Lords Debate Sectoral Collective Bargaining in Schools and Adult Social Care: ERB in the House of Lords

The Employment Rights Bill continues to be debated in an extended Committee Stage in the House of Lords. Last week, Peers discussed provisions of the Bill which seek to establish two negotiating bodies for school support staff and adult social care.

Labour’s Plan to Make Work Pay promised ‘Fair Pay Agreements’ negotiated via sectoral collective bargaining across the economy, which would address the decline in collective bargaining coverage. When the Bill was published, however, it instead provided for the establishment of a School Support Staff Negotiating Body (SSSNB) and an Adult Social Care
Negotiating Body (ASCNB).

The IER expressed a number of concerns over these arrangements – namely that the Bill expressly excludes these negotiating bodies from constituting collective bargaining, and also restricts subjects permitted for discussion, (which exclude, for example, work organisation, diversity and inclusion, health and safety, the deployment of new technologies, formulation of a dispute resolution procedure, legal status of workers).

In the clip below, IER Chairperson, Lord John Hendy KC, explains the history behind the decline in collective bargaining in the UK, as well as why and how the SSSNB and ADSCNB must be amended to to convert them into proper collective bargaining bodies consistent with international law and permit collective agreements to impose more favourable terms and conditions.

Amendments brought by Lord Hendy included Amendment 152 which would allow the SSSNB to collectively bargain on any of the matters specified in Section 178 of the 1992 Act and Amendment 173 which would allow agreements of the SSSNB to constitute collective agreements within the meaning of that section. Additionally, he brought a number of amendments that would extend the programme to cover self-employed persons too. His Amendments 155 to 159 would remove the Ministerial power to prevent any of the currently permitted matters being discussed. Amendment 161 would remove the requirement for the Minister to authorise discussion on permitted matter.

Full Transcript (Lords Hansard):

My Lords, I will speak to Amendments 152 to 179, which are intended not to undermine but to improve the SSSNB.

First, I will say a word about collective bargaining relevant to these amendments and to later amendments dealing with that subject. The term was coined by Beatrice Webb in 1891. It means negotiations between one or several trade unions on the one side and one or more employers or employers’ associations on the other, with a view to agreeing rates of remuneration and other terms and conditions of employment for a defined group of workers. The term is defined in Section 178 of the Trade Union and Labour Relations (Consolidation) Act 1992, which sets out various matters which may form the basis of such negotiations—not just pay, terms and conditions, but including dismissals, allocation of work, union facilities, dispute resolution machinery, and so on. The International Labour Organization—ILO—has a similar, but less detailed, definition in Convention 154.

Collective bargaining may be on a sector-wide basis across a particular industry or it may be confined to a particular enterprise. Where there are sectoral agreements setting minimum terms, they are usually improved upon by enterprise agreements with individual employers in the sector. The UK was the first country to establish widespread collective bargaining coverage. By 1948, the then Prime Minister could say in a broadcast to the nation that:

“We have built up in this country a system of collective bargaining without parallel in the world”.

That coverage was built upon two pillars: the statutory wages councils introduced by Winston Churchill in the Trade Boards Act 1909, latterly regulated by the Wages Council Act 1979, and the voluntary joint national councils, or Whitley councils, pursuant to the reports of the Reconstruction Committee after the First World War by JH Whitley. Governments of all persuasions were committed to the promotion of collective bargaining, particularly because of its very positive effect on productivity in both world wars. In consequence, collective agreement coverage of UK workers was in excess of 80% between 1945 and 1980.

Significantly, the proportion of workers covered by only an enterprise-level collective agreement was almost insignificant and had grown to only 9% by the late 1970s. The dismantling of sectoral collective bargaining since 1980 has produced a steady downward curve in the coverage, which was not halted by the introduction of the recognition machinery for enterprise-level bargaining in 2000. The percentage of workers whose terms are negotiated now is likely to be around 25%. The remaining three-quarters must take what they are offered.

The staggering decline from over 80% coverage to 25% has had a devastating effect on workers. The stagnation in the real value of wages and the meteoric rise in zero-hours contracts and job insecurity can be  attributed, at least in part, to that dramatic decline. To achieve the growth and improvement in living standards rightly sought by the Government necessitates restoration of extensive collective bargaining coverage.

There are considerable benefits to that. A few years ago, the Supreme Court of Canada pointed out that:

“The right to bargain collectively with an employer enhances the human dignity, liberty and autonomy of workers by giving them the opportunity to influence the establishment of workplace rules and thereby gain some control over a major aspect of their lives, namely their work. Collective bargaining is not simply an instrument for pursuing external ends … rather [it] is intrinsically valuable as an experience in self-government … Collective bargaining permits workers to achieve a form of workplace democracy and to ensure the rule of law in the workplace”.

It has also been said that collective bargaining

“is the mode in which employees participate in setting the terms and conditions of employment, rather than simply accepting what their employer chooses to give them”.

Workers enjoy the benefits of increased wages and improved minimum terms and conditions. Trade unions can negotiate on a sector-wide stage without diminishing their ability to negotiate better terms locally.

