Understanding Employment Relations 2e

Chapter 6

The Role of the State in Employment Relations

What the Chapter Covers

This chapter covers the final actor in employment relations, the State, and the material is
presented in the following order:

• First, the State is defined.

• Second, the way the State has intervened in employment relations is explained,
and this includes the changing character of legal intervention in Great Britain
• Third, how different types of laws affect one or more of the parties to an
employment relationship is considered.
• Finally, how the law and the legal institutions operate in Britain is reviewed.

The chapter contains four themes concerning the role of the State in British employment
relations:
1. While Great Britain is traditionally characterised as having a voluntarist system of
employment relations, the scope of State intervention has put limits on the actions
of managers, unions and employees.
2. The law is not neutral, and therefore the political and ideological perspectives of
government are important. Therefore the law can be based on political beliefs
about which party should hold the balance of power in the employment
relationship, and this is even more significant given the Conservative-Liberal
coalition government.
3. How the law operates in practice, including the role of European legislation and
the key British legal institutions is another important theme of the chapter.

1
McGraw-Hill Education
 Understanding Employment Relations 2e

New Concepts Introduced in Chapter

Arbitration: a process in which an arbitrator or arbitration panel is appointed to set the

terms of a settlement to a dispute.

Bargained Corporatism: a level of State intervention through the creation of tripartite

national bodies who consult on a broad range of economic and social matters with
strong trade unions and employers

Civil law: deals with the rights of private citizens and their conduct towards each other

Common law: laws that arise from legal decisions made in a court of law or an
employment tribunal.

Conciliation: advice and assistance to help resolve a collective or individual dispute.

Corporatism: centralised state control of economic activity that results in relatively

weak trade unions.

Criminal case: a legal prosecution brought to either the magistrates or crown courts by
an agency of the State, such as the police or one of the various employment relations
commissions.

Criminal law: deals with unlawful acts that are offences against the public at large

Economic manager (the State): macro-economic policies of the State which affects
labour market demand, employment and effective manpower utilisation.

Employer in its own right (the State): by virtue of its role as an employer, the State
can set the standards of responsible employment practice.

Employment appeals tribunal: a higher legal court that deals with appeals from
employment tribunals.

Employment tribunal: a legal court that adjudicates on employment law cases.

European law: directives and regulations passed by the European parliament, which are
then transposed into British statute law

Incomes regulator (the State): the State can control prices and wages, either through
direct intervention or in its management of the economy.

Keynesian economics: a macro-economic theory which concentrates on managing the

demand-side of the economy through government fiscal policies, with the aim of
achieving full employment, price stability and a balance of payments equilibrium.

2
McGraw-Hill Education
 Understanding Employment Relations 2e

Labour decommodification: the extent of welfare protection so employees are not

wholly dependent upon employers for survival

Liberal collectivism: a situation in which the interests of strong and autonomous trade
unions and employers become legitimised via State intervention through limited
legislative frameworks

Market individualism: a situation that often results in weak trade unions because
laissez fair economic philosophies of the State support ruling class interests.

Mediation: a process in which the mediator recommends a potential solution to a

dispute for the parties to consider.

Monetarism: a right-wing economic theory based on market forces as the most efficient
way to control inflation. Trade unions are deemed to be a supply side constraint, and so
their activities curbed by the State.

National minimum wage: a statutory minimum rate of pay for all workers and trainees
in Britain.

Non-industrial civil courts: courts that deal with an array of other employment-related
matters, such as claims of negligence against an employer or injunctions seeking to
restrain union action.

Protector (the State): an employment relations role adopted by the State, in which it
establishes and monitors minimum standards through its agencies.

Rule maker and legislator (the State): by enacting legislation the State can establish
auxiliary, restrictive and regulatory rules that affect the other parties in employment
relations.

Social citizenship (the State): the extension of political citizenship rights to the
workplace through legislation and policy.

Statute laws: laws that are passed by parliament and have received royal assent.

Statutory instrument: a device used by a minister of the government to change or

update legislation that already exists

Supply-side (economics): a set of macroeconomic policies designed to eradicate

presumed market constraints in managing prices, income, employment and economic
growth.

