7 Employee relations

            Phil James

7.1 Introduction

This chapter aims to provide readers with an introduction to the systems and management of employee relations in the UK and some of the key developments taking place concerning them.

Major changes have occurred in the last decade which have impacted on employee relations. Higher levels of unemployment and structural changes in the economy have affected employment patterns, management strategies, and trade union organisation, membership and bargaining power. Thus strike activity has declined significantly, while new legislation has increased the legal liabilities of unions and their members. Alongside these developments innovative collective agreements have been concluded incorporating ‘no strike’ provisions and espousing closer links between pay and performance, extensive labour flexibility, and harmonised terms and conditions of employment for all employee grades. One must take care not to overstate the scale of the changes which have evolved. Thus management-union relations in some organisations may continue to retain significant elements of those which existed during the 1970s, but pressure from global competition is ever-threatening, and constant commitment to change through continuous improvement must be the only route for survival and growth.

This chapter attempts to capture this combination of continuity and radical change. Its contents are presented under four broad, but inter-related, headings: managing employee relations; collective bargaining structure; the conduct of bargaining; and the assessment of employee relations. A brief final section considers likely future developments in employee relations by reference to recent and future trends in union membership and recognition.

7.2 Managing employee relations

As with many tasks of management, there is no one correct way of managing employee relations. Organisations need to develop policies and strategies best suited to individual circumstances. Many factors are likely to play a part. These may include: type of product and labour markets in which an organisation operates; type of technology in operation; internal structure and organisation culture; and the degree and nature of trade union organisation within it.

Employee relations policies not surprisingly vary considerably between organisations. Two leading academics, John Purcell and Keith Sisson, have attempted to classify them into four ‘ideal typical’ styles of management: traditionalist, sophisticated paternalist, sophisticated modern and standard modern.¹

Traditionalists, according to Purcell and Sisson, adopt a policy of ‘forceful opposition’ to trade unions and an often overtly exploitative approach towards their employees. Sophisticated paternalist, a category held to include companies like Hewlett-Packard, Marks & Spencer and Kodak, also tend to be non-union, but differ from traditionalists in that they spend considerable time and money developing personnel policies which ensure that unions are seen as unnecessary and inappropriate by their employees.

Sophisticated moderns, such as Ford, by contrast, adopt a rather more positive approach to trade unions, legitimising their role in certain areas on the grounds that they can help maintain stability, promote consent, assist management-employee communications and help the process of change. Finally, the standard modern category is considered to be the largest and characterised by an approach to employee relations which is essentially pragmatic or opportunistic. While they may recognise unions and employ specialists to handle employee relations, they tend to view it as primarily a ‘fire-fighting’ activity.

In arguing that the standard modern category is the most common, Purcell and Sisson highlight the fact that most UK employers do not tend to approach employee relations in a particularly strategic manner. A recent study of practice in 175 large multi-establishment enterprises found that, while over 80 per cent of firms claimed to have an overall employee relations philosophy, only half said this was written in a formal document and even fewer that a copy of this was given to employees.² The authors concluded that the general weight of evidence seemed to confirm that most UK-owned enterprises remain pragmatic or opportunistic in their approach to the management of employees.

Moreover, the presence of a particular philosophy or policy at corporate level does not necessarily mean that it is actually implemented. Managers within companies differ in terms of both the work they do, and their attitudes, philosophies and personal experiences. These differences inevitably influence how they personally approach the management of their employees. Research on the impact of initiatives introduced to promote greater employee empowerment or involvement illustrates the importance of this point. A variety of studies have found that such initiatives often fail as a result of resistance or failings on the part of junior and middle managers.³ Such findings highlight the importance of providing managers and supervisors with sufficient training so that they are knowledgeable about the procedures they are to operate, understand and support the philosophy underlying them, and possess the skills and competencies needed to carry out the duties relating to them.

7.3 Collective bargaining structure

Collective bargaining arrangements vary in terms of who they cover, the subject matter they encompass, the form they take (procedural and substantive elements) and the levels at which they operate.

Collective bargaining coverage

For collective bargaining to occur trade unions need to be recognised for bargaining purposes. Such recognition has a number of potential advantages and disadvantages for management. On the negative side, unions will inevitably restrict the freedom of management to organise work and reward employees in the way they wish, and this may be considered undesirable in relation to organisational efficiency and costs. Employers may also fear that recognition will lead to the creation of an ‘us and them’ division within the company and necessitate considerable amounts of management time being tied up in negotiations. On the positive side, managements, particularly in larger organisations, may see unions as providing a valuable means of two-way communication with employees. Moreover, collective bargaining may be considered a useful means of gaining workforce commitment, particularly to change, and a relatively efficient way of altering the employment contracts of large numbers of employees simultaneously.

The previous discussion of the differing styles of managing employee relations points to the fact that widely differing views are held regarding the relative strengths of these two sets of arguments. It is clear that in recent years employers, against a background of union weakness, have generally found the arguments against recognition to be the more persuasive. Consequently, there has been an increased unwillingness to grant recognition and a noticeable rise in cases where employers have chosen to derecognise unions, either completely or in respect of particular groups of workers.⁴

The effect of this change in employer attitude has been accentuated by two further developments. First, a shift of employment from traditionally highly unionised areas of the economy, like manufacturing, to sectors such as retailing, and hotels and catering, where union recognition has historically been limited.⁵ Second, a reduction in the size of employment units, stemming in part from this shift in the distribution of employment as well as the more general growth of small businesses.

