Memorandum by the TUC
INTRODUCTION
The Trades Union Congress (TUC) has 63 affiliated
unions, representing nearly 6.5 million people working in a wide
variety of UK industries and occupations. The TUC welcomes the
opportunity to participate in the Sub-Committee's Inquiry on the
EU Green Paper on Modernising Labour Law. The TUC's submission
to the EU Commission is attached.
1. How flexible is the labour market in the
UK? What could be the benefits of making it more flexible, and
how could this be achieved? In which ways, if any, could changes
in labour law help with this?
The TUC believes that labour law should be improved
to provide protection for workers against arbitrary and unfair
practices by employers and to assist organisations to adapt to
the changing pressures arising from increased globalisation. We
do not share the assumption set out in the EU green paper that
improved employment levels and labour market dynamism and innovation
are dependent upon the increased use of atypical forms of employment
and a weakening of employment protection, in particular dismissal
protections.
Experience from the UK shows that such views
are based on assertions rather than evidence. Between 1997 and
2005, employment growth in the UK occurred against the backdrop
of a partial re-regulation of the labour market, including strengthened
unfair dismissal protection. The vast majority of new jobs created
during this period were in permanent employment. Independent research
also demonstrates that there is no negative correlation between
employment protection legislation and employment levels, innovation
or productivity.
Rather labour law can play an important role
in removing barriers which prevent disadvantaged groups from participating
fully within the labour market. Enhanced maternity leave entitlements,
combined with equal treatment rights for part-time workers, have
assisted in increasing female labour market participation in the
UK. Similarly, the minimum wage has led to an increase in productivity
by incentivising spending on improvements in recruitment/retention,
training and IT.
Collective bargaining and effective worker participation
play an important role in building high trust, high skilled workplaces
which are equipped to respond to the rapidly shifting challenges
generated by increased globalisation. Joint working between unions
and employers brings benefits in terms of increased working time
flexibility. It can also contribution to innovation and to promoting
"functional" flexibility, through increased investment
in training enables employees to adjust their skills to match
the demands of changes in technology and workload.
The TUC believes changes to labour law are needed
to further enhance labour market productivity and flexibility.
These include measures to encourage collective bargaining and
worker representation; improved rights for all workers to work
flexibly and improved protections for agency worker and other
vulnerable groups.
2. What is the extent of employment security
in the UK? What could be the benefits of changing the present
arrangements for employment security? In which ways, if any, could
changes in labour law help with this?
Employment insecurity is widespread. Although
the UK has one of the best records unemployment in Europe, we
have one of the worst records as regards the share of inactive
people of working age who say they want a job. In 2004, the UK's
want-work rate was estimated at 11.5 per cent, or 7 per cent higher
than the official ILO unemployment rate. This is the fourth highest
rate in the EU. Job insecurity and financial insecurity are also
prevalent among so-called "atypical" workers. However
vulnerability and insecurity is not limited to those on non-standard
contracts. The costs and risks associated with increased globalisation,
including restructuring, contracting-out and plant closures have
led to pressure for increased flexibility, have also been experienced
by those employed on permanent contracts.
The TUC believes that a range of labour law
and welfare reforms are needed to address the problems of employment
and job insecurity. These include:
— Improved employment protection for
agency workers and those employed in non-standard employment.
— A substantial increase in statutory
redundancy payments entitlements.
— Reforms to information and consultation
arrangements in cases of collective redundancies and insolvencies
to ensure that early and meaningful discussions take place between
employers and trade unions and worker representatives.
— Enhancements in welfare benefits
for job seekers.
3. How helpful do you think is the Commission's
concept of "flexicurity" seeking to combine the ideals
of a flexible labour market with those of employment security?
How practical could it be to strike a balance between these two
ideals and where should such a balance be struck? In which ways,
if any, could changes in labour law help with this?
The TUC has concerns about the concept "flexicurity"
as defined by the Commission in the green paper. The paper appears
to reduce the "flexicurity" agenda to the issue of labour
law reform and increased "numerical flexibility" through
external contractual flexibility and the increased use of atypical
forms. Reducing dismissal protection would result in increased
in job insecurity and job satisfaction with its consequential
effects on worker motivation, innovation and productivity levels.
In seeking to improve flexibility, to generate better quality
jobs and to ease labour market transitions, the Commission should
focus on positive measures such as improved education and life-long
learning, generous social protection and measures to improve the
reconciliation of work and private life.
There are also important lessons which may be
learnt from those Nordic economies where the concept of flexicurity
originated, notably Denmark. The Danish model of flexicurity combines
generous social protection arrangements with comparatively strict
employment protection measures. The development of flexicurity
models also coincided with a highly developed social dialogue,
where social partners have played an essential role in negotiating
the balance between flexibility and security on the labour market.
