Britain’s new union law will reshape its workplace

FOR 40 years British workers have been deserting trade unions, a trend found across the rich world. But union officials express a striking optimism that the tide of history is turning. There may be a “massive spike in membership”, says Petros Elia, the general secretary of United Voices of the World (UVW), which represents cleaners, security guards and other precarious workers. “We’ve got more pull of workers wanting to organise than we’ve got the resources to deal with,” says John Chadfield of UTAW, which acts for tech workers. “There are opportunities to get into workplaces that have been difficult to reach in a generation,” says an official at a third union.

They are right to be bullish. The Employment Rights Act, a sweeping labour-market law brought in by the Labour government, cleared Parliament on December 18th, and will mostly enter into force later this year. Most attention has fallen on eye-catching new rights for individual workers, such as more generous sick pay and paternity leave. Britain has among the most employer-friendly labour laws in the OECD, a club of mostly rich countries, and overall the act will tighten them relative to its peers by a nudge, according to an analysis by legal academics at the University of Cambridge commissioned by the government (see chart 1).

The real action lies in a bundle of largely overlooked changes to Britain’s trade-union laws, which will make it easier for unions to recruit workers, bargain with employers and call strikes. By these metrics, the act shifts the law covering critical parts of union activity to roughly where it stood in the late 1970s, before the anti-union reforms of Margaret Thatcher (see chart 2). On this score, Britain jumps to the middle of the OECD pack. And the upshot, in the words of the government, is a “transfer of power from employers to workers”.

Employers may be caught napping. Many human-resources departments, particularly in professional services, have little experience of negotiating with trade unions, says Sarah Henchoz, the global head of employment law at A&O Shearman, a law firm. Others incorrectly assumed Labour’s plan would be watered down. “I’ve been saying to clients: ‘You’re not going to be able to stop this. You’re going to have to find a way to work with it.’”

Unions will be able to formally request that they are let into a workplace to recruit members and set up branches. They will also be able to contact workers digitally. (Firms that refuse must show to a tribunal why it would “unreasonably interfere” with their business.) Employers must periodically tell workers of their right to join a union. For organisers, it changes the game: meeting workers in the first place is half the challenge. “You’ve basically just got to hang around on street corners,” says Mr Elia, who launched UVW in 2014.

Unions will secure recognition (giving them the right to negotiate on pay and conditions) more easily. Currently, a union must show it has at least 10% of the workforce as members before a recognition ballot is held; this may be reduced to as little as 2%, pending a consultation. The act also scraps a clause requiring the support of at least 40% of the entire workforce, so ballots could be won by a simple majority on low turnouts. It makes organising easier in sectors like cleaning with a rapid churn of staff, say unions. The risk is that workers get represented by unions they don’t support. Stealth campaigns will be easier. “We can get 20 to 30% [support for unionisation] under the radar, without the company knowing, and present the employer a fait accompli,” says one organiser.

Strikes will be easier too. Ballots can be by email, rather than post (pending a consultation). A requirement for a turnout of at least 50% (and the support of 40% of an entire workforce in some public services) will also go. Nor will unions need to send officials to supervise pickets. Constraints on raising money from members for political lobbying and donations will be eased, and the power of the state regulator to probe rogue unions weakened. The unions had a big hand in drafting the law, and are happy with their work.

Which workplaces to target first? Unions are scouring their records of “brownfield” and “greenfield” companies (as well-trodden and unfamiliar employers are known). Their priority is the private sector, where union membership has fallen to just 12% (compared with 50% in the public sector). Outsourced suppliers of cleaning and catering are a big target for several unions.

Equity, an actors’ union, aims to expand from theatre and TV into advertising, voice-overs and video games, says Dugald Johnson, its policy officer. It wants greater control over how actors’ likenesses can be repurposed with artificial intelligence. Care homes, characterised by low pay and long hours, are a target for several unions. Mr Chadfield of UTAW says: “All the big tech companies that pop into the head of your readers, we are at some stage of negotiation with.” Mr Elia wants to expand UVW’s reach in hotels: he hopes that the lowered threshold will put entire chains rather than individual premises in scope.

Until now, many companies have sought to defeat recognition bids. But with the law tipped in unions’ favour, some executives advocate a new strategy of seeking out more moderate unions, which are slower to strike and less agitated by issues such as Gaza. Better to recognise a co-operative union today than be forced to recognise a militant one tomorrow.

The challenge for employers, says Ms Henchoz, is that more powerful unions will magnify other changes in the act. That will make restructuring a company more risky, and mergers more complicated. Employers now face uncapped damages for unfair dismissal, higher penalties for collective redundancies without proper consultation and tougher restrictions on how employers can change workers’ contracts. “Employers are now beginning to get quite nervous,” says Ms Henchoz. “They thought they had generous redundancy packages, but people might decide litigation is a better option if they’re backed by the union.” One union official said they hope to inflict “punitive” damages on firms to compel them to change their behaviour.

For years, British governments have hewed to the logic that a light-touch labour market brings investment and low unemployment. This Labour one turns this on its head, and argues that it has been a flaw rather than a strength that has produced low-wage work and fuelled populism.

But the government’s own economic assessment is a finger-in-the-air exercise. It is possible the act will mean fewer strikes, it says; but equally, it might bring more. Maybe, it muses, workers will be happier and healthier, and therefore more productive. The effect on investment is “ambiguous”. Much is scored as “uncertain”.

A more honest assessment would state the dangers plainly: that the act could chill hiring at a time when the labour market is already softening, and dent Britain’s attractiveness as a place to do business. It is a grand experiment at rendering the labour market a little less American and rather more European overnight. Where it leads is in the hands of the unions. ■