The State: the elected government of the day, together with all other agencies that carry
out its will and implement its policies and legislation.

3
McGraw-Hill Education
 Understanding Employment Relations 2e

Trade dispute: a dispute between workers and their employing organisation, which
complies with Section 219(1)a of the TULRCA 1992 (i.e. the Golden Formula).

Trade union immunity: a convention that protects a trade union from prosecution for
inducing its members to breach their individual employment contracts when engaging in
strike or other similar industrial action.

4
McGraw-Hill Education
 Understanding Employment Relations 2e

Teaching Materials in Textbook

Pause for Reflection Exercises: Hints for Completing

Exercise on page 168: High or low interventionist stance by British
government
Think of some obvious employment laws, and ask how these fit with the notion of
voluntarist employment relations considered in Chapter 2.

Exercise on page 185: Defining sources of employment law

Think about the different ways the law deals with: private citizens, workers, decisions
made by a judge in a court, and laws passed by parliament.

Exercise on page 189: Laws regulating the employment relationship

In tackling this question, you are being asked to apply ‘actual’ laws to the framework for
categorizing legislation given in Figure 6.2. You will need to look through the examples
given in Tables 6.1, 6.2 and 6.3 in the chapter.

Exercise on page 191: Functions of conciliation, mediation and arbitration

Each of the different functions of ACAS is very different, and each has a different
purpose in employment relations.

Critical Discussion Questions: Hints for Completing

As with the Pause for Reflection Exercises, the Critical Discussion Questions are help you
discuss competing ideas with co-students.

Exercise on page 139: Difference or similarities between current and

previous government approaches to State intervention.
In tackling this question, think about the approach what was different (or similar) to the
underlying approach and philosophy between the previous labour government and former
conservative governments. How did they differ with regard to European regulations, for
example? Is there any further change is the Conservative-Liberal coalition government
was elected in 2010?

5
McGraw-Hill Education
 Understanding Employment Relations 2e

Case Studies: Hints for Completing

There is one case study in the textbook chapter, and an additional supplementary case
study later in this student web-site resource.

CASE 6.1: The Changing contours of the role of the State

This case is not exceptionally long and provides extracts of different State roles, some of
which are from other countries to give an international or comparative view. You might
want to consider a scheme to answer the questions, such as that covered in Figure 6.1 in
the Chapter by Crouch, or by considering a range of broader factors that may influence
government policy and action concerning employment relations intervention.

Exhibits
There are three Exhibits in this chapter:

Exhibit 6.1: Contradictory TUPE legal interpretations

This Exhibit (page 186) illustrates the variability in the way the courts can interpret and
re-interpret legislation that results in different outcomes and impacts workers in different
ways.

Exhibit 6.2: The meanings of a trade dispute (the ‘Golden Formula’)

On page 188 Exhibit 6.2 shows the conditions that have to be met for a trade union to
qualify for legal immunity from inducing a breach of contract when pursuing a trade
dispute (otherwise known as the Golden Formula), as contained in Section 219(1)a of the
Trade Union and Labour Relations (Consolidation) Act 1992.

Exhibit 6.3: Equality and Human Rights Commission interventions

This Exhibit (page 193) describes the role of the Equality and Human Rights
Commission, with examples of specific case interventions.

6
McGraw-Hill Education
 Understanding Employment Relations 2e

Supplementary Case Study

Case 6.2: A time for radical change?

You are the recently appointed Human Resources Manager of Peak Electronics, a small
media and technology company that provides a range of information and communication
technology (ICT) services to other organisations. The company specialise in the design
and technical support for internet and intranet software products, many of which
incorporate technological security systems. Peak Electronics started in 1999 by five
friends, who between them had specialist knowledge in information technology and
technical engineering. Shortly after they all graduated from university, they spotted a
niche in the ICT market and created Peak Electronics. In its first few years the company
was particularly successful in attracting business from the growth in outsourcing
activities among public sector organisations. Today its client base includes many well-
known private sector companies and public sector organisations, such as the NHS,
London Metropolitan Police, the Inland Revenue, several major High St Banks and
multinational companies with sites in Britain.

