Regulation of Industrial Relations in the UK - Essay Example

Introduction Management and staff and those with whom they associate with are the parties that are directly interacting in industrial relations. Even so, the state is an important third party in the matrix of industrial relations. The state’s role is typically manifested by the passing of law and the implementation of policies that impact how management, staff and unions relate and by doing so regulate industrial relations (Rollinson & Dundon, 2007). Up to the 1950s the UK state’s role in industrial relations was characterised as involving minimum intervention (Kahn-Freund, 1969). However, since the end of the Second World War, the UK state has increasingly intervened in industrial relations. It is fair to state that given the increased intervention by the UK state in industrial relations it is reasonable to conclude that there has been a determined shift away from voluntarism relative to collective bargaining agreements toward state intervention in supporting some minimum standards within the employment contract. The government or state’s intervention has moved toward a more active role in regulating the relationship between employee and employer and working conditions in the UK. This paper demonstrates the UK state’s shift from voluntarism to actively supporting minimum standards within the employment contract by tracing state intervention and the methods by which state intervention has been utilized. UK Intervention in Industrial Relations Overview In general states intervene in industrial relations in a variety of roles and capacities. They may intervene as an employer or as a supervisor or regulatory agent for income and price setting. States may also intervene as the economic management, or for the protection of standards. States intervene in industrial relations as legislators and rule-makers. States may also intervene in industrial relations in an attempt to establish and promote the parameters of social order (Hyman, 2009). Historically, the UK has operated as an employer in its own right signifying private employers should follow the state’s example in how it treats its employees. As a result for this approach to employment principles, it was expected that employees in the public sector would seek to avoid tensions and conflicts in the workplace (Rollinson & Dundon, 2007). The UK has also intervened in employment relations by virtue of its capacity as a regulator of income. After the Second World War, UK governments have found it necessary to manage and regulate both prices and wages for the purpose of avoiding or responding to inflation. For instance in the 1970s the UK’s government engaged the input of employers and union members with the aim of establishing policies for nationwide income. During the 1980s, the Conservative government while rejecting the idea of controlling the market, established price controls and wages in subtle ways. For example, interest rates were manipulated as was government spending for regulating wage increases for workers in the public sector (Rollinson & Dundon, 2007). The UK has also intervened in industrial relations in its capacity as economic regulator. In this role the UK adopts macro-economic policies relative to supply and demand and fiscal matters that have consequences for the labour sector and the use of workers. For instance, the government may implement incentives for the unemployed to return to work or by introducing work exchange programs that will connect those who are looking for employment with those offering opportunities to work. As economic regulator the state may also implement measures to encourage “labour mobility” (Rollinson & Dundon, 2007. P. 171). One method of implementing labour mobility strategies is the provision of training programs in an attempt to respond to a shortfall in talent on the labour market (Rollinson & Dundon, 2007). The government’s role as economic regulator or manager characterizes the state’s stance with respect to “labour decommodification” (Holden 2003, p. 303). According to Holden (2003): Decommodification occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market” (p. 304). Labour decommodification occurs when the state finances “welfare protection” so that employees are not entirely relying on employers to survive. This is particularly so in times of economic downturns and high rates of unemployment (Rollinson & Dundon, 2007). The state may also intervene in industrial relations in its capacity as protector of minimum employment standards. The UK’s minimum standards within the employment contract have existed for some time, but in different degrees. For instance in 1920, the UK government enacted the Employment of Women and Young Persons and Children Act. The 1920 Act set an age minimum for the employment of children under the age of 18 and mandated that all children and young persons employed at the age of 14 should be documented in a public register so that government officials could inspect the workplace with a view to ensuring that children and young persons were not exploited in the workplace (Employment of Women and Young Persons and Children Act 1920). Legislation designed to protect