APPENDIX 13
Memorandum by Popularis Ltd
EMPLOYMENT REGULATION, SMALL BUSINESSES AND
TRADE UNION RECOGNITION: A NEW TWO-TIER WORKFORCE
INTRODUCTION
1. On 6 June 2000 the recognition procedure
introduced by the Employment Relations Act 1999 was brought into
force. The procedure has been very successful and has led to a
significant number of new recognition agreements. A major concern
for a number of trade unions, however, is that the procedure does
not apply to employers who employ less than 21 workers. There
is no comparable exclusion in either of the two previous statutory
recognition procedures which operated in this country (in 1971
and 1975), and there is no comparable exclusion in any other major
western democracy.
2. The small business exclusion has a number
of consequences, not the least of which is that a large sector
of the workforce is denied the right to trade union representation
and the right to engage in collective bargaining. This in turn
has a number of implications for a range of issues including gender
pay discrimination, skills and training, and health and safety
at work. Yet the small business sector is a sector which is growing,
so that the impact of the small business exclusion is likely to
grow, particularly in light of the government's commitment to
the expansion of the number of small businesses. Unless this exemption
is removed, we will see the emergence of a new two—tier
workforce: one to whom trade union recognition applies, and one
to whom it does not.
SMALL BUSINESSES
AND EMPLOYMENT
LAW
3. The idea of thresholds for employment
rights is not new, though they have always been controversial
by focusing on the position of the employer rather than the rights
of the worker. The general rule has been that the law should apply
equally to everyone, and that workers are entitled to the protection
of the law regardless of the number of people they work beside.
But although employment rights typically apply to small businesses,
the small business is sector is characterised by low levels of
trade union membership, low levels of trade union recognition,
and low levels of collective bargaining coverage.
4. These low levels of worker representation
are paralleled by what has been referred to as the "weak
human resource policies, a high level of low pay and extensive
use of dismissal as a disciplinary device" in small enterprises.
Small businesses score badly on matters like low pay, equality
policies, and some aspects of health and safety, with the "rate
of fatal injury in small manufacturing workplaces . . . more than
double those in medium and large workplaces" (HSC, 2001).
Small businesses also score badly when it comes to employment
tribunal applications, where the sector has been over—represented.
SMALL BUSINESSES,
TRADE UNION
RECOGNITION AND
COLLECTIVE BARGAINING
5. Trade union recognition is a precondition
of free collective bargaining. The right to bargain collectively
in turn is recognised as a human right by a number of international
human rights treaties by which the United Kingdom is bound. These
include ILO Convention 98, which provides by article 4 that Measures
appropriate to national conditions shall be taken, where necessary,
to encourage and promote the full development and utilisation
of machinery for voluntary negotiation between employers or employers'
organisations and workers' organisations, with a view to the regulation
of terms and conditions of employment by means of collective agreements.
There is no qualification which says "except
in the case of small businesses" or "except in the case
of employers employing fewer than 21 workers".
6. The obvious implication of the small
business exclusion is that more than a fifth of the labour force
is denied the right to trade union recognition and representation
unless their employer agrees. 24,695 million employees are employed
by 1.2 million employers, and of these employees:
— 1.6 million are employed by employers
who have between 10 and 19 employees;
— 1.5 million are employed by employers
who have between 5 and 9 employees; and
— 2.3 million employed by employers
who have between 1 and 4 employees.
21.8% of the people employed are employed in
businesses employing less than 20 employees.
SMALL BUSINESSES
AND WOMEN'S
RIGHTS
7. The importance of collective bargaining
for women has recently been emphasised by the ILO in the following
terms:
The ability of women to exercise freely their
rights to join trade unions and have their interests represented
on a par with those of their male colleagues is vital to the achievement
of both gender equality and trade union strength. Not only should
women take their place at the negotiation table but gender issues
will have to be made more explicit during the collective bargaining
process to ensure that any agreement reflects the priorities an
aspirations of both women and men.
This concern that women should take their place
at the bargaining table is undermined by the small business exemption
in the statutory recognition procedure. This is partly for the
obvious reason that women like men will be excluded from collective
bargaining in a large number of cases. But it is also because
the exemption bears harder on women than it does men.
8. The exclusion of small businesses from
the trade union recognition procedure means that women are more
likely than men to be denied the right to have their trade union
recognised by their employer.