From its inception employment relations at Peak Electronics have been very informal
and relaxed. All of the five owners are personal friends, and they started a business
venture in what amounted to their personal interests and hobbies. In its first year, clerical
and admin support was ‘drafted-in’ from amongst family and friends, often working long
hours as the company was in its start-up phase. As the company grew, two of the
owners’ sisters were employed on a permanent basis as clerical assistants when they
left school, and another owner’s aunty is now the full-time general office manager. The
use of a network of family and friends has remained the main source for recruiting new
staff.

Peak Electronics now employs 64 people and has an annual turnover of several million.
Pay is generous and the working conditions are reasonably pleasant. The owners set
pay unilaterally for each individual employee. The rate of pay is based on the owners’
evaluation of an individual employee’s performance over the previous year (e.g. in terms
of commitment, loyalty, client satisfaction, performance and profit, and technical
expertise). Overall, the owners have never felt the need to have any formal policies or
procedures, as everyone in Peak Electronics are all friends and all work for the good of
the client. What formality does exist is a very short one page contract of employment
which employees sign on their first day, and which was drafted by the owners in the
early days of the company. Indeed, one owner remarked that personnel management is
just another term for common sense.

Despite the appearance of a friendly and informal employment relationship, a number of

tensions have been developing in the company. First, despite generous pay and
benefits, some technical consultants have started to complain that they are working
excessively long hours, and without any extra pay. Indeed, on one occasion a team
worked for three consecutive days and nights to meet a client deadline. Furthermore, the
relationship between one of Peak Electronics major client’s and the consultant team
seems to be getting worse. The technical consultants on this particular project (which is
due to run for another 2 years) are concerned that managers in the client organisation
are issuing them with rules and procedures. For example, they have been asked to

7
McGraw-Hill Education
 Understanding Employment Relations 2e

attend the induction for new employees of the client organisation, and have been asked
to make any requests for annual leave to management in the client company and not to
the office manager of Peak Electronics.

Second, some of the clerical and admin staff have been muttering concern they never
seem to see any of the fringe benefits as they are always office-based, and therefore not
directly linked to a client project. Of the 14 clerical employees (all women), 10 of them
work part-time as they have family responsibilities, and they now feel that their part-time
status means they are treated as second-class citizens.

Third, a married couple who work at Peak Electronics (a clerical assistant and technical
consultant) are expecting their first baby, and have asked for time off together. However,
the office manager feels that the company cannot support releasing the two of them at
the same time, especially the technician who is a key specialist on an important client
project.

Finally, the MD of Peak Electronics recently received a letter explaining that a former
part-time clerical employee is taking the company to an employment tribunal to claim
unfair dismissal. The employee was dismissed for what the office manager described as
excessive and unauthorised leave over a period of 6 months. While Peak Electronics
tried to help the employee with support and some time-off to deal with family and
childcare issues, the office manager eventually felt that matters were getting worse and
not better, and therefore felt they had no alternative but to terminate the person’s
employment.

Given the above information the owners have come to realise that employment relations
matters are perhaps a little more complicated than just relying on common sense, and
have therefore appointed you as the HR Manger. Accordingly, the MD has asked you to
make a presentation to the owners, highlighting the following:

1) A general overview of the current legal situation for employment relations in Britain.

2) What internal employment relations policies and procedures should Peak Electronics
consider introducing or changing, and what implications will these have on the
company’s informal approach.

What will you say in your presentation?

8
McGraw-Hill Education
 Understanding Employment Relations 2e

Useful Sources of Additional Material

Books and Journal Articles

Ackers, P. and A. Wilkinson (2003) ‘Introduction: The British Industrial Relations

Tradition – Formation, Breakdown and Salvage’, in Understanding Work and
Employment: Industrial Relations in Transition, P. Ackers and A. Wilkinson (eds),
Oxford University Press. A thoughtful chapter that charts the transition of the academic
discipline of industrial relations, employment relations and human resource management,
with implications for how the employment relationship is regulated.

Crouch C. (1982) The Politics of Industrial Relations, Fontana, London. Despite its date
this is a penetrating and highly readable analysis of the growth of government
intervention in employment relations in post-war Britain.