At the same time collective bargaining remains an important feature of the UK economy. Findings from the 1990 Workplace Industrial Relations Survey indicated that in workplaces with 25 or more employees, collective bargaining covered around 54 per cent of employees, and had formed the basis of the most recent pay increase for manual workers in 48 per cent of workplaces and for non-manuals in 43 per cent.⁶ These average figures, however, conceal marked sectoral variations in the extent of union recognition. For example, the same survey found that whereas unions were recognised in nearly 90 per cent of public sector workplaces, the corresponding figures for the private manufacturing and services sectors were 44 per cent and 36 per cent, respectively.⁷

The subject matter of bargaining

The subjects covered by management-union negotiations can be considered under two broad headings: procedural rules — which lay down the regulatory framework within which management-union relations are to be conducted; and substantive provisions which lay down the terms and conditions under which workers are employed.

Procedural rules: These can cover a wide variety of issues including: types of workers covered by collective bargaining; composition of the machinery through which management-union discussions and negotiations are to take place; appointment and constituencies of shop stewards; shop stewards’ rights, facilities and training; subject matter to be discussed and negotiated; and procedures to be followed when attempting to resolve or handle particular issues.

Where more than one union is recognised, a not uncommon situation in the UK, particularly in the public sector, separate procedural arrangements will frequently be agreed with each union. This is particularly likely to occur where both manual and non-manual unions are recognised. But it may also apply where more than one manual union is present. (Traditionally, in manufacturing, unions representing production workers frequently bargain separately from those representing craft workers.)

The Donovan Commission which reported on trade unions and employers’ associations in the UK in the 1960s revealed that multi-unionism, and the multiplicity of bargaining units frequently associated with it, had long been a criticised feature of UK industrial relations.⁸ It was seen to have a number of potential drawbacks for employers. Inter-union disputes over the right to recruit particular types of worker, demarcation disputes over whose members can do particular work, inefficiencies arising from job demarcations, and the greater complexity of bargaining arrangements were among the problems highlighted. Thirty years on in multi-union workplaces employers have sought to minimise such problems by persuading different unions to negotiate together, thus reducing the number of bargaining units.

This process of rationalisation has also seen the creation of single-table bargaining arrangements under which all unions bargain jointly. Organisations which have taken this route include British Steel Strip Products, Midlands Electricity, Thames Water and a number of NHS Trusts.⁹

Where organisations set up operations on ‘greenfield sites’ they are frequently seeking to avoid the problems associated with multi-unionism by recognising just one union, if they are willing to concede recognition at all. Such single union agreements have been established in a number of Japanese companies, including Nissan, Sanyo Industries, Toshiba, Hitachi and Komatsu, as well as on new sites opened by companies which have long had operations in the UK.

Many of these ‘single union deals’ contain a number of distinctive features.¹⁰ These include: harmonised terms and conditions of employment for all staff (including a common grading structure); incremental pay structures and appraisal systems covering all employees (see also Chapter 12); wide-ranging labour flexibility provisions, and negotiating and consultative machinery involving the workforce rather than union representatives. Such features are now also becoming a feature of agreements concluded on older ‘brownfield’ sites.

Substantive provisions: The substantive content of collective agreements can encompass a vast array of issues: hours of work, holidays, staffing levels, payment systems, pensions, gradings, redeployment, environmental conditions, job content and pay are just some of the topics that may be covered. Some firms negotiate longer-term pay deals as a way of creating a more predictable and stable employee relations environment. Such agreements, which generally still provide for annual pay increases, usually last either two or three years. Longer-term agreements are not unknown. For example, a five-year agreement covering distribution drivers has recently been signed at Blue Circle. This provides for greater work flexibility, contains a management commitment not to make compulsory redundancies or engage in any further contracting out of haulage work during the period of the agreement, and establishes a pay review body to determine pay increases during the final three years of the agreement by reference to ‘industry standards’.¹¹

Organisations have also, against a background of greater competitive pressures and declining union power, secured significant changes in the substantive content of collective agreements.¹² Grading structures have been simplified to remove restrictive distinctions between different categories of jobs, sometimes as part of harmonisation programmes; closer links have been established between pay and performance; working practices have been reformed to acquire greater labour flexibility by breaking down demarcations between different types of craft worker and making production workers responsible for inspecting the quality of their work and carrying out routine maintenance. Working hours have been reformed and greater use made of part-time, temporary and sub-contract staff, to achieve a better match between labour supply and demand. New patterns of working hours include changes to shift patterns, the use of ‘min-max’ contracts under which employers are able to vary the number of hours an employee works during a particular week up to a specified maximum, and annual hours schemes which enable the number of hours worked in a defined period, for example where the work has seasonal fluctuations, to be varied in relation to a given number of working hours per year.

