational change to UK employment law in decades. While the party is still finalising the policy programme which will form its next manifesto, employers should start considering the potential implications for their operations.

With Labour’s stated ambition in the Green Paper to “update trade union legislation so it is fit for the modern economy and empower working people to collectively secure fair pay, terms and conditions”, this article focuses on Labour’s plans to reform trade union law and what that would mean for employers.

What are Labour’s proposals to reform trade union law?

Labour believes that “strong collective bargaining rights and institutions at all levels are key to tackling the problems of insecurity, inequality, discrimination, enforcement, low pay, and other issues identified in the Green Paper.” The proposals set out in the Green Paper include:

• Introducing sectoral collective bargaining across the economy by way of Fair Pay Agreements; and
• Updating trade union legislation by:
  • repealing the Trade Union Act 2016 and associated restrictions on industrial action;
  • simplifying the process of union recognition; and
  • creating new rights and protections for trade unions to undertake their work.

Labour has put forward these proposals in a period of heightened industrial action, with high-profile strikes recently taking place across the UK public sector, railway network and many private sector employers. In the second half of 2022, more than 2.4 million working days were lost due to industrial action in the UK – the highest rate since 1989. While the Conservative government has responded to this trend by seeking to introduce new legal restrictions on industrial action, Labour is firmly committed to increasing trade union power and influence.

As employment law (save for some matters) is devolved for the Northern Ireland Assembly to legislate on, these proposals relate to employment law in Great Britain. The current lack of a functioning Assembly and Government makes it impossible to predict with confidence what may happen in Northern Ireland regarding these proposals. However, previous experience suggests that the status quo will likely remain, with trade union law in Northern Ireland being different to that in Great Britain in several key areas, including in relation to notice periods before a strike can be called.

What are Labour’s proposals on sectoral collective bargaining?

Labour’s commitment to introduce sectoral collective bargaining is arguably the single most radical proposal in its 2021 Green Paper. The party has pledged to introduce “Fair Pay Agreements”, which would be negotiated between employers and unions on a sectoral basis, in contrast to employer-level and site-level negotiations, as is currently the norm in the UK when negotiations take place at all.

Labour believes that sectoral collective bargaining would set a minimum ‘floor’ on pay and conditions across entire industries, thereby “reversing the decades-long decline in collective bargaining coverage”. Recent government statistics indicate that in 2022, just 26.6% of employees in the UK – and just 13.1% in the private sector – were covered by a collective agreement, compared to 36% and 23.2% respectively in 1996.

Collective bargaining coverage rates are significantly higher in many of the European nations which have sectoral collective bargaining:

The Employment Rights Green Paper states that Fair Payment Agreements would be “binding”, in contrast to the status of most existing collective agreements which typically aren’t legally enforceable between employers and trade unions (even if their effects are legally binding between employers and their employees). It also suggests that sectoral collective bargaining would have a broad scope, covering work organisation, new technologies and diversity and inclusion, in addition to the topics of pay, hours and holiday currently required under the default method of statutory recognition.  

Beyond this, there is virtually no detail about how this new legal framework would be implemented, with Labour instead promising to ‘consult widely’ on its design and implementation. For example, basic questions remain unaddressed - such as which sectors would be covered, who would be entitled to represent workers or employers in a sector, how negotiating machinery and dispute resolution procedures would operate and how sectoral collective bargaining would interact with existing company-level negotiations.

However, press coverage suggests that Fair Pay Agreements may initially only be applied in a narrow range of sectors with low levels of existing collective bargaining. In particular, Fair Pay Agreements may only be piloted in the adult care sector in the first instance, with speculation that Labour may fall short of implementing its full proposals in government. If that’s correct, the introduction of sectoral collective bargaining may ultimately impact far fewer employers than the Employment Rights Green Paper indicated.

