What are the new Labour government’s plans for trade union and industrial relations reform?

Alongside unpacking the final few boxes in Whitehall, the new government has wasted no time in setting out its priorities and legislative agenda. With a draft Employment Rights Bill included in the King’s Speech, together with the promise of new equality legislation, employers are now digesting what a Labour government means for them.

Prior to the election, the Labour Party set out its plans for a comprehensive overhaul of workers’ rights. Its manifesto and Plan to Make Work Pay (‘MWP’) detailed wide-reaching proposals for employment law reform which will impact employers of all sizes and across all sectors. For more details on Labour’s employment law proposals as a whole, check out our update.

With Labour’s reforms broadly falling into three themes, namely worker voice, individual rights, and equality, in this update we take a closer look at worker voice, and trade union and industrial relations reform.

The new government’s vision as regards worker voice and the role of trade unions is clear. MWP highlights the Party’s commitment to ‘Securonomics’- the goal of giving working people security in their day-to-day lives. Part of achieving this goal involves empowering working people to ‘take their voice back’. Whilst individual rights will also be bolstered, the new government clearly sees workers’ collective voice as an important mechanism for delivering ‘Securonomics’ particularly for more vulnerable workers who may not have sufficient bargaining power to advocate for themselves on an individual basis.

The new government’s vision is further mirrored in its manifesto which highlighted that the industrial relations reforms (and the separate proposal to create a Single Enforcement Body (aka a Fair Work Agency)) are designed to ‘strengthen the collective voice of workers’. MWP details plans to empower workers to organise collectively and remove what it describes as ‘unnecessary red tape on trade union activity’ with a view to ‘ushering in a new partnership of cooperation between trade unions, employers and government’. Whilst this may herald a markedly different approach for the UK, as we explore below, this will bring us more in line with other, otherwise comparable jurisdictions (particularly in the EU) when it comes to collective bargaining.

In terms of the implementation of this new approach, the briefing notes to the King’s Speech identify that the Employment Rights Bill (which has been promised within the government’s first 100 days in office) will address Labour’s proposals to update trade union legislation. Currently it is not clear whether this means the Bill will include all of the proposed amendments to trade union and industrial action legislation (as contained in MWP) or if some of these changes will be picked up in slower time.

The reforms range in scope and complexity – some are more contained and/or comprise procedural changes, others, in contrast, would break new ground and would represent important, structural changes to our industrial relations landscape. We discuss below some of the most noteworthy areas which Labour has pledged to address:

• Trade union recognition: In MWP, the Labour party indicated that it would simplify the statutory recognition process – the mechanism by which a trade union can secure the right to collectively bargain on behalf of a group of workers, where the employer has not voluntarily agreed to such recognition. Labour’s proposals include the relaxation of some of the points that a trade union must demonstrate to the Central Arbitration Committee (an independent government body with powers relating to collective workplace disputes) before its statutory recognition application can get off the ground.

  Another proposal relates to the final ballot of workers that takes place later on in the statutory recognition process – MWP details a plan to change the rules so that the union would only be required to achieve a simple majority in that ballot. In contrast, under the current rules, a union must have the support of a majority of those voting in the ballot and 40% of those in the bargaining unit.

  In addition, MWP includes a plan to ensure that gig economy workers and workers in other precarious sectors have a ‘meaningful right’ to organise through trade unions. This seems to be a move to combat the effect of a Supreme Court decision from last year, which found that Deliveroo riders are not in an ‘employment relationship’ for the purposes of Article 11 of the European Convention on Human Rights, and so do not have the right to form and join trade unions.

  It remains to be seen whether these changes would increase the number of recognised unions, but they could strengthen the trade union’s hand in voluntary recognition discussions. It will be interesting to see if this leads to more sophisticated, non-unionised employers proactively looking to implement different worker representation models as an alternative, potentially to head off and/or mitigate the risk of trade union recognition requests.

• Restrictions on industrial action: Industrial action, and particularly strike action, has been more commonplace over the last two years and Labour’s proposed changes in this area may make industrial action easier to call and quicker to organise. One of the pledges in MWP is to repeal two relatively recent pieces of industrial action legislation – the Trade Union Act 2016 and the minimum service level legislation introduced last year.