Employers have been active in taking initiatives to improve management-worker communication, and to involve employees more closely in decision-making, at least at the level of their job.¹³ A variety of different means has been used to achieve these objectives including videos, in-house newspapers, employee reports providing information on the employer’s financial results, team briefing, profit sharing and share option schemes, quality circles and team working.

A recent agreement covering craft and process workers at Castle Cement provides a good illustration of these developments. This provides for the replacement of existing job demarcations with a system of multi-skilled team working; the introduction of an annualised hours scheme; the establishment of a grading structure encompassing fewer and more broadly defined job grades; and the creation of harmonised arrangements for redundancy and sick pay.¹⁴

Levels of bargaining

Collective bargaining can take place at industry level through the medium of employers’ associations as well as in individual organisations. Within individual organisations it can take place at different levels, such as company, division and establishment levels.

Industry-wide bargaining has been of declining importance throughout the past 50 years.¹⁵ As we approach the millennium it now covers less than one in ten of those employees covered by collective agreements.¹⁶ Such bargaining continues to operate in a number of sectors, including electrical contracting, local government and the printing industry. The agreements concluded generally set only minimum rates of pay which are often considerably exceeded following negotiations conducted within individual organisations, although terms concerning matters like overtime premium, sick pay, hours of work and holidays are usually followed.

This decline in the importance of multi-employer bargaining has been compounded in recent years by developments stemming from the government’s policy of privatisation, its creation of an internal market in the National Health Service and resultant NHS Trusts, and the introduction of compulsory competitive tendering (CCT) in local government. The privatisation of the electricity and water industries prompted the demise of the previously existing systems of national bargaining and their replacement by individual company-based arrangements,¹⁷ while the advent of NHS Trusts has led to attempts to reduce the importance of centralised pay negotiations and increase the role of local pay determination.¹⁸ In a similar vein, CCT has in some cases resulted in local government Direct Labour Organisations (DLOs) moving away from national agreements in order to establish terms and conditions of employment that would enable them to win contracts.¹⁹

Management must take into account a wide variety of factors and considerations when deciding the level at which to bargain within their organisations.²⁰ Both centralised and decentralised bargaining arrangements have potential advantages and disadvantages. Centralised arrangements can make labour costs more predictable, enable a common approach to be adopted towards union recognition, and ensure that negotiations are carried out by skilled and experienced negotiators. They also ensure consistency between workplaces thereby avoiding jealousies and rivalries between them and the comparability-based pay claims that these may generate. On the other hand, central negotiations can be very time-consuming and lead to delays in resolving disputes. They may also mean that pay rates have to be set at the level sufficient to recruit and retain labour in the most expensive labour market in which the employer operates. Moreover, it is difficult to take account of differences in the performance of different workplaces and the types of work they carry out, and to engage in detailed discussions about ways of improving efficiency. A further potential problem is that where negotiations ‘break down’, any resultant dispute is likely to affect the whole company rather than just one part of its operations.

A number of factors need to be considered when assessing the relative strengths and weaknesses of these arguments. These include: internal management structure, existing patterns of union representation and collective bargaining, payment system in use, geographical location of plants, nature of labour and product markets, and types of work carried out.

In practice, companies have been moving away from highly centralised bargaining arrangements and seeking to negotiate at divisional or workplace level. Philips, Royal Insurance, Courtaulds, GEC, Pilkington and the privatised regional electricity companies are among those organisations that have gone down this road during the last decade or so. The trend appears to be very much associated with a change in corporate strategy and business policy towards local profit centres, and the granting of greater autonomy to management at unit level.²¹ It is also seen to reflect the greater emphasis being placed on the cost-effective use of human resources.²²

Decentralisation of bargaining does not, however, mean that local managers are given a completely free hand on employee relations matters. In fact, rather the opposite appears to be true. The study of multi-establishment companies mentioned earlier, for example, found that two-thirds of those with establishment-level bargaining had a policy on pay settlements or issued pay guidelines and a similar proportion indicated that there were consultations with management at higher levels before the start of negotiations.²³ Only 17 per cent of establishments surveyed in the study indicated no such higher-level policy, guidelines or consultation.

7.4 The conduct of bargaining

Collective bargaining conduct is considered under four headings: the context of negotiations; the nature of negotiations; the bargaining encounter; and disputes procedures.

The context of negotiations

Collective bargaining is part of an ongoing relationship between management and unions. This needs to be borne in mind during negotiations, and care must be taken to ensure that relatively minor short-term gains are not obtained at the cost of harm to the long-term relationship. Nevertheless, disagreements will inevitably occur which will prove difficult, if not impossible, to resolve in a way that is reasonably acceptable to both management and union.

Negotiations involve a combination of coercive and persuasive strategies. The latter encompass both threats and arguments; the former, the application of direct sanctions intended to inflict harm on the opposing side and prompt it to shift its negotiation position.