Crouch C. (2003) ‘The State: Economic Management and Incomes Policy’, in Industrial
Relations: Theory and Practice, 2nd Edition, P. Edwards (ed), Oxford, Blackwell. An
excellent analysis of the role of the British State in employment relations, charting the
impact of various strategies on: economic management of the economy, inflation, public
sector pay and bargaining. Some insights into the continuity between Conservative and
Labour government approaches are considered.

Ewing, K. (2003), ‘Industrial relations and the law’, in P. Ackers & A. Wilkinson (eds),
Understanding Work and Employment: Industrial Relations in Transition, Oxford
University Press. A thoughtful essay that examines the impact of the law on the changing
nature of employment relations, and in particular the implications for voluntarist
employment relations.

Hyman, R. (2009) ‘The State in Industrial Relations’, The Sage Handbook of Industrial
Relations, P. Blyton, N. Bacon, J. Fiorito and E. Heery (eds), Sage, London. Provide a
review and critique of State inventions, drawing on several theories and international
evidence.

Lewis, D. and M. Sargeant (2009) Essentials of Employment Law, 10th edn, CIPD
Publishing, London. A valuable resource guide with a comprehensive and practical
coverage of numerous British employment laws.

Smith, P. (2009) ‘New labour and the commonsense of neoliberalism: trade unionism,
collective bargaining and workers’ rights’, Industrial Relations Journal, 40(4), 337-355.
A well argued paper concerning the adoption of neo-liberal values and policies by New
Labour that resonate with those inspired by previous Conservative governments.

Taylor, S. and A. Emir (2006) Employment Law: An Introduction, Oxford university

Press, Oxford. A very useful source for employment law, with a good narrative and set of
practical examples surrounding the implications of the law for wider employment
relations issues.

9
McGraw-Hill Education
 Understanding Employment Relations 2e

Wedderburn, Lord. (1986) The Worker and the Law, 3rd Edition, Penguin,
Harmondsworth. A seminal study that, despite its age, is highly recommended for its
insightful and analytical coverage of the sources and philosophies of labour law, and
especially for its extensive coverage of the topics of voluntarism versus state
intervention.

Web-based Materials
Below are a number of potentially useful websites that provide information about
government policy and legislation.

http://www.berr.gov.uk/whatwedo/employment/index.html
Department for Business Innovation and Skills (BIS), which includes plenty of data and
information concerning public policy and legislation in the area of employment relations.

http://www.acas.org.uk/
The Arbitration, Conciliation and Advisory Service (ACAS) web site provides many
useful reports and codes of practices on almost all areas related to employment relations
and labour law in Britain.

http://www.cac.gov.uk/
The Central Arbitration Committee (CAC) is an independent body of the State with the
statutory powers to adjudicate on matters relating to trade union recognition and
information and consultation rights. Its web site reports on such adjudications.

http://www.equalityhumanrights.com/
The Equality and Human Rights Commission (EHRC). The web site provides
information on the Commission’s mission, its strategy, advice and areas of good
practices. It also includes some information on case reports.

http://www.employmenttribunals.gov.uk/
The Employment Tribunal service web site contains resources and publications relating
legal applications and the types of issues it can resolve.

http://www.lowpay.gov.uk/
The Low Pay Commission (LPC) web site provides research and publications relating to
changing in and the impact of the national minimum wage in Britain.

http://www.lrc.ie/docs/Welcome/4.htm
The Labour Relations Commission (LRC) is the statutory body for employment relations
matters for the Republic of Ireland, similar to ACAS in Britain. Its web site contains
other useful links, publications and legal guidance on employment relations matters for
Ireland.

10
McGraw-Hill Education
 Understanding Employment Relations 2e

Multiple Choice Questions

Try the following multiple choice questions to test your knowledge of the information in
Chapter 6. You should note that each question has only one correct answer, and this is
one of the four alternatives (a), (b), (c) or (d) listed below the question. When you have
answered the questions, move to the grid at the end of this chapter to see the correct
answers.

This activity contains 12 questions

1. An Employment Tribunal is:

a. A legal court that adjudicates on employment relations cases

b. An independent State body to help resolve disputes between the parties to an
employment relationship.
c. A higher legal court that has the power to rule on decisions taken in lower
British courts.
d. An employment relations conciliation service which has the power to enforce
statutory laws.