workers and their rights accelerated during the 1970s. At this time protective measures were implemented to establish what amounted to or constituted unfair dismissal and for prohibiting discrimination on the basis of race and for ensuring equal pay for equal work. Specialized agents were also establishes during the 1960s and the 1970s. Some examples were the Equal Opportunities Commission and the Health and Safety Executive. By the year 2000, these agencies were expanded and the Low Pay Commission was established (Rollinson & Dundon, 2007). In its role as legislator, the state’s intervention is “most visible” (Rollinson & Dundon, 2007, p. 171). In this regard, employment legislation has three primary functions. First, legislation sets standards of ideal employment relations by establishing repercussions for those who do abide by the statutory standards for good employment relations (Deakin, 1986, p. 226). For example Section 199 of the Trade Union and Labour Relations (Consolidation) Act 1992 establishes that the Advisory, Conciliation and Arbitration Service (ACAS) may set out codes of practices for which employers are bound. ACAS also has the authority to revise any codes of practices that it establishes from time to time (Trade Union and Labour Relations (Consolidation) Act 1992, Section 199(4). Secondly, as legislator and rule-maker, the state may perform a restrictive function. In a restrictive capacity, states may make it illegal for specific workplace practices. For example, child labour and discrimination have been outlawed by legislators in the UK (Deakin, 1986). Thirdly, the state legislators may serve as a regulator. As regulator, legislators may create and enforce minimum standards for all of its residents. For instance, the UK has established and maintains minimum wages for all workers in the UK (Deakin, 1986). The state may also intervene in industrial relations under the auspices of the promotion of social citizenship. Social citizenship agendas typically involve increasing democratic participation of all citizenships and this extends to having a voice within the workplace. The promotion of stakeholder theory has encapsulated the idea of social citizenship. Under stakeholder theory, employers have an obligation to safeguard the rights of the broader class of stakeholders and not merely shareholders. The broader class of stakeholders include employees (Rollinson & Dundon, 2007). In fact, pursuant to the Companies Act 2006, directors have a duty to consider the interest of its employees when making a corporate decision (Companies Act 2006). The extent to which the government intervenes in the methods explained above have changed considerably over time in the UK. For example, the UK functioning as model employer has declined over the years, particularly in the 1980s and 1990s when privatization intensified (Rollinson & Dundon, 2007). When the Labour government was elected in 1997, the UK state intensified its function as protector and legislator/rule-maker and these efforts were largely promoted by the European Union’s expansion of the rights of employees (Rollinson & Dundon, 2007). The next section examines the UK’s voluntarism and its progressive shift toward active intervention in the employment contract. Voluntarism Voluntarism envisages that the relationship between the employer and the employee is properly established via consultation and negotiations between the employer and the employee representatives which are typically trade unions (Wynn-Evans, 2007). This is typically referred to as collective bargaining (Clark, 2000). Some degree of voluntarism persists in contemporary industrial relations. As Clark (2000) notes: Employers may unilaterally determine workplace rules over reward motivation, training and employer control, with or without formal codification (p. 92). However, other aspects of codification are not aligned to the concept of voluntariam. For example, rules relative to unfair dismissal, discrimination and redundancy remuneration are outside of the unilateral powers of the employer (Clark, 2000). Despite the fact that government intervention in industrial relations have intensified, some aspects of voluntarism remain embedded in UK’s industrial relations. As Clark (2000) explains: A central characteristic of UK industrial relations is the extent to which institutions remain and reflect a historically embedded process of particularization that structures the UK state. Employer associations, trade unions and collective bargaining or unilateral employer regulation are institutional mechanisms that express the process of regulatory delegation from the state to the central parties in the employment relationship (p. 92). In this regard, voluntarism which is essentially freedom from state intervention has never been entirely autonomous in UK industrial relations but has always been present in different degrees (Traxler, 1999). According to Clark (200) the UK’s pattern of voluntarism was practically “institutionalized” during the 19th century and after the Second World War became subject to supplementation by “an extensive range of auxiliary legislation” (p. 92). In the UK, voluntarism during the 19th century permitted employers