Threats and arguments can take a number of different forms and those used will inevitably be influenced by the issues under discussion and the particular circumstances surrounding those discussions. In the case of pay negotiations union claims will often be supported by reference to one or more of the following: rises in the cost of living, improvements in productivity, trends in company profitability, the level of settlements negotiated elsewhere in the industry or the economy, and the earnings of other employee groups, either inside or outside the company. Notions of equity, fairness and justice will frequently underpin, either implicitly or explicitly, union arguments put forward concerning pay and other issues. For example, in discussions over a disciplinary matter, union representatives may well argue that the proposed penalty is out of all proportion to the offence committed, or that management is guilty of inconsistency in that a lesser penalty had been imposed when a similar situation occurred in the past. It is important not to underestimate the importance of such notions when handling such issues.²⁴

Threats involve one party threatening to impose sanctions on the other unless a more favourable settlement is offered. Sometimes these threats may be meant. On other occasions they may involve an element of bluff. A crucial task for the other party is to try and assess which of these situations apply. Sanctions can be imposed by both sides. Management may, for example, threaten to lock the workforce out, cease negotiations and impose a pay settlement unilaterally, dismiss any workers taking industrial action, or close the workplace down. Union-initiated sanctions can include strikes, go-slows, work-to-rules, overtime bans and the withdrawal of cooperation.

Calculations about the ability of members to take effective action will influence the willingness of unions to impose sanctions on a particular issue. These in turn will reflect assessments of the degree of support among members and the capacity of those members to disrupt their employer’s operations. The nature of the employer’s products, the position the workers occupy in the work process, and in particular the immediacy and extent to which they can affect the supply of goods and services, and the ability of the employer to find alternative means of meeting customer demand — such as through the use of alternative labour or production from another plant — are some of the more important factors which will influence the disruptive potential of particular employee groups.²⁵

The nature of negotiations

The process of negotiation has been defined by Gottschalk as ‘an occasion where one or more representatives of two or more parties interact in an explicit attempt to reach a jointly acceptable position on one or more divisive issues’.²⁶ Various models have been put forward to analyse management-union negotiations. One of the most influential is that developed by Walton and McKersie who argue in their model that negotiations consist of four sub-processes: distributive bargaining, integrative bargaining, attitudinal structuring and intra-organisational bargaining.²⁷

Distributive bargaining exists where the function of the negotiations is to resolve conflicts between the parties, the resolution of which requires by definition one party to win, the other to lose. Walton and McKersie argue that this form of bargaining is the dominant activity in management-union negotiations.

Integrative bargaining, in contrast, refers to negotiations over issues which are not marked by fundamental conflicts of interest and hence are capable of solutions which benefit both sides to some degree, or at least do not result in the gains of one side representing equal losses for the other. The productivity bargaining carried out in the 1960s and 1970s under which employees agreed to accept more efficient working practices in return for improved terms and conditions was a good example of this type of bargaining.²⁸ The same is true of some of the flexibility agreements signed in the 1980s.²⁹

While most bargaining situations will involve elements of both distributive and integrative bargaining, they will generally approximate to one or other of these two ‘ideal types’. According to Walton and McKersie, ‘integrative bargaining is tentative and exploratory and involves open-communication processes, whereas distributive bargaining involves adamant, directed, and controlled information processes’.³⁰ Integrative bargaining is consequently facilitated by a supportive and trusting climate which encourages the negotiators to behave spontaneously without fear of sanctions.

Attitudinal structuring is more concerned with the process by which one party to the negotiation attempts to influence the attitudes of the other in a way favourable to itself. Attitudes can be influenced both during negotiations and before they start. For example, management and unions may try to influence the expectations of the other side with regard to forthcoming negotiations during discussions in forums like joint consultative committees.³¹ Management may also try to influence attitudes in the build-up to negotiations by the provision of information on financial performance, trading prospects and likely future developments in the enterprise. Here it should be noted that under the Trade Union and Labour Relations (Consolidation) Act 1992 officials of independent, recognised unions have a right, on request, to be provided with information without which they would be ‘to a material extent impeded’ in carrying out collective bargaining. Employers have a similar obligation to provide information which it would be in accordance with good practice to disclose for the purpose of such bargaining (see Chapter 8). An ACAS Code of Practice provides guidance on the types of information that employers should disclose in order to meet their statutory requirements.³²

Intra-organisational bargaining, the final sub-process distinguished by Walton and McKersie, reflects the fact that those directly involved in negotiations are acting as representatives of their respective parties. Consequently, an important aspect of negotiations is the process of discussion and debate that goes on within each of the parties involved in order to reach consensus on matters like the offer which should be made to the other side, the tactics to be employed during negotiations and the acceptability of a proposed settlement. As one writer has observed, ‘when two organisations are party to negotiations, it takes, in effect, three agreements to achieve a negotiated settlement between the parties: an agreement within each party and between them’.³³ In the public sector this process of intra-organisational bargaining can be particularly complex since the government will frequently try, either formally or informally, to influence the policies and strategies adopted by management.

Negotiators need to bear in mind these intra-organisational considerations. A sensitivity to, and awareness of, the internal political pressures which the negotiators ‘on the other side’ are under can be helpful in the search for the compromises and packages necessary to resolve disputes. Moreover, management negotiators need to appreciate that even if their union counterparts find an offer acceptable, they may have to reject it because of the views of their members.

