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Collective Bargaining

Only a minority of employees in the UK are covered by collective bargaining, with private sector employees, where the key bargaining level is the company or the workplace, much less likely to be covered than those working in the public sector, where industry level bargaining is more important.

The framework

 

The pay and conditions of most employees in the UK are not collectively negotiated, as two sets of official figures indicate. However, there are differences between the two. Figures from the Labour Force Survey show that just over a quarter (26.9%) of employees were covered by collective bargaining in 2019. In contrast, a second survey, which looks at hours and earnings, estimates that in 2019 almost four out of 10 employees (39.2%) had their “pay set with reference to an agreement affecting more than one employee”, in other words, in most cases, though collective bargaining.[1]

 

The UK Office for National Statistics (ONS), which undertakes both surveys, explains that while there are some minor differences between the two surveys – the question is slightly broader in the ASHE earnings and hours survey, and the ASHE figures are for jobs not employees – the main difference is that the Labour Force Survey asks employees, while the ASHE survey asks employers. As employees may be less aware of how their pay is set, the ONS concludes that the ASHE survey, which was completed by more than 180,000 employers in 2019, “may gave an more accurate picture of the coverage of such agreements.”[2]

 

A common conclusion from both sets of statistics is that bargaining is much more prevalent in the public than in the private sector. The ASHE figures show that in 2019 90.6% of public sector employees were covered by some form of collective bargaining, compared with 21.1% in the private sector and 50.2% in the much smaller “not for profit sector”. The comparable figures from the Labour Force Survey are 60.1% in the public sector and 15.1% in the private sector; there are no Labour Force Survey “not for profit figures”.

 

The ASHE figures also provide a breakdown between different levels of bargaining, and there are clear differences between the pattern in the public and the private sectors.

 

When bargaining occurs in the private sector, its most important level is at the company or individual workplace, covering more than three quarters of private sector employees, whose pay is set through collective agreements. The ASHE figures show that 9.5% of private sector employees have their pay set by agreements signed at organisation level, typically a company in the private sector, and for 6.8% it is a workplace level agreement that sets pay. Industries where a high proportion of employees are covered by company-level agreements include the privatised utilities, gas, electricity, water and telecommunications, and finance. Agreements at workplace level are more common in manufacturing. For, example, many companies operating in engineering and food manufacturing have separate agreements for each of their production sites.    

 

There is still industry-level bargaining in some private sector industries, particularly in construction and some parts of the arts and entertainment industries. The annual survey of bargaining, published each year by the union-linked Labour Research Department, listed 33 industry-level agreements current in 2019, of which the majority were either in construction (14 agreements) or theatre and film production (seven agreements).[3] However, this level of bargaining remains the exception. The ASHE figures show that only 2.7% of private sector employees have their pay set by industry-level agreements signed at national level, with another 0.1% at sub-national level, for example for Scotland or Northern Ireland.

 

A combined approach, where the industry-level agreement is supplemented by an agreement at a more local level and which was once found widely, now only accounts for 1.9% of private sector employees.

 

It is also important to point out that, employers are not bound by an agreement signed by an employers' federation even if they are members of it. This means that there is no mechanism for collective agreements to be extended to non-signatory employers.

 

Overall, therefore, around eight out of 10 private sector employees are not covered by collective bargaining and those that are have their terms and conditions set by company and workplace-level agreements rather than those signed at industry level.

 

The situation in the public sector in the public sector is almost exactly the reverse. The ASHE figures show that nine out of 10 (90.6%) public sector employees are covered by collective bargaining, and that for most – 70.9% of the total – that bargaining is nationwide at industry level.  Examples of nationwide agreements, although often with separate agreements for Scotland and Norther Ireland, and sometimes Wales as well, are those for staff in the health service, local government staff, firefighters and teachers, although some schools can theoretically opt-out from the national deal.

 

Many of these groups, such as teachers, those working in the health service, and other groups including the prison service and the police, are covered by pay review bodies, rather than pure collective bargaining. These pay review bodies make recommendations on pay to the government, which are then normally approved. However, this is not always the case. In 2014-15 a pay review body recommendation on pay in the health service was not accepted by government, resulting in industrial action.[4]

 

There are some public sector employers, which bargain at the level of a single organisation. The civil service, for example, pays different rates in different government departments. The ASHE figures indicate that 10.5% of public sector workers have their pay set at organisational level and another 2.0% at workplace level (which may be the same as the organisation in some smaller bodies. Finally, there are 6.7% of public sector workers whose pay is determined by a national agreement supplemented by an agreement at a more local level. It seems likely that pay arrangements for vocation (further education) colleges fall into this category, as the employers’ association typically make a recommendation on the pay increase, but the implementation is left to local colleges.

 

Some aspects of bargaining are common across both the public and private sectors. For example, sometimes there are separate agreements for different grades of worker, most typically for manual and non-manual workers. However, there is no requirement for this – for example, there are no differences between the two groups in terms of their legal status or their social security contributions – and the practice has become less frequent. For example, most staff in local government moved onto a so-called “single status” agreement in 1997, although some workers are still not included, and the main agreement in the health service became single status in 2004.[5]

 

There is no legal requirement for the employer to negotiate with the union except where there has been a legally binding decision that the unions should be “recognised” for bargaining (see section on Workplace representation). In these cases, the union has the right to bargain over pay, hours and holidays. However, such cases are rare and generally it is the balance of forces between union and employer at the workplace that determines whether bargaining takes place.

