New Deal talking points: what will Labour’s trade union reforms mean for non-unionised employers?

While the Labour Party has dropped some of the most radical plans to expand and empower the trade union movement, its New Deal for Working People nonetheless includes a long list of measures to increase trade union rights. As a result, now that Labour has won the general election, we could see a significantly more pro-union legal framework than was in place under the last Labour government between 1997 and 2010.

The impact of some of Labour’s proposals may be relatively confined to specific and traditionally unionised sectors. This is true, for example, of Labour’s plans to repeal restrictions on industrial action under the Trade Union Act 2016 and the Strikes (Minimum Services Levels) Act 2023 and its promise to pilot sectoral collective bargaining in the social care sector.

Many of Labour's planned reforms, however, could affect all employers in every sector. In this article, we explore five key areas where non-unionised employers could see a material difference.

1. Expanded union rights to access workplaces

Labour has promised to introduce “rights for trade unions to access workplaces in a regulated and responsible manner, for recruitment and organising purposes”. The party plans to legislate to establish “a transparent framework and clear rules… that allow unions officials to meet, represent, recruit and organise members, provided they give appropriate notice and comply with reasonable requests of the employer.”

At present, trade unions have no general right to enter workplaces to recruit and organise members. There are limited exceptions where an employer voluntarily agrees access arrangements (for example, under the terms of a collective agreement under which it has already agreed to recognise a union) or when the Central Arbitration Committee (CAC) orders access in advance of workforce ballot as part of a statutory recognition application. However, the trade union movement has long complained that this position has hamstrung its ability to recruit and represent new members and contributed to Britain’s falling levels of trade union membership over recent decades.

Labour has provided little tangible detail about the new rights of access which it would grant to unions and their representatives, so we await further information. However, it is notable that the New Deal for Working People does not refer to union officials requiring any consent from employers to visit workplaces – it only refers to the need to give notice and comply with employers’ reasonable requests.

One model Labour may potentially look to follow is New Zealand’s, where reforms in 2018 by the then-Labour Party government gave unions a new right to enter workplaces during working hours to conduct ‘union business’. No employer consent is needed in workplaces covered by a collective agreement or where negotiations over union recognition are ongoing. In other workplaces, employers cannot unreasonably withhold consent. These rules give union officials significant freedom to enter workplaces to meet with employees, recruit new members and mobilise campaigns. If similar measures are adopted in the UK, they would give unions major new rights, particularly in relation to non-unionised workplaces where they do not currently enjoy any rights of access.

It is also plausible that these legislative reforms may include a new so-called ‘digital right of access’, designed to help unions adapt to the realities of 21^st century communications and contact hard-to-reach workers in the gig economy and other sectors. For example, the TUC has long called for legislation to require employers to forward unions’ electronic communications to workers, and to provide a digital notice board on which unions’ materials can be displayed. These measures would be likely to raise significant practical challenges for employers, but we again await further detail from the Labour government in due course.

These changes would sit alongside a new requirement to state in workers’ written statement of particulars that they have a right to join a trade union and to remind them of this on a ‘regular basis’. In isolation, this modest change seems unlikely to have a major impact on industrial relations, but, taken together with the new rights of access, is intended to help unions increase their membership and influence.

It’s unclear whether these changes will be enough to result in a major increase in union membership and support unless unions are also able to prove their relevance and offer value to workers. It is also unclear whether unions will have enough officers available meaningfully to exploit these new rights, or whether they will be of most use in the context of unionisation campaigns that would have taken place in a different form in any event. Nonetheless, the trade union movement is likely to regard its new rights of access as a major victory and employers will need to be ready.

2. Collective Grievances

Labour’s New Deal for Working People includes a commitment to “enable employees to collectively raise grievances about conduct in their place of work, to ACAS”.

Labour has provided little detail about this proposal but it appears to envisage extending the existing framework under the ACAS Code of Practice on Disciplinary and Grievance Procedures to apply to collective grievances raised by multiple employees on matters of common concern. Procedures of this kind for managing collective grievances are already a common feature of collective agreements where employers voluntarily recognise a trade union, but there is currently no general legal requirement for employers to adopt a similar procedure.

However, it is puzzling that Labour call for collective grievances to be referred to ACAS, rather than to employers (as is the case for individual grievances). It is unclear whether this is simply an oversight or if Labour wish to introduce a more formal process for resolving collective grievances.

Collective grievances would not necessarily have to involve trade unions – they could be organised by employees themselves acting as a group. It seems reasonably likely, however, that Labour would also give employees a new statutory right to be accompanied by a trade union representative when raising a collective grievance. At present, employees have a statutory right to bring along a trade union representative to a grievance hearing, even in non-unionised settings.  But there is no legal right to a collective grievance hearing at which a union representative could address the employer. In theory, a group of employees could raise the same grievance individually and invite a trade union representative along to each individual hearing to represent them and make the same submissions, but this is not common in practice. Under Labour’s plans, it seems likely that this position will change so that employees will gain both a right to make a collective grievance and a right to have a trade union representative involved in making their arguments.

3. Collective Redundancy Consultations

Labour has also promised to “strengthen redundancy rights and protections”. While the party has again provided little clarity over what precisely this may mean, the one specific area in which it has provided more detail is in relation to collective redundancy consultation obligations, where it has suggested that these would apply by reference to “the number of people impacted across the business rather than in one workplace.”