Negotiations may involve union full-time officials, shop stewards or a combination of the two. Shop stewards are elected by union members in a particular location, department or section to represent their interests. Traditionally they were associated with manufacturing industry and manual workers, their widespread appointment developing first in the skilled engineering trades during the nineteenth century.

Today it is estimated that there are more shop stewards in the public sector than in the private, and that there are nearly as many representing non-manual employee grades as manual. Shop stewards are found in the majority of workplaces where unions are recognised and where two or more stewards are present, they may appoint senior stewards, and/or conveners. Committees representing stewards from one or more unions may also exist. Consequently, when negotiating, stewards have to take account not only of the policies of the national union, and the expectations and aspirations of their members, but also the views of their fellow stewards.

The nature of the relationship between stewards and the members they represent will reflect the composition of the workforce and their own personality and opinions. A study of steward organisation in a car factory distinguished four different types of steward based on the extent to which they espoused trade union principles and the nature of the relationship they had with their members.³⁴ The most important distinction was that drawn between what they termed leader and populist stewards. Leader stewards adopted an initiator role in decision-making, actively shaping the issues raised on behalf of members, and sought to achieve objectives supportive of wider trade union principles. Populists, in contrast, saw themselves more akin to a delegate whose role was to carry out merely the wishes of the membership, whatever these might be. Interestingly, Batstone found populists to be more common among white collar groups and leaders among manual workers.

The bargaining encounter

Negotiations can range from relatively informal discussions between a supervisor and a shop steward to a large set-piece affair involving a number of representatives from each side. In this second situation, it is important to clarify the roles to be played by each member of the negotiating team before the start of negotiations. Roles commonly distinguished are those of chief negotiator, the person who does most of the talking, the secretary, who is expected to keep notes and look for any verbal or non-verbal signals from the other side, and the analyst, whose role is to scrutinise and analyse what is being said and to summarise the issues, if and when this is appropriate. Negotiating teams may also include one or more specialists with technical knowledge and experience relevant to the issues under discussion.³⁵

It is vital to ensure that team members do not give contradictory messages, since this is not only confusing, but may give the other side an opportunity to exploit any differences of opinion that exist. Disagreements within a negotiating team should be discussed during adjournments, an important part of negotiations. Adjournments give negotiators time to consider the arguments and offers put forward by the other side, to re-appraise their bargaining tactics and to seek clearance from senior management if a change in bargaining objectives is thought desirable.

Good preparation is an essential prerequisite for effective negotiations. Each side needs to consider carefully what its negotiating objectives are to be, including fallback positions, and the arguments to be used to support them. Where a number of issues are to be discussed, it may be useful to allocate the various objectives to one of three categories: essential, desirable and optimistic.³⁶ Negotiators should give thought also to the objectives likely to be pursued by the other side, and the arguments that they may use to support them. They must also consider the necessary bargaining tactics, for example, management may choose to make a relatively generous opening offer which leaves little subsequent room for manoeuvre, or it may adopt the opposite approach.

Once negotiations start, the convention is that the party seeking the negotiation should open the encounter. In the case of a pay claim, the union will start the process by outlining its claim and the rationale underlying it. At this stage management listens carefully to what is being said, seeks any necessary clarification and makes sure that what the union is asking for is fully understood. Indeed, these three techniques should be used throughout negotiations. Research by Rackham and Carlisle has found that ‘skilled negotiators’ tend to seek more information, and more frequently to summarise and test understanding, than ‘average negotiators’.³⁷

Agreement by definition only becomes possible if one or both sides are willing to make concessions and move from their opening positions. But both sides may be wary of offering concessions for fear that they will not be reciprocated. The use of what has been called signalling can be used to try and ‘break out’ of circular and non-conclusive argument in a way that minimises this danger. Signals are qualifications placed on a statement of position indicating a willingness to consider alternative proposals. An example is where a negotiator adds the phrase ‘in its present form’ to a statement that ‘we will never agree to what you are proposing’.³⁸ More generally, when negotiating, it is important to think creatively about how the various issues on the bargaining table can be combined or packaged in a manner acceptable to both sides.

As far as possible, exchanges that could be perceived as personal attacks by the other side’s negotiators should be avoided since this is unlikely to be helpful to the discussions and could have adverse implications for future negotiations. Similarly, where a party makes a concession it may be sensible to help them do this without losing face.

Once agreement has been reached, it is important to clarify exactly what has been agreed. One way of doing this is to prepare a detailed summary which both sides then agree. A further important point is that union negotiators will frequently have to refer agreements to their members for approval before they can agree them formally. Management should seek an undertaking that they will recommend acceptance by their members.

Disputes procedures

When negotiations become deadlocked the parties will usually register a failure to agree and refer the issue to the next stage of the disputes procedure. It is normally understood, if not explicitly stated, that both sides will refrain from taking any industrial action until all stages of the procedure have been exhausted. Nevertheless, unconstitutional action, that is, action in breach of procedure, can occur.