 

At national level, the TUC has not been involved in negotiations about pay since the end of the 1970s, when there were a series of national deals. There is also no tradition of negotiations between the TUC and the national level employers’ body, the CBI, on other issues.  However, in 2003 the two sides reached agreement on how the EU’s information and consultation directive should be implemented (see section on Workplace representation), and in 2008 there was an agreement between the TUC and CBI on agency workers, covering the implementation of an EU directive on agency workers.[6] However, such agreements are the exception.

 

There is no tripartite forum for social dialogue in the UK.

Who negotiates and when?

 

Bargaining is conducted by trade unions and employers.  The union side may be made up of full-time officials, workplace representatives or a mix of both. Local union representatives are now much more likely to be involved in collective bargaining. The employers' side can be the individual employer or, if at industry level, the employers' association.

 

There will sometimes be several unions represented on the union side, who normally will have agreed their position together in advance. For example, the main agreement in the health service, Agenda for Change, has nine signatory unions and many agreements in manufacturing are signed by two general unions Unite and the GMB. However, often there will be only one union present, because past union mergers have resulted in a single union representing the whole workforce.

 

Collective agreements do not have to run for a specific period although the most common pattern is that they run for a year. Figures from the Payline database of collective agreements, maintained by the Labour Research Department, show that of 1,386 collective monitored agreements which were current in 2019 63% lasted 12 months, 21% ran for 24 months and 12% for 36 months. There were also a few four- and five-year deals, with the longest lasting 10 years.[7] Agreements lasting for more than a year normally have regular staged increases which are linked to the price index. Anniversary dates are spread throughout the year, although clustered in January and April.

 

Usually, union representatives will seek to negotiate on pay every time there are negotiations, but may negotiate over other improvements, for example, holidays, sick pay and so on, less frequently.

 

The subject of the negotiations

 

Some negotiations cover all aspects of pay and conditions, but others are limited to only a few areas, principally pay, with the employer refusing to negotiate about many terms of employment. Even where pay is subject to negotiations, a large number of agreements, particularly for non-manual workers, give employers considerable flexibility by linking pay increases for individual employees to a subjective assessment of their performance.

 

The most recent major survey of workplace employee relations in the UK, the 2011 WERS survey, examined the situation in workplaces where the employer was willing to negotiate with the union – in other words, where the union was “recognised” (see section on Workplace representation). It found that in just over half of these workplaces (54%) managers said that they normally negotiated with the union about pay, 42% said that they normally negotiated about hours and 43% that they normally negotiated about holidays. The proportions negotiating about other areas, such as pensions, training, grievance procedures and health and safety, were considerably lower, although unions were often consulted on these issues.[8]

 

The WERS list of topics did not cover all the areas which may be subject to negotiation. Negotiations may also deal with other areas, such as the facilities or time off provided to the union.

 

The UK has a national minimum wage which is set by the government on the advice of the Low Pay Commission which brings together representatives of the employers (four members), the unions (three) as well as independent academics (two). This advice on the level at which the minimum wage should be set each year, is drawn up by the Low Pay Commission, taking account of the government remit it receives. In 2019, the government remit, which from 2016 had aimed at a rate set at 60% of median earnings by 2020 was changed to a rate set at two-thirds (66.7%) of earnings by 2024.

[1] For a detailed examination of collective bargaining in the UK see United Kingdom: a long-term assault on collective bargaining by Jeremy Waddington in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[2] Trade Union Membership, UK 1995-2019: Statistical Bulletin, Department for Business, Energy and Industrial Strategy, May 2020, this largely relies on the Labour Force Survey data but also includes the ASHE figures  https://www.gov.uk/government/statistics/trade-union-statistics-2019  (Accessed 08.01.2021)

[3] Workplace Report October 2019, Labour Research Department https://www.lrdpublications.org.uk/publications.php?pub=WR&iss=1996&id=idm292496 (Accessed 08.01.2021)

[4] NHS staff strike in dispute over pay, Nick Triggle, 13 October 2014, BBC News https://www.bbc.co.uk/news/health-29560083 (Accessed 08.01.2021)

[5] Local government Association website https://local.gov.uk/our-support/workforce-and-hr-support/local-government-services and NHS Employers website https://www.nhsemployers.org/pay-pensions-and-reward/2018-contract-refresh/questions-and-answers#:~:text=Agenda%20for%20Change%20was%20introduced,in%20a%20number%20of%20areas. (Accessed 08.01.2021)

[6] Agency workers: joint declaration by government, the CBI and the TUC https://www.tuc.org.uk/research-analysis/reports/agency-workers-joint-declaration-government-cbi-and-tuc (Accessed 08.01.2021)

[7] LRD Payline: specific calculations

[8] Employment relations in the shadow of the recession: Findings from The 2011 Workplace Employment Relations Study by Brigid van Wanrooy, Helen Bewley, Alex Bryson, John Forth, Stephanie Freeth, Lucy Stokes and Stephen Wood, Palgrave Macmillan, 2013 Table 5.4

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.