Under the current law, employers are required to collectively consult employee representatives where they are proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. The landmark Woolworths case confirmed that ‘establishment’ essentially means ‘site’ or ‘workplace’ – i.e. the place to which employees are assigned to work. On the facts of that particular case - which concerned the collapse of Woolworths and the closure of all of its stores - the result was that employees of the smaller Woolworths stores did not count towards the numbers. It appears that Labour intends to amend the law to overturn the Woolworths decision, adopting a more holistic definition of ‘establishment’, such as applying thresholds across a corporate group or removing this concept of an ‘establishment’ from the law altogether, which would require employers to carry out an increased number of collective redundancy consultations in future.

The TUC has recently called for several additional changes, including (i) removing the 90-days’ pay cap on protective awards for breach of collective consultation obligations; and (ii) extending the period consultation must start before making 100 or more redundancies from 45 to 90 days. It’s currently unclear if Labour will take those additional ideas forward.

4. Fire and Re-Hire

Labour remains committed to “ending” the practice of ‘fire and re-hire’, in which employment terms and conditions are changed by way of dismissal and re-engagement, typically where it has proven impossible to obtain employee or union consent to the changes.

Labour has also specifically pledged to replace the statutory Code of Practice on Dismissal and Re-Engagement, which is due to come into effect on 18 July 2024 (we have written about this here).

We await further information about how this will be implemented, particularly as Labour has stated that employers will still be able to “restructure to remain viable, preserve their workforce and the company when there is genuinely no alternative”, provided they follow a proper consultation process. At the very least, Labour’s plans would require a strengthening of the current law on unfair dismissal, which only requires employers to show a “substantial reason” for changing terms, rather than demonstrating that there is no alternative way of ‘remaining viable’.

While we await a public consultation on these reforms, any use of ‘fire and rehire’ is likely to carry even greater reputational risks than before, and employers should be careful to properly explore and exhaust alternatives before deciding to implement the practice, as well as to comply with the Code once it has come into effect. 

5. Simplifying Statutory Trade Union Recognition

Labour has pledged to “simplify” the process of unions applying for statutory recognition, by lowering the thresholds of support which unions are required to satisfy.

At present, statutory recognition initially requires 10% of the workers in a proposed bargaining unit to be members of the union and for a majority of the bargaining unit to be likely to support recognition before an application will even be considered by the CAC. Following that, recognition only follows if 50% of the bargaining unit are members of the union or, if that is not the case and so a ballot needs to be held, a majority of those voting in the ballot vote in favour of recognition and that majority represents at least 40% of all workers who were eligible to vote.

Labour has said these thresholds present “too high a hurdle in modern workplaces that are increasingly fragmented”. It proposes to remove the requirement for unions to show that at the outset of submitting a statutory recognition application to the CAC that at least 50% of workers are likely to support recognition. It also proposes to remove the additional requirement for 40% of all eligible workers in the bargaining unit to have to vote for recognition.

These reforms would be incremental changes rather than a more fundamental overhaul of the legal framework for statutory recognition – Labour has not, for example, proposed changing the scope of default collective bargaining rights granted to unions which do succeed in securing statutory recognition.

However, these changes would make it far easier for unions to secure recognition, particularly in combination with the new rights of access also promised by Labour. For example, unions would no longer need to conduct petitions to indicate likely workforce support to surpass that initial test for their applications to be admissible. We may well also therefore see an increase in the number of employers having to respond to statutory recognition applications from unions in the coming years (albeit from a relatively low base – on average, only 50 applications have been made to the CAC per year over the last three years).

The removal of the 40% threshold may create particular risks that, where turnout in statutory recognition ballots is very low, a committed minority of employees could be able to secure recognition against the democratic will of the wider, albeit apathetic workforce. For example, 11% of employees who are members of a union could secure collective bargaining for an entire workforce if they all vote for recognition, 10% of employees vote against recognition and the remaining 79% of employees abstain from voting at all.

Conclusion

Employers which have not previously had to engage with unions will need to be prepared for these new rights. It will be more important than ever for employers to adopt proactive industrial relations strategies, ensuring that they have effective ways of engaging their employees and addressing workforce concerns. Non-unionised businesses should also consider rolling out training and resources for managers and HR teams on dealing with unions, to help them manage challenging situations and to mitigate the potential risk of union victimisation and other legal claims. Many managers, HR and in-house legal teams have very limited experience of dealing with trade unions and may need upskilling in this area.

The last Labour government introduced several pro-union reforms, including the current statutory recognition framework. Keir Starmer’s new Labour government intends to build on those reforms and to go further in strengthening the rights and potential influence of trade unions in the workplace. However, trade unions will need to prove their relevance and value to the modern workforce in order to translate these legal reforms into a lasting increase in their membership and negotiating power. Workplaces have evolved since the heyday of trade unionism in the 1970s, and many employers now offer a variety of ways in which employees can have a collective voice at work, from employee resource groups through to employee forums and other channels. It will be down to the trade union movement to see if they are able to make the most of Labour’s reforms, but there is clearly scope for these proposals to add up to a significant shift in the legal and industrial relations landscape.

For more analysis of Labour’s plans and other articles in our talking points series, visit our Labour Policy Impact Hub.