The benefits of sectoral collective bargaining extend to employers too. Sectoral collective bargaining prevents undercutting and steadies labour costs. Employers in the same sector must compete instead in investment, innovation, efficiency and productivity—the fields of competition which foster growth. Employers, especially SMEs and micro employers, benefit from not having to research or negotiate wages with their workers. Instead, the minimum terms and conditions for their sector are contained in the sectoral agreement.

Employers profit from the increase in consumer demand, consequent on increased earnings generally. Governments enjoy increased tax from higher earnings and the diminished need to fund social security payments to subsidise low wages. Sectoral collective bargaining has proved to reduce inequality, not just between high and low earners but between women and men, and to reduce the pay gap suffered by disabled and ethnic-minority workers.

There is much research from academic institutions to support these conclusions, as well as from the ILO, OECD and IMF. In 2024, the European Union went so far as to adopt a directive requiring member states that have less than an 80% coverage of collective agreements to put in place an action plan to achieve such coverage.

A letter in last week’s Financial Times pointed out that Sweden—notwithstanding its conversion over the last 30 years from neosocialism to neoliberalism—preserved, at the insistence of employers and unions, the very extensive sectoral collective bargaining that characterises Nordic industrial relations.

Collective bargaining, and in particular sectoral collective bargaining, is not just desirable in itself; international law requires the UK to promote and encourage it. That is a subject I will return to in the next group.

It is unclear why the Bill does not stipulate the creation of collective bargaining bodies. The UK’s long and successful experience of statutory wages councils and voluntary joint national councils provides fine precedents. There are many other such precedents as well.

With that introduction, I turn to the proposition that the SSSNB is not the collective bargaining forum it should be, and which many unfamiliar with the detail of the Bill assumed it would be. To save time, I will also refer to the adult social care negotiating body—I wish the Government had chosen easier acronyms—since the Bill’s proposals and the arguments about them are virtually identical.

The relevant features are these. First, the Bill expressly states that nothing in the SSSNB is to be regarded as collective bargaining as defined by Section 178 of 1992 Act, and that any agreements reached are not to be regarded as collective agreements. The ASCNB is slightly different, in that the relevant Minister is given power to exclude the application of Section 178.

Secondly, the Bill defines a negotiating body, but its functions do not include negotiation. The parties have no power to decide for themselves the matters they wish to discuss and are confined to the four subjects permitted to each by the Bill, plus any additions conferred by the Minister. The very limited subjects so far permitted exclude, for example, work organisation, diversity and inclusion, eradication of pay gaps, health and safety, deployment of new technology, formulation of a dispute resolution procedure and the legal status of workers in the sector.

Thirdly, the Bill gives the Minister power to make regulations as to the nature of the consideration the negotiating body must give to the authorised subjects, with power to direct specific factors the body must take into consideration and any conditions that must be met in reaching agreement. Matters can be discussed by the SSSNB only with the permission, or on the direction, of the Minister, who can also specify matters that may not be discussed.

Fourthly, if the body reaches an agreement, the Minister can override it and require reconsideration, specifying factors that must be taken into account and conditions that must be met to reach a reconsidered agreement acceptable to Minister. Ultimately, the Minister can override agreements of the negotiating body.

Fifthly, if the negotiating body fails to agree, the Minister has the power to assume its functions and impose a settlement, regardless of the wishes of the parties, who may, of course, prefer their own dispute resolution procedure, or conciliation, mediation and arbitration by a third party in whom they have confidence.

Sixthly, terms agreed and approved, or simply dictated, by the Secretary of State will be set for all relevant workers. Consequently, any genuine collective agreement for more favourable terms will be void. Far from promoting collective bargaining, the effect of this provision is to preclude it.

Seventhly, the employers and the unions are unable to decide for themselves the size and composition of the body; that is in the exclusive power of the relevant Minister, who will determine how members may be appointed to each body, including the chairperson and third parties, who must not represent employers or unions in the sector. They will have voting rights, if the

Minister chooses, in the case of the ASCNB, but not in the case of the SSSNB. Employers and unions may not choose their own chair and, in the case of the SSSNB, must not select one of their representatives as chair, thus precluding the usual arrangement of alternating the chair between the two sides.

Eighthly and finally, the Bill defines a social care worker as those employed, thus excluding the many self-employed.

These features are incompatible with free collective bargaining under any definition, and my amendments intend to do the following. It will take me a moment to go through them. Amendment 152 would allow the SSSNB to collectively bargain on any of the matters specified in Section 178 of the 1992 Act. Amendment 173 would allow agreement of the SSSNB to constitute collective agreement within the meaning of that section. Amendments 153, 160, 162, 167 and 170 all provide for inclusion of the self-employed. Amendment 154 would permit the body to negotiate dispute resolution machinery, grievance and disciplinary procedures and anything else that the employers and unions want to negotiate.

Amendments 155 to 159 would remove the ministerial power to prevent any of the currently permitted matters being discussed. Amendment 161 would remove the requirement for the Minister to authorise discussion on permitted matters. Amendments 163 to 166, 168, 169, 171 and 172 would make the output of the process a minimum floor, thus permitting subsequent or prior agreement for more beneficial terms. Amendment 177 would remove ministerial representatives and confine membership of the body to unions and employers. Amendment 179 would permit the SSSNB to determine its own constitution, allowing intervention by the Minister only if it cannot agree its constitution.

I apologise for taking so long, but I now beg to move.