How the Job Retention Scheme demonstrated the failings of British Labour Law?
The Job Retention Scheme (JRS) is a perfect case study to highlight the failings of British Labour Law. This article will focus on how such failures were evident in regards to i) lack of unfair dismissal protection, ii) lack of collective bargaining for workers and; iii) lack of protection for precarious workers.
What are the fundamental failings of British labour law?
In order to determine the failings of British Labour law, it is important to first establish the normative standard it should be held to. It is best to look to the normative framework established by ILO Constitution. In its most recent form, the ILO reinforced the importance of social justice, and social dialogue in contributing to the ‘overall cohesion of societies’, while being ‘crucial for a well-functioning and productive economy’.
British labour law has failed to live up to this standard. It has been largely stripped of its traditional function of protecting workers from various abuses of employer power. The pre-pandemic high levels of employment disguised a ‘digital and sanitised version of the nineteenth century workhouse,’ rather than a response ‘to the real needs of those facing widespread economic insecurity in an age of deep and rapid transformation brought about by automation, zero-hour contracts and rapidly growing inequality’ (UNHRC).
How has the JRS demonstrated this?
The JRS exposed a number of systemic failures of British labour law. First, it caused the public to effectively pay to prevent the inevitable corollaries of inadequate unfair dismissal and redundancy legislation. Under current legislation, employers are readily able to pass market failure risk onto their employees through dismissal; all workers and employees with less than two years of service are prevented from bringing unfair dismissal claims, redundancy is a potentially fair reason for dismissal under s.98(2)(c), there are low standards to prove reasonableness of dismissal (Iceland Foods) and there is a low statutory cap for compensation. Furthermore, employers can easily ‘fire and rehire’ on inferior terms if workers are unwilling to accept detrimental contractual variations. If the law strengthened worker protection, employers would be incentivised to bear the cost of keeping workers on rather than immediately resorting to redundancies. Furthermore, the public would not have to carry the burden of these costs instead. Ironically, such public cost increases austerity measures which propound failures mentioned.
Second, the JRS demonstrates the double standards intrinsic to the ‘neoliberal’ approach to labour law. If the market works against employees it is ‘tough luck’. However, if the market works against businesses, they are not expected to ‘take the hit’; rather, the government will bail them out. JRS was not for employees’ benefit. Furlough claims were wholly left to employer discretion; employers could still make large scale redundancies if they wished, even whilst benefitting from the scheme. Furthermore, employers could claim only 80% of the employee’s wages up to a maximum of £2,900 a month with no obligation to make up the difference. For minimum wage workers, this allowed employers to pay less than their legal obligations under the NWA 1998, with the employee having no legal redress. To further crystallise this hypocrisy, employers - such as British Airways - are now using the circumstances of the pandemic coupled with Britain’s soft labour laws to cut jobs and weaken the terms and conditions of its remaining employees, whilst using the JRS (Transport Committee). Where is the multi-billion pound scheme to bail employees out of this market swing?
Third, the JRS did not extend the statutory obligation to inform and consult unions in relation to proposed collective redundancies to decisions to furlough. This again proves the duplicity intrinsic to the UK’s neoliberal approach to labour law; whilst this ideology promotes ‘laissez faire’ bargaining, such bargaining is only effective when there is equality of arms (Karl Freund). The UK increasingly has moved from a collective to individual approach; leaving workers vulnerable.
Fourth, the JRS has exposed the lack of protection for precarious workers, particularly in the context of the ‘substantial increase in the number of self-employed people in the workforce in recent years…due in part to the rise of the “gig economy”, and the increasing prevalence of people using apps to sell their labour’ (Work and Pensions Committee). Freelancers were unable to self-declare their status due to fears of fraud (R.Moss) and administrative unworkability (R (Adiatu) v HM Treasury). Such an argument is flawed; fraud concerns are equally applicable to employers, many of whom took advantage of the system despite having the funds to pay their workers.
In conclusion, the JRS has proven the fundamental failings of British labour to protect workers. This has been caused by decades of a free market approach to a market ridden with inequality of bargaining power. Rectification of inequality of bargaining power is swiftly needed to ensure effective protection for workers.