4. What other challenges are facing those
involved in the labour market? Respondents may wish to comment
on their knowledge of a variety of different types of "subordinate"
employment contracts and/or on their knowledge of the challenges
faced by those in self-employment, "economically dependent"
self-employment and agency work. To what extent could changes
in labour law help to address these challenges?
A growing proportion of EU workers including
many migrant workers, face financial and job insecurity, limited
access to training and discrimination due to their precarious
employment. In 2002 the UK Government (DTI) estimated that agency
workers in the UK earn approximately 68 per cent of the earnings
of permanent employees. There is evidence of migrant agency workers
being forced to live in over-crowded, sub-standard accommodation
and then being charged exorbitant rates for the accommodation.
The adoption of the EU Temporary Agency Worker
Directive would guarantee agency workers equal treatment on pay
and other basic employment conditions. It would also contribute
to the Government's strategy for promoting fairness, flexibility
and productivity and to its wider social cohesion agenda.
The distinction in UK employment law between
"worker" and "employee" is a significant one,
governing access to a hierarchy of employment rights. In order
to qualify for important rights such as unfair dismissal protection,
redundancy payments and certain parental rights, it is necessary
for an individual to demonstrate that they are an "employee"
rather than a "worker". Groups of worker in the UK labour
market, notably those in "non-standard" employment relationships,
find it particularly hard to demonstrate that they are "employees."
This includes the so-called bogus self-employed, agency workers,
home-workers and freelancers. As a result such workers are vulnerable
to being laid off without notice or good cause. Lack of access
to maternity, paternity and parental leave rights also restricts
the ability of workers to choose flexible working patterns which
accommodate their caring needs.
Equal treatment for agency workers and measures
designed to clarify employment status and to extend employment
rights to all workers would not restrict the abilities of employers
to use more flexible contracts. They would however ensure that
those employed on flexible contracts are treated fairly and assist
in making non-standard employment a more attractive option for
a wider category of workers, thereby extending the pool and increasing
the quality of workers from which employers can choose.
5. To which categories of workers should labour
law apply? Are any workers currently excluded that ought, in your
view, to be included? What is your view of the issues raised by
the Green Paper about the applicability of labour law to groups
of workers whose employment status is intermediate between that
of employee and self-employed?
The TUC believes that labour law should apply
to all economically dependent workers, including agency workers,
home-workers, so-called "casual" workers and freelancers
who regularly worker for a number of different employers within
the same industry. There should be a legal presumption that all
workers qualify for the full range of EU and domestic employment
rights. The onus should placed on the employer to demonstrate
that an individual is genuinely self-employed. In the case of
agency workers, while the employment agency should be treated
as the primary employer, the hirer employer should also have joint
and several liability for any breaches of employment rights.
6. What is the role of regulation at the EU-level
in achieving a modernised system of labour law? Are there any
specific pieces of EU legislation that need either to be repealed
or to be introduced? Do you consider that the Green Paper's proposed
"Floor of Rights" for all workers is a viable one? In
order to promote worker mobility, would a Community-wide definition
of "worker" be useful?
The TUC believes that there is a need to promote
and extend the social dimension of the European Union. Under Treaty
obligations, the European Union is already committed to promoting
the employment, improved living and working conditions, dialogue
between management and labour, high employment and the combating
of social exclusion. The Commission therefore has a duty to maintain
the social dimension of the European Union through the development
of core European labour standards. Priorities for future reform
should include:
— The introduction of equal treatment
rights for agency workers, similar to those provided for fixed
term and part-time workers.
— Measures to ensure that all workers,
including agency workers, home-workers and freelancers, qualify
for EU employment protection regardless of their employment status.
— Improved measures to protect migrant
workers from exploitation and discrimination.
— Measures to provide improved work-life
balance, in particular for workers with caring responsibilities.
— The protection and promotion of fundamental
rights, in particular rights to freedom of association and for
trade unions to organise, bargain collectively and to take industrial
action.
The Commission should also take further steps
to ensure that EU employment legislation is effectively implemented
and enforced in EU member States. Beyond core EU labour standards,
the TUC believes, however, that decisions over the reform of labour
law and the level of social protection provided should remain
primarily a matter for determination for Member States and should
not be subject to challenge under free movement principles.
The TUC would not generally support a "floor
of rights" approach to guaranteeing fair treatment for workers
across the EU. There is a risk that a floor of rights approach
can all too readily translate into a ceiling of rights leading
to a "levelling down" of the best legal and collectively
negotiated employment rights.
March 2007
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