to regulate the employment contract and employment relations in a manner that they deemed appropriate. Likewise, once trade unions were established and acquired legal, political and economic recognition, they were permitted to negotiate and consult with employers about matters pertaining to the regulation of the employment contract and relations. Thus trade unions and employers consult on a collective bargaining basis (Clark, 2000). The focus on voluntarism and collective bargaining was exemplified in the 19th century when strike action on the part of employees was no longer criminal. However the general law of criminal conspiracy remained applicable to strike actions but by 1875 employees would no longer be liable to criminal conspiracy charges in relation to strike action. By 1906, strike action could no longer be the subject of tort or other forms of civil liability (Curthoys, 2004). Thus employees either by themselves or through trade unions were fully engaged in the employment contract in a way that exemplified voluntarism during the 19th century and remains a part of industrial relations in the UK today. The change toward government intervention and minimum standards in industrial relations in the UK is primarily aimed at curtailing the autonomy of the employer. Even so, there have been attempts to cultivate greater autonomy for employers and thus, attempts to return to greater degrees of voluntarism in UK industrial relations. For instance during the 1980s, Thatcher and Major “confined and curtailed access to legally codified rules on industrial relations” and went so far as to attack the “economic and political legitimacy of trade unions” (Clark, 2000, p. 93). Thus Thatcher and Major weakened the voluntarism of the industrial relations system by weakening the collective bargaining system. Clark (2000) explains that the assault on the legitimacy of trade unions was accomplished by: ...a substantial tightening of the legal definition of a trade dispute and the subsequent introduction of further legal prerequisites, such as correctly constituted and worded ballot, to secure immunity from civil liability in cases of industrial action (p. 93). Clark (2000) goes on to note that the government’s ability to accomplish this feat demonstrates how fragile legislative interventions as well as the fragility of voluntarism when there is determination to regulate programmes for “economic, institutional and political deregulation” (p. 93). The history of UK voluntarism and regression from voluntarism is a symptom of economic policies. Industrial relations are for the most part governed and regulated by reference to its economic benefits for the state as a whole. Even so the economic benefits of industrial relations are not the only factors influencing government intervention. Clark (2000) argues that “regulation and participation necessitate some form of industrial democracy in the employment relationship” (p. 94). For example measures toward reducing voluntarism in the post-war era were not designed to foster economic growth, but rather to cushion the effects of “economic decline” (Clark, 2000, p. 94). In the 1980s, the assault on the legitimacy of collective bargaining did not cushion economic decline, but rather intensified economic decline (Clark, 2000). Dickens and Hall (2003) argue that industrial relations in contemporary Britain demonstrate a marked decline in the voluntarism approach to the employment contract. This shift was intensified by the efforts of the Conservative governments of 1979-1997 and the Labour governments since 1997 and represents a virtual “demise of the voluntary system and the increasing juridification of industrial relations in Britain” (p. 124). As Dickens and Hall (2003) maintain: Voluntarism may remain a touchstone at the level of rhetoric, but it has ceased to be the keystone of British industrial relations (p. 94). When elected in 1997 and again in 2001, the Labour government significantly intervened in the employment contract by virtue of legislative intervention in the context of industrial relations. Legislative interventions not only introduced new statutory-directed details, but also changed the actual legal relationship between the employee and the employer. For example, legislative intervention included regulating pay which was domestic in nature and the regulation of working hours pursuant to European Union law (Dickens & Hall, 2003). For most of the 20th century, it was far more important for employers and trade unions to regulate the employment relationship through collective bargaining as opposed to legislative and any other form of government intervention. In other words, employers and trade unions had complete autonomy with the regulating of the employment contract as. This voluntarism was preferred by both sides. For trade unions, legislation simply meant “hostile intervention by the courts” in the event of an industrial dispute (Dickens & Hall, 2003, p. 125). Employees were determined to “avoid legislation that constrained their freedom to manage” (Dickens & Hall, 2003, p. 125). Voluntarism was not merely defined by a reduced role by legislators and the liberal functioning of the collective bargaining