Disputes procedures are intended to aid the resolution of disputes by enabling them to be processed through a series of hierarchical stages, each of which involves the introduction of more senior personnel from both sides who are less directly involved with the issues under discussion. Survey evidence shows that the majority of workplaces with 25 or more employees have formal, written procedures and that they are almost universal in establishments with workforces of over 500.³⁹ The absence of a formal procedure does not, however, mean that an organisation does not have any standard means of processing disputes.⁴⁰

When devising procedures only those levels of management able to play an effective role in resolving disputes need to be involved, to avoid their becoming unduly cumbersome and time-consuming. An important issue is whether individual grievances and collective disputes should be covered by the same procedure. Where a combined approach is adopted, it is common with collective disputes for the procedure to provide for certain of its early stages to be omitted.

Procedures vary considerably both in relation to the number of stages they contain and the identity of those to be involved at each stage.⁴¹ Three main levels or stages can be distinguished, although each of these may in turn include a number of different stages. These are the department, the establishment and the external. An additional corporate level stage may be distinguished in some multi-plant companies.

Not all procedures formally provide for issues to be referred outside the organisation. Where provision is made, it may take the form of reference to an industry-wide disputes procedure if the employer concerned is a party to the relevant set of industry-level negotiations. Alternatively, the matter may be referred to an independent third party.

Independent third party intervention, often organised in the UK under the auspices of ACAS, can take one of three main forms: conciliation, mediation and arbitration. With conciliation the third party supports the negotiating process by assisting the parties to identify the nature of their differences and possible ways of resolving them. Mediation, in practice often difficult to distinguish from conciliation, permits a rather more interventionist stance in that the third party puts forward recommendations for settlement, although the parties are free to accept, reject or amend the terms proposed. Finally, arbitration involves an even greater degree of intervention in that the third party has to make an award which is binding on the parties.

Procedures which include provision for third party intervention differ in terms of how the process is to be triggered. In some cases this can only occur with the joint agreement of the two parties. In others, one party may have the right to refer an issue to a third party. A third possibility is for the procedure to provide for an issue to be automatically referred once a failure to agree has been registered internally. Moreover, it is possible for procedures not only to specify more than one type of intervention, but to lay down different procedures regarding how they are to be initiated. For example, an agreement may provide for joint reference to conciliation, but unilateral reference to arbitration.

Procedures which provide for automatic recourse to arbitration were central to the debate about ‘no strike’ or ‘strike-free’ deals. This was because, when combined with the normal obligation not to take action in breach of procedure, they effectively precluded a union from calling unconstitutional industrial action. Optical Fibres, NEK Cables, Toshiba and Hitachi are among the companies with agreements of this type.⁴²

Arbitration can provide a valuable means of resolving disputes without costly industrial action, but it does have several potential drawbacks since, by definition, it involves management allowing a third party to decide issues which could have considerable implications for internal costs and efficiency. It may also act to undermine the collective bargaining process in two important ways: first, because it provides the parties with a way of ‘getting off the hook’ without having to work out their own solutions; second, because arbitrators can choose compromise solutions somewhere between the final negotiating positions of the two sides. As a result, it is argued that negotiators are encouraged to hold back their final negotiating stances on the grounds that they have ‘something to give’ at the arbitration stage. In the USA this is referred to as the ‘chilling effect’.

Such potential drawbacks have prompted considerable interest in the concept of ‘pendulum’ or ‘last offer’ arbitration, a feature of most of the ‘strike-free’ deals referred to above. Used widely in the USA to resolve public sector disputes, this type of arbitration differs from that traditionally used to resolve disputes over issues like pay in that the arbitrator cannot make an award somewhere between the final negotiating positions of management and union. In other words, the arbitrator has to opt for one or other side.

It is argued that pendulum arbitration serves to support rather than undermine collective bargaining since it encourages the parties to narrow their differences as far as possible in order to avoid the ‘all or nothing’ character of the process and minimise their chances of losing if an issue does go to arbitration. But it does have certain potential disadvantages compared with ‘traditional arbitration’.⁴³ These include the difficulties surrounding what constitutes the final negotiating positions of management and union; the fact that it precludes arbitrators from considering the long-run implications of their awards for industrial relations; and the rather crude nature of the process where the dispute concerns a complex set of negotiations covering several different issues such as pay, holidays and hours of work.

7.5 Assessment of employee relations

Disputes procedures are intended to help management and unions to resolve disagreements without recourse to costly industrial action. However, they must guard against assessing the quality of their employee relations solely by reference to the amount of such action experienced.

Effective management-union relations take place within the context of the employment relationship more generally. Both parties to this relationship, management and workers, have objectives which they want to fulfil. Employees, for example, are likely to see their work as a means of meeting their aspirations on, for example, pay levels, employment security, hours of work, and promotion. Similarly, organisations employ people to enable the enterprise to further its commercial and/or public service objectives.

As seen by the employer, the ultimate test of effectiveness should be whether their management-union relations enable the organisation to operate in a way conducive to the achievement of both its short- and long-term objectives. Relevant questions to consider are whether they are helping or hindering the achievement of high levels of output and productivity, satisfactory labour recruitment and retention, the maintenance of an atmosphere supportive of change, and the presence of a committed and motivated workforce.