  The 2016 Act introduced a new requirement for a 50% turnout for an industrial action ballot to be valid. It also introduced restrictions on picketing and extended the minimum length of notice of industrial action that a trade union must give to an employer from seven days to fourteen and introduced a limit of six months on the duration of the industrial action, meaning that fresh notifications and ballots must be run after six months.

  The minimum service levels legislation introduced the option for employers in particular public services (such as health services and public transport) to identify workers who could be required to work during strike action in order to meet the service levels specified in regulations. These powers have not really been utilised by relevant employers on the ground so their repeal may not be too controversial.

• Electronic balloting: Labour proposes to introduce secure and private electronic balloting. E-balloting has been on the political agenda for some time – in 2016, the then government commissioned an independent review to look at this. The outcome, published in 2017, included a recommendation to carry out non-statutory testing to assess the reliability of e-balloting and test its vulnerability to a range of risk factors (including cyber security, hacking and manipulation risks). Subsequently in 2022, the government indicated that it had consulted on the issue with relevant organisations and would issue its response to this review in due course. No response has since been issued. The introduction of e-balloting will make ballots for calling industrial action easier, cheaper and speedier to run.
• Right to access: This proposal would grant trade unions new rights of access to workplaces for recruitment and organising purposes. Currently trade unions only have limited rights of access in particular situations (aside from where specific arrangements have been agreed in any collective agreement). Allowing trade unions access to the workplace with the specific aim of seeking to recruit members would represent a very significant step, albeit the government has committed to any such access being governed by a transparent framework and clear rules.
• Duty to inform: MWP also includes a proposed new duty on employers to inform workers at the outset of their employment (in their written statement of particulars) that they have the right to join a trade union, and to inform them of this right periodically on a rolling basis. It is unclear at this stage how often and in what way employers would be expected to inform workers of this right.
• Fair Pay Agreements: Another potentially significant proposal relates to the introduction of a ‘Fair Pay Agreement’, a sector-level agreement covering pay and conditions (including staff benefits, terms and training) negotiated between employers and unions. Proposals have been reined back so currently this is only proposed for the adult social care sector, but Labour has stated (in MWP and now confirmed in the briefing notes) that it intends to assess how and to what extent similar agreements could benefit other sectors.

  Sectoral bargaining would be a significant shift in approach from the current norm in the UK where collective bargaining typically takes place at individual employer level (with some notable exceptions). Contrast this to the situation in the EU where collective bargaining on a sectoral basis is commonplace – indeed a recent EU Directive has introduced a requirement for any member state with less than 80% collective bargaining coverage to introduce an action plan to promote collective bargaining and increase coverage. Interestingly, most of the EU jurisdictions with high levels of coverage operate collective bargaining at a sectoral or equivalent level. 

The new government’s vision seeks to give workers a stronger collective voice. If the proposed reforms proceed, collective representation will play a more prominent role in the coming years. However, it is worth noting that the bulk of the changes we have detailed here are structural and procedural changes. As we mention above, the government has stated that it wants to bring about a shift towards partnership working, with trade unions, employers and the government co-operating together. Is this an aspiration that it hopes to achieve through its procedural changes, or will we see more substantive changes made to move the dial towards greater co-operation? For example, MWP refers to ‘good faith’ negotiation and bargaining and, perhaps importantly, the briefing notes mention ‘ensuring industrial relations are based around good faith negotiation and bargaining’. Will we see a new legal requirement for unions and employers to negotiate in good faith borne out in draft legislation or will the government seek to bring about this cultural change in other ways? If it is a new legislative obligation, it will be interesting to see how this requirement is expressed and how the respective parties will be able to demonstrate that they have negotiated in good faith. The Employment Rights Bill may well tell us more.

Whilst we await further details, employers with trade union relationships currently in place (whether recognised or otherwise) should review those relationships to assess the likely impact of the reforms. Employers with no trade union relationships may wish to review the remit, constitution and efficacy of existing worker voice mechanisms and consider whether the establishment of a ‘worker voice’ forum (if one does not already exist) may be a good fit. It may also be worth considering whether managers and/or HR teams would benefit from training on industrial relations matters. 

If you would like to discuss how these proposals might impact your business or any of the issues raised in this update, please contact Luke Bowery or your usual employment team contact.

Disclaimer: This update gives general information only and is not intended to be exhaustive. Although we have taken care over the information, you should not rely on it as legal advice. We do not accept any liability to anyone who does relay on its contents.

This update was co-authored with Katie Wooller and Kate Redshaw.