process between employers and trade unions/employee representatives. Voluntarism also involved securing “the extension and support of social regulation through collective bargaining” (Dickens & Hall, 2003, p. 125). Voluntarism also did not simply mean the complete absence of legislative intervention. Obviously some laws were necessary to support voluntarism. For example the abrogation of strike action as a criminal offence was necessary to fortify the collective bargaining process. This is because be decriminalizing strike actions trade unions and by extension employees gained leverage since they could organize industrial action and urge the collective bargaining process along (Dickens & Hall, 2003). Auxiliary legislative intervention was also necessary in certain circumstances. For example, the employment contract might have missed some entirely important terms and conditions of employment. This is particularly so for those terms and conditions not contemplated by the collective bargaining process (Dickens & Hall, 2003). Thus legislative provisions were introduced to account for protection and rights not covered by the employment contract. The necessary provisions would include minimum wages and the statutorily mandated working hours for women, children and young persons (Employment of Women and Young Persons and Children Act 1920). Other necessary legislative provisions were the provision of health and safety at work (Health and Safety at Work Act 1974). These laws were necessary to protect workers in specific industries and to safeguard against poor working conditions. Voluntarism was constrained however during the two World Wars when strikes were restricted as well as union action although these laws were repealed in 1946 (Dickens & Hall, 2003). By 1953 voluntarism was losing ground as the government introduced employment legislation that took away some measure of autonomy from the collective bargaining process. For example the Contracts of Employment Act 1963 was introduced and provided for a minimum period of notice of termination which was required to be in writing (Contracts of Employment Act 1963). The Redundancy Payments Act 1965 was introduced providing for compensation packages for employers who were terminated as result of economic issues (Redundancy Payments Act 1965). Even so, these legislative interventions did not have much of an impact on industrial relations and so voluntarism continued to be practiced through the collective bargaining contract (Dickens & Hall, 2003). The legislative interventions created minimum standards for the contract of employment but did not prevent continued negotiations between employers and trade unions (Dickens & Hall, 2003). According to Dickens and Hall (2003): It was the nature of the employment law reforms introduced by Conservative governments between 1979 and 1997 which constituted a decisive shift away from voluntarism. The long-standing public policy view that the joint regulation of the employment relationship through collective bargaining was the best method of conducing industrial relations was no longer accepted (p. 127). Law was systematically used by the Conservative government to contain Union activity. The result was the curtailing of the legal rights of unions and the enhancement of employer powers and freedoms (Dickens & Hall, 2003). However, with the influx of European Union directives and the election of the Labour government in 1997, voluntarism took another hit, but this time it curtailed the strength of the employer and strengthened the position of the union. It therefore follows that voluntarism has almost entirely been obliterated from industrial relations in the UK. Conclusion The history and development of industrial relations in the UK demonstrates that voluntarism and state intervention has changed hands from time to time. Initially, the state allowed employers to determine unilaterally who they wished to tailor the employment contract. However, gradually employees via trade unions were allowed to negotiate the terms and conditions of the employment contract. By the end of the 19th century, voluntarism was entrenched in the UK’s industrial relations system. However, just as voluntarism was gradually introduced via the collective bargaining process, it has gradually declined as a result of government intervention. The Conservative government shifted the balance of power to the employer by weakening the strength of unions. The Labour government shifted the balance of power from the employee/union and weakened the position of the employer. Thus, voluntarism is virtually non-existent in the UK and state has taken a more active role in the regulation of the employment contract. Bibliography Clark, I. 2000. Governance, the State, Regulation and Industrial Relations. London, UK: Routledge. Companies Act 2006. Contracts of Employment Act 1963. Curthoys, M. 2004. Governments, Labour, and the Law in Mid-Victorian Britain: The Trade Union Legislation of the 1870s. Oxford, UK: Oxford University Press. Deakin, S. 1986. “Labour Law and the Developing Employment Relationship in the UK.” Cambridge Journal of Economics. Vol. 10(3): 225-246. 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