2. In employment relations the task of defining the State can be difficult for which of the
following reasons?

a. It embraces so many different institutions and government departments

b. Because the elected government of the day can change after a General Election
c. The role of the State is determined by civil servants rather than politicians
d. The laws enacted in Britain are now all made at a European level

3. In general terms, which of the following can be described as a broad objective of the
State?
a. To maintain high levels of employment
b. To ensure price stability
c. To maintain a balance of payment surplus
d. All of the above

4. A government which pursues a monetarist economic approach can be defined by which

of the following characteristics?

a. Belief that free market forces are the most efficient way to control inflation
b. That trade unions are a supply-side constraint on the efficient operation of the
market.
c. Privatising public sector services and industries will stimulate greater
competition and growth in private sector jobs
d. All of the above.

11
McGraw-Hill Education
 Understanding Employment Relations 2e

5. The concept of ‘social citizenship’ can be influenced by the State because of which of
the following ideas?

a. To force a private sector employer to act responsibly for the good of the
environment
b. To ensure that goods and services are based on fair-trade principles.
c. To ensure legislation and policy reflects the same principles of wider political
democracy at the workplace level.
d. To pass laws to protect the health and safety of all members of society,
regardless of whether they are workers or not.

6. The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) seeks to

do what?

a. Protect union membership and union facilities when two or more companies
merge.
b. Regulate the working hours of employees when they start a new job with a new
employer.
c. Safeguard the rights and working conditions of employees should their employer
merge or change ownership.
d. All of the above.

7. According to Kahn-Freund (1965), legislation passed by the State fulfils which of the
following functions?

a. To encourage good employment relations among businesses

b. To enforce sanctions that can be taken against employers who ignore laws and
rules established by the State
c. To establish minimum standards for all citizens in the country
d. All of the above.

8. In Britain, a Conservative government would tend to see the role of the State in terms of:
a. Providing stable and long-term employment security for British workers
b. Protecting British jobs and British industry from foreign competition
c. Promoting free enterprise and supporting private business
d. Managing the economy by agreeing incomes policies with business leaders and
trade unions.

9. Statute laws can be defined by which of the following statements

a. Laws made by judges in a higher court of law

b. Legislation that is passed by parliament and has received royal assent.
c. Legislation that deals with unlawful civil acts committed against workers.
d. All of the above.

12
McGraw-Hill Education
 Understanding Employment Relations 2e

10. According to Crouch (1982), the changing role of the State can be explained by which
of the following variables?

a. The relationship between micro and macro economic policies of the State
b. Changing social values and union membership levels
c. Dominant political ideologies and strong independent trade unions
d. All of the above.

11. A legitimate and legal trade dispute is defined as which of the following?

a. Action that is taken in contemplation or furtherance of a trade dispute between

workers and their employing organisation, and which relates wholly or mainly to
the employees’ terms and conditions of employment.
b. Industrial action that is taken in contemplation of securing a closed shop union
agreement between workers and the employing organisation.
c. Action that is short of a strike and is taken in opposition to government plans to
privatise public services.
d. Strike action taken with the support of all affected employees by a show of
hands in support of a dismissed union member.

12. A level of State intervention characterised as ‘Bargained Corporatism’ would include

which of the following features?

a. A strong interventionist belief by the State, which includes the creation of

tripartite consultative bodies to help manage the economy
b. A moderate but begrudging interventionist approach, which the State adopts
only because of the power of strong trade unions
c. A highly centralised strategy to control economic activity because trade unions
are weak and ineffective.
d. A minimalist intervention approach by the State as a way to encourage the
parties to bargain voluntarily without the need for extensive labour laws.

13
McGraw-Hill Education
 Understanding Employment Relations 2e

Answers to Multiple Choice Questions

Question Number Answer Level of Difficulty Page Number

1 a Moderate 189
2 a Easy 168
3 d Easy 169
4 d Moderate 176
5 c Difficult 171
6 c Moderate 185-86
7 d Moderate 171
8 c Easy 169
9 b Easy 185
10 c Difficult 172
11 a Easy 187
12 a Difficult 173

14
McGraw-Hill Education