As its proponents frequently observe, sectoral collective bargaining is very common in many other European countries. Perhaps more relevantly, New Zealand – another common law jurisdiction with an established tradition of firm-level collective bargaining – has recently legislated to roll-out sectoral collective bargaining. In the run-up to the next general election, New Zealand’s early experiences under the Fair Pay Agreements Act 2022 could provide an invaluable insight into the future industrial relations landscape under a Labour government.

What steps should employers consider now to prepare?

While the practical impact of sectoral collective bargaining will heavily depend on the specific design of the legal framework, it is likely to mean that many employers would have to engage with trade unions for the first time, whether directly, or indirectly through employers’ associations. If implemented, advance preparation and planning will be critical for all employers in affected sectors.

The long-term decline of the trade union movement has meant that, in many organisations, HR teams have limited experience of industrial relations issues, as James Davies noted in his 2022 ‘Eight Drivers of Change’ report on the future of work. The prospect of a future Labour government may make it more important than ever for HR teams and professionals to up-skill in this area.

How does Labour propose to reform union organising and recognition?

Labour has called for reforms to increase levels of union membership and recognition.

Labour has stated that it will “simplify the law around statutory recognition thresholds”. At present, statutory recognition requires 10% of the workers in a proposed bargaining unit to be members of the union, a majority of those voting in a ballot to vote in favour of recognition and for that majority to represent at least 40% of all workers eligible to vote. Labour has indicated that it “will look at lowering the threshold”. It has also promised to consult on whether statutory recognition should automatically be granted where 50% or more of workers in a bargaining unit are members (despite there already being a statutory presumption for this). The practical impact of this proposed change may therefore be low.

Labour has also pledged to “strengthen trade unions’ right of entry to workplaces to organise, meet and represent their members and potential members, and to contact remote workers.” It has provided little clarity on what these proposals would entail. At present, unions have limited rights to enter workplaces to organise and recruit new members unless they are already recognised or access is ordered by the Central Arbitration Committee in advance of a statutory recognition ballot. It is plausible that these proposals could include a new ‘digital right of access’, as championed by the TUC.

The party has also indicated that it would “ensure there is sufficient facilities time for all trade union reps so that they have capacity to represent and defend workers, negotiate with employers and train.” While the Employment Rights Green Paper again does not clarify what this would mean in practice, it is possible that a future Labour government might seek to legislate to give lay trade union representatives minimum levels of paid time off for their union duties. The Employment Rights Green Paper also commits to strengthen union reps’ protection against unfair dismissal and union members’ protection against intimidation, harassment and blacklisting, but it is unclear precisely how a future Labour Government would reform the existing law in this area given the strong protections that already exist.

It remains to be seen whether this package of reforms would result in an increase in union membership levels. It is striking that trade union membership continued its long-term decline in 2022: even amidst the national backdrop of heightened industrial action and increased levels of publicity for unions and their agenda, the percentage of UK employees who were union members fell yet again, from 23.1% to 22.3% last year. Regardless of the intricacies of the legal framework its organising is subject to, the trade union movement faces a major struggle to prove its relevance to a new generation of young workers.

What steps should employers consider now to prepare?

At this time, employers may wish to focus on ensuring that their alternative ways of giving employees a voice in the workplace are effective and engaging. Traditional methods of employee engagement – such as employee forums – can be valuable tools for consulting staff in a more collaborative, flexible manner. Our Future of Work Hub considered the important role employee voice has to play in the evolving landscape of collective and individual voice in a recent podcast with Nita Clarke OBE, Director of the Involvement and Participation Association. However, digital technology is also increasingly opening up new and exciting opportunities for employees to share their views and concerns more directly with management.

What are Labour’s plans to update the legal framework governing industrial action?

Labour has indicated that it would seek to “update” the legislative framework which governs industrial action, on the grounds that “complex and often unnecessary legal requirements …. are holding back living standards and the economy.”