Table 1
MALE AND FEMALE EMPLOYMENT BY SIZE OF WORKPLACE
(PERCENTAGES)
| All | males
| females |
| No of employees: | |
| |
| 1 to 19 | 28.9 | 26.2
| 31.7 |
| 20 to 24 | 4.9 | 4.6
| 5.2 |
| 25 to 49 | 14.6 | 13.7
| 15.6 |
| 50 to 249 | 24.8 | 27.1
| 22.3 |
| 250 to 499 | 9.3 | 10.2
| 8.4 |
| 500 or more | 17.5 | 18.2
| 16.8 |
| No. of employees | 23,650,979
| 12,289,934 | 11,361,045 |
| Source: Labour Force Survey |
| | |
| | |
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Table 1 deals with the position in companies with 20 employees
or less. It shows that female employment in small workplaces is
higher than the average, and higher than male employment in small
workplaces. However, it conceals the fact that there is a higher
incidence of both female employment and small business employment
in some sectors more than others.
THE GENDER
PAY GAP
AND COLLECTIVE
BARGAINING
9. A continuing problem faced by women workers in the
United Kingdom is the gender pay gap which stubbornly refuses
to close. Recent figures suggest that the gender pay gap in Britain
is among the highest in Europe, at 19% for full time employees
and 41% for part time employees. The EOC has identified a number
of possible explanations for the position in the United Kingdom,
despite almost 30 years of equal pay legislation. One explanation
is the decline in collective bargaining coverage, so that less
than 1 in 3 workplaces is now covered by a collective agreement.
The exclusion of a quarter of the workforce from legislation giving
workers the right to trade union recognition cannot but be significant.
It is all the more significant for the fact that the trade union
representation deficit is highest among the groups excluded, that
is to say the small businesses.
10. But not only are women losing out on collective bargaining,
they are also losing out on some of the legal rights which arise
as a result of collective bargaining or which depend upon the
trade union being recognised. These rights include:
— the right to paid time off for trade union duties
and training in these duties, as well as the right to the disclosure
of information about the undertaking;
— the right to trade union representation on health
and safety matters, important because trade union representatives
are likely to have greater expertise and to have undergone training;
and
— the right to be consulted in the event of a business
transfer, with trade union representation likely to be more effective
than representation by a fellow employee untrained for such a
role.
There is in addition to the foregoing the right to make use
of the full services of union learning representatives who only
have the right to time off if their union is recognised. It is
not clear why the government should assume that women are prepared
to accept reduced access to skills and training opportunities.
THE PRACTICE
ELSEWHERE
11. An examination of the position in other countries
is striking for the fact that there is no parallel exclusion of
workers in small firms from the coverage of workplace protection
laws. All major industrial countries in Europe and beyond have
legislation providing for some form of worker representation.
So far as thresholds are concerned, some have no minimum threshold:
one worker is enough. Some require two or more for the purpose
of collective bargaining. Still others have a threshold before
various forms of workplace representation must be established.
But that threshold varies, and in no country is there an exclusion
of workplaces employing as many as more than 20 people.
11. The position in selected countries is as follows:
— In France it is compulsory to establish workers'
delegates in all enterprises employing at least eleven employees.
— In Spain workers' delegates must be established
in enterprises employing more than 10 workers and enterprise committees
must be established in enterprises employing 50 or more.
— In Germany and Austria the duty to establish a
works council applies in relation to enterprises with more than
five employees, though it is for the employees to take the initiative
to request the employer to establish a works council.
— In The Netherlands, "a representative body
of the employees has to be established if either the employer
or the majority of the employees so wish" in enterprises
with more than 10 employees.
— In the United States, there is no minimum threshold
of employees an employer must employ before an application is
made for recognition (or certification as it is called there)
under the statutory procedure.
— In Canada the position varies from Province to
Province. In two Provinces the threshold is two, and in another
the Act applies only to employers who employ at least three employees.
Otherwise there is no threshold.
— In New Zealand the position "based on the
principle that employees who wish to bargain collectively are
entitled to do so—presumably as long as there are two members
employed by the employer".
— In Sweden a trade union has "the right to
negotiate with an employer on matters which concern the relationship
between the employer and such members of the union who are or
have been employees of the employer". One member is enough.