Organised conflict can dramatically harm an employer’s operations in each of the areas mentioned. This is certainly not what any employer wants. On the other hand, a low level of conflict is not necessarily a sign that relationships are satisfactory. It is quite possible for low levels of conflict to exist alongside high levels of absenteeism and labour turnover, inflexible working practices, and widespread resistance to change. As has been pointed out by Fox, ‘overt and palpable expressions of conflict are no more a reliable indicator of low morale than their absence is of a clean bill of health’.⁴⁴

7.6 Future developments in employee relations

The future coverage of collective bargaining in the UK is inexorably linked to developments in union membership and recognition. As already noted, the past 15 years have seen unions experiencing reverses in both of these areas.

Back in 1979 union membership in Britain had reached an all-time record level of 12.6 million, or 55 per cent of the employed workforce. Since then it has declined both continuously and dramatically. Indeed, data from the Labour Force Survey indicates that by the autumn of 1993 membership had fallen by over 4 million to 7.7 million covering 31 per cent of those in employment.⁴⁵

A variety of economic and structural factors have contributed to this decline in membership.⁴⁶ These include the existence of relatively high levels of unemployment combined with generally rising real incomes; a shift of employment away from highly unionised industries, such as mining, manufacturing and the docks, to the less well-organised private services sector; an increase in the number of white collar and female workers; and a growth in self-employment and temporary and part-time work.

The effects of these developments have in turn been compounded by changes in employer and government attitudes towards trade unions. Successive governments since 1979 have introduced a host of legislative changes which have both made it harder for unions to secure recognition and increased their vulnerability to legal action.⁴⁷ For example, the previously existing statutory recognition procedure has been repealed; secondary (sympathetic) action and the enforcement of closed shop arrangements have been made unlawful; the inclusion of union-only clauses in commercial contracts has been prohibited; and employers have been given the right to seek damages from unions in respect of industrial action which has not been approved by a membership ballot. At the same time, and partly as a result of these legislative developments, employers have been considerably less willing to recognise unions and in some cases have decided to withdraw recognition, either completely or in respect of particular groups of staff.⁴⁸

One response of unions to these developments, and the loss of subscription income associated with them, has been to merge as a means of obtaining greater institutional security and economies of scale. As a result the number of unions in the UK dropped from 454 in 1979 to 268 in 1992.⁴⁹ New unions created as a result of mergers during this period included Manufacturing, Science and Finance (MSF), the Amalgamated Engineering and Electrical Union (AEEU), the Graphical, Paper and Media Union (GPMU) and UNISON, the public services union.

Another union response has been to improve the organisation and resourcing of their recruitment activities. For example, new legal and financial services have been made available to members and attempts made to increase recruitment among part-time, temporary, and even self-employed workers.⁵⁰ There is considerable debate as to how far activities of this type can succeed in securing an expansion of union membership.⁵¹ However, it would seem questionable whether they can significantly reverse recent membership trends in the absence of an economic and political environment which is more conducive to union organisation.

It is a matter of speculation whether, and to what extent, such an environment will become a reality. At the time of writing, it appears that a more supportive political climate may develop as a result of the election of a Labour Government committed to re-introducing a statutory union recognition procedure. In addition, it is possible that union attempts to increase membership and recognition will be assisted by European Union developments relating to the establishment by employers of consultative representative bodies.

The European Works Council Directive currently requires over 200 UK multinationals to establish such bodies in respect of their operations elsewhere in the European Union and it appears that most of these will choose to include representatives of their home workforce in the arrangements they establish. Moreover, the number of companies affected by the Directive will increase further should a subsequent government elect to sign the Social Protocol attached to the Maastricht Treaty. The establishment of bodies of this type in companies which do not recognise unions for all (or parts) of their UK workforce could provide unions with another forum to push for recognition rights. This would perhaps be even more true of any future European requirements concerning the creation of domestic, rather than transnational, consultative arrangements.⁵²

7.7 References

1. Purcell J, Sisson K. Strategies and practices in the management of industrial relations. In: Bain GS ed. Industrial relations in Britain. Oxford: Blackwell, 1983. Also see Purcell J. Mapping management styles in employee relations. Journal of Management Studies 1987; 24: 533–548.

2. Marginson P, Sisson K. The management of employees. In: Marginson P et al. Beyond the workplace: managing industrial relations in the multi-establishment enterprise. Oxford: Blackwell, 1988.

3. Geary J. New forms of work organisation: the case of two American electronics plants. Economic and Industrial Democracy 1993; 14: 511–534.

4. Gregg P, Yates A. Changes in trade union and wage setting arrangements in the 1980s. British Journal of Industrial Relations 1991; 29: 361–76; and Claydon T. Union derecognition in the 1980s. British Journal of Industrial Relations 1989; 27: 214–224.

5. Lucas R. Industrial relations in hotels and catering: neglect and paradox? British Journal of Industrial Relations 1996; 34: 267–286.

6. Millward N et al. Workplace industrial relations in transition: the ED/ESRC/PS1/ACAS surveys. Aldershot: Dartmouth, 1992.

