Trade unions to gain muscle under Labour's new employment laws – what does it mean for SMEs?

New employment laws will make it easier for workers to take collective action. Here's what it could mean for SMEs.

Trade unions on strike through London
Companies worry that union militancy will increase
(Image credit: Kristian Buus/In Pictures via Getty Images)

Will the government’s reforms to trade union rights presage a new wave of confrontations with employers, as some small and medium-sized enterprises (SMEs) fear? The legislation includes a raft of measures that give employees new rights, such as the right to claim unfair dismissal from day one in a new job. But one particularly controversial area of the legislation is focused on trade unions, making it simpler for employees to secure representation in the workplace and to take collective action in the event of a dispute.

The current rules on when employers have to recognise a trade union in their workplace – and therefore to engage with it over issues such as pay and conditions – are relatively tough. If an employer does not voluntarily recognise the union, the latter has to apply to the Central Arbitration Committee, a state-backed body, for statutory recognition. This will only be granted if the union can show that at least 10% of employees are already members and that a majority of employees are in favour of recognition, typically through a ballot.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.