Most specifically, Labour has pledged to repeal the Trade Union Act 2016, which introduced new restrictions on industrial action, including longer notice periods, higher ballot thresholds for important public services and a six-month expiry deadline for ballot mandates. If the Strikes (Minimum Service Levels) Bill is enacted before the next election, Labour has also committed to repealing that legislation.

In addition, Labour has a long-standing commitment to allow electronic voting in industrial action ballots, relaxing the current requirement for union members to vote by post.

The Employment Rights Green Paper also contains a broader statement “the laws regulating industrial action should ensure that UK law complies in every respect with the international obligations ratified by the UK, including those of the International Labour Organization and the European Social Charter”. While seemingly anodyne, this is a broad statement with potentially far-reaching implications – in recent years, the trade union movement has sought to argue that much of UK industrial relations law is incompatible with international treaties such as ILO Convention 87 (on Freedom of Association and the Right to Organise). It is therefore possible that a future Labour government may contemplate a more sweeping liberalisation of the law governing industrial action than it has already outlined.

What steps should employers consider now to prepare?

Nevertheless, the practical impact of any of these potential changes also remains uncertain. While the Employment Rights Green Paper is strikingly critical of the UK for having “one of the most regulated systems of industrial action in the world”, the current legislative framework has not prevented the surge in strikes over the past year. As it is already rare for industrial action to be blocked on technical legal grounds, liberalising the rules on balloting and notice requirements may have less impact on UK industrial relations than its advocates hope.

What is the role of trade unions in the future of work?

The Employment Rights Green Paper also suggests new roles for unions and their representatives. For example, Labour has pledged to give recognised unions a right to approve the introduction of surveillance technologies in the workplace. It has also indicated that it would legislate to give trade union equalities representatives statutory rights in relation to discrimination complaints. Data privacy and diversity and inclusion are both issues that are central to debates around the future of work which might not typically be seen as traditional trade union priorities: together, these two policies are illustrative of the way in which a future Labour government is likely to look to give the union movement a more influential role in many facets of working life.

Demonstrating an ability to adapt to the rapidly evolving realities of work will be critical to the future survival, strength and relevance of trade unions. Over the last 40 years, trade unions have struggled to adapt to broad trends including deindustrialisation, the shift towards individual employment rights (including reforms such as the introduction of a minimum wage, which provides an alternative safeguard for the lowest paid in society to collective bargaining), and the increasingly fragmented nature of workplaces.

Unions are also now competing with a much wider array of ways in which employees can have a voice at work and in civil society in general. If unions are to remain relevant, they will have to show that they can deliver on the key concerns of their diverse membership – from training and skills to pay to climate change. This will include when their own vested interests conflict with those of wider society, which recently led to the GMB and Unite the Union criticising Labour’s proposal to ban new oil and gas expansion as part of addressing climate change, because of the ban’s potential impact on their members’ jobs. Nonetheless, it is notable that Unite the Union recently voted to remain affiliated to Labour, with its General Secretary stressing that it had done so as Labour ‘are in touching distance of power, if we leave we wouldn’t influence that power’. So, it would seem that, despite being elected on a platform of returning Unite the Union’s focus to workplace rather than political issues, Sharon Graham will in fact continue to engage with wider political issues and debates.

Ultimately, unions’ long-term futures are most likely to be determined by their ability to carry out internal cultural change and to focus on the evolving needs of their members, than external legislative reform. For example, a recent independent report into allegations at the TSSA trade union found a vindictive, misogynistic and mafia-like culture that condoned sexual harassment and bullying; whilst Unite the Union recently shared two independent reports on its construction of a hotel and conference centre with police after they uncovered very serious concerns about potential criminality. Living the values that they don’t hesitate to call on other employers to follow will be a crucial first step for these unions at least.

It therefore remains to be seen whether even the long list of reforms outlined in Labour’s Employment Rights Green Paper would be enough to provide for a lasting and significant role for trade unions in the world of work.