SUPPORT BY
THE SMALL
BUSINESS SERVICE
13. British law on trade union representation is arbitrary,
discriminatory, and irrational, as well as inconsistent with international
law and out of step with the practice of other countries. So what
is to be done? The first step that government could take to address
the representation gap in small businesses would be to use its
resources to bring to the attention of small businesses some of
the benefits of collective bargaining. Although there is a large
recognition gap in small businesses, it is often overlooked that
there are many small businesses that do recognise a trade union.It
is also overlooked that small business growth does not simply
require entrepreneurs, but that it requires individual workers
who are also prepared to make investments and take risks. There
are steps that could be taken in the first instance without the
need for legislation.
14. The Small Business Service ought to promote the interests
of small businesses in a way that takes account of the interests
of the employee as well as the entrepreneur, and in a way that
has regard to government policy in other areas. These include
fairness at work, pay equity between men and women, reducing the
number of tribunal applications in an era of expanding employment
rights, promoting the training of the workforce, and giving workers
a voice in decision making. It is the responsibility of the SBS
to remind employers of these policies and the different ways by
which they can be effectively developed. A number of very simple
steps could be taken in the first instance by the SBS to discharge
what should be a duty to address the representation gap and the
employment practices in small businesses. These include:
— Investigation: conducting research into the performance
of companies which recognise a trade union. Although there is
a trade union representation gap in the small business sector,
there are many small businesses which do conduct collective bargaining.
Why do they do it, and what are the benefits?
— Dissemination: publishing information about the
results of research conducted about trade union representation
in small businesses. This would include explaining the different
benefits to small businesses where there is a recognised trade
union and collective bargaining.
— Partnership: working with public authorities (such
as ACAS), interested trade unions, and representative small business
organisations to increase understanding and awareness of each
others concerns, and to provide trade unions with an opportunity
to explain their role.
THE NEED
FOR LEGISLATION
OPTIONS FOR
CHANGE
15. In terms of government initiatives to deal with the
representation gap in the small business sector, it is thus important
to emphasise the role of government through agencies such as the
Small Business Service. But even though there is much that could
be done without changing the law, it is difficult to escape from
the fact that some kind of legal support will be necessary to
underpin a serious trade union role in the small business sector.
The most obvious solution would be to remove or reduce the threshold
so that more workers would have access to the statutory recognition
scheme. There are, however, other options which may also be pursued.
Three "alternative" options to the repeal of the small
business exception in the statutory procedure are as follows:
— Converting the right to be accompanied on grievance
and disciplinary matters into a right to be represented on all
matters relating to the employment relationship.
— Extending the range of existing national collective
agreements so that they apply to all the workers employed in an
industry including those in non union companies.
— Removing statutory restraints so that contractors
may contract with suppliers on terms that the latter recognise
a trade union or observe collective agreements.
16. But although there are a number of options for addressing
the small business exemption, they are not a full solution to
the simple expedient of removing the exemption altogether. The
case in favour of repealing the exclusion of small businesses
from the statutory recognition procedure is a strong one. It is
based on the following considerations:
— The exclusion is arbitrary, different from other
small business privileges in employment law, without explanation
or justification.
— The exclusion is irrational in the sense that
it reinforces poor employment practices and a high level of employment
tribunal complaints from the small business sector.
— The exclusion is contrary to the requirements
set by minimum international standards, which are legal obligations
binding upon the United Kingdom.
— The exclusion runs contrary to the concerns of
the ILO that steps should be taken to encourage rather than exclude
collective bargaining in small companies.
— The exclusion is discriminatory in its application
in the sense that it denies women more than men the opportunity
to engage in collective bargaining.
— The exclusion has discriminatory implications
in the sense that certain statutory rights are conditional on
the employee's union being recognised.
— The exclusion has discriminatory implications
in view of the fact that the gender pay gap is likely to be higher
where there is no collective bargaining.
— The exclusion has no parallel on the scale of
the British legislation in the workplace representation laws of
any other major country in Europe or North America.
ABOUT THE
AUTHORS
Keith Ewing is Professor of Public Law at King's College,
University of London. He is President of the Institute of Employment
Rights.
Anne Hock founded Popularis Ltd in December 2000. Popularis
Ltd is named in Statutory Orders as Independent Scrutineer for
the purposes of trades union ballots and elections, and as Qualified
Person for the purposes of trades union recognition and de-recognition
ballots.
The information provided in this evidence has been taken
from the report, "Trade Union Recognition is Small Enterprises"
by KD Ewing and Anne Hock (c) Popularis Limited. The report was
supported by the Trades Union Congress, and the unions Amicus,
GPMU, KFAT and UNIFI.
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