7. Millward et al., Workplace industrial relations: 71.

8. Royal Commission on Trade Unions and Employers’ Associations 1965–68. Report. Cmnd 3623, London: HMSO, 1968.

9. Single-table bargaining: an idea whose time has yet to come? 1RS Employment Trends 1995: 577, February: 10–16.

10. Bassett P. Strike free: new industrial relations in Britain, revised edition, London: Macmillan, 1987.

11. IDS Report, January 1997.

12. See e.g. Brewster C, Connock S. Industrial relations: cost effective strategies. London: Hutchinson, 1985.

13. Marchington M et al. New developments in employee involvement. Employment Department Research Paper No. 2, London: Department of Employment 1992.

14. A firm foundation: Castle Cement’s new deal. IRS Employment Trends 1997: 628, March: 11–16.

15. Brown W, Walsh J. Pay determination in Britain in the 1980s: the anatomy of decentralisation. Oxford Review of Economic Policy 1991; 7: 44–59.

16. Brown W. The contraction of collective bargaining in Britain. British Journal of Industrial Relations 1993; 31: 189–99.

17. Ogden S. Decline and fall: national bargaining in British water. Industrial Relations Journal 1993; 24: 44–58; and James P. Reforming industrial relations in electricity supply. 1RS Employment Trends 1992; 521, October: 6–12.

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20. See e.g. Commission on Industrial Relations. Industrial relations in multi-plant undertakings. Report No. 85, London: HMSO, 1974; and Jackson M et al. Decentralisation of collective bargaining: an analysis of recent experience in the UK. London: Macmillan, 1993.

21. Purcell J. How to manage decentralised bargaining. Personnel Management 1989; May: 53–55.

22. Brewster, Connock, Industrial Relations.

23. Edwards PK, Marginson P. Trade unions, pay bargaining and industrial action. In: Marginson et al. Beyond the workplace: 123–164.

24. Hyman R, Brough I. Social values and industrial relations. Oxford: Blackwell, 1975.

25. Batstone E, Boraston I, Frenkel S. The social organisation of strikes. Oxford: Blackwell, 1978: 27–44.

26. Gottschalk A. The background to the negotiating process. In: Torrington D ed. Code of personnel administration. Aldershot: Gower, 1973.

27. Walton R, McKersie R. A behavioral theory of labor negotiations. New York: McGraw-Hill, 1965.

28. See e.g. McKersie R, Hunter L. Pay, productivity and collective bargaining. London: Macmillan, 1973.

29. Marsden D, Thompson M. Flexibility agreements and their significance in the increase in productivity in British manufacturing since 1980. Work, Employment and Society 1990; 4: 83–104.

30. Walton, McKersie Behavioral theory: 166.

31. Marchington M, Armstrong R. A case for consultation. Employee Relations 1980; 3: 10–16.

32. ACAS Code of Practice: disclosure of information to trade unions for collective bargaining. London: HMSO, 1977.

33. Singh R. Negotiations In: Towers B ed. A handbook of industrial relations practice. London: Kogan Page, 3rd edition, 1992: 137–151.

34. Batstone E, Boraston I, Frenkel S. Shop stewards in action. Oxford: Blackwell, 1977.

35. Useful texts on the negotiating process include: Atkinson G. The effective negotiator. London: Quest, 1977; and Kennedy G, Benson J, McMillan J. Managing negotiations. London: Hutchinson, 2nd edition, 1984.

36. Kennedy et al., Managing negotiations.

37. Rackham N, Carlisle J. The effective negotiator — Part 1. Journal of European Industrial Training 1978; 6: 7–14.

38. Kennedy et al., Managing negotiations: Ch. 5.

39. Millward et al. Workplace industrial relations: 189–190.

40. Thomson A, Murray V. Grievance procedures. London: Saxon House, 1975.

41. Singleton N. Industrial relations procedures. London: HMSO, 1975.

42. No-strike deals: are they different? Industrial Relations Review and Report 1988; 414, 19 April.

43. Wood J. Last offer arbitration. British Journal of Industrial Relations 1985; XXIII: 415–424.

44. Fox A. Industrial sociology and industrial relations. Royal Commission on Trade Unions and Employers’ Associations, Research Paper No. 3, London: HMSO, 1967: 9.

45. See Waddington J, Whitson C. Trade unions: growth, structure and policy. In: Edwards P ed. Industrial relations: theory and practice in Britain. Oxford: Blackwell, 1995: 151–202.

46. See e.g. Disney R. Explanations of the decline in trade union density in Britain: an appraisal. British Journal of Industrial Relations 1990; 28: 165–177.

47. Dickens L, Hall M. The state: labour law and industrial relations. In: Edwards P ed. Industrial relations: theory and practice in Britain. Oxford: Blackwell, 1995: 255–303.

48. See Gregg, Yates, Changes; and Claydon, Union derecognition.

49. Waddington J, Whitson C. Trade unions: growth, structure and policy. In: Edwards P ed. Industrial relations: theory and practice in Britain. Oxford: Blackwell, 1995.

50. Mason B, Bain P. Trade union recruitment strategies: facing the 1990s. Industrial Relations Journal 1991; 22: 36–45.

51. See e.g. Mason B, Bain P. The determinants of trade union membership in Britain: a survey of the literature. Industrial and Labour Relations Review 1993; 46.

52. Wedderburn Lord. Consultation and collective bargaining in Europe: success or ideology? Industrial Law Journal 1997; 26: 1–34.