“The Employment Rights Act 2025 contains many useful measures, but it simply does not go far enough to re-empower workers and their unions.”
Andy McDonald MP and John Hendy wrote a piece for the Socialist Campaign Group’s 2026 pamphlet ‘The Socialist Policies We Need’. You can read the pamphlet in full below.
There are 34 million workers in the UK out of a population of 67 million. The standard of living of the working class depends on them earning a fair wage. The Government’s efforts to cap energy and housing costs have not so far succeeded.
Of course, those who are unemployed, sick, disabled or devoted to caring need decent social security. But the wages of the 34 million workers are the backbone of the economy. It’s wages that generate the demand in the economy on which employers depend and which creates jobs.
Wages and the cost of living
Increases to the national minimum wage are not insignificant, but the national minimum wage is not a minimum wage; it is a minimum hourly rate, and it does not enhance the wages of a large proportion of the workforce who earn something more than that rate.
The cost-of-living crisis tops the concerns of working-class people. To improve their standard of living, it is essential to raise wages. Workplace laws enable this. The key is not so much to create new or extend existing rights at work – useful though that is – but to alter the balance of power at work, so that employers are forced to respond to the demands of their workers.
In the past, from the end of the Second World War until the 1980s, over 80% of our workforce had terms and conditions of employment established in agreements negotiated between unions and employers; the share of Gross Domestic Product (GDP) going into wages rather than profits was the highest ever, and unemployment was negligible.
Then came Thatcher’s ‘anti-union laws’, privatisation, outsourcing and globalisation. In consequence, collective agreement coverage has now been driven down to about 25% of the workforce, the real value of wages has been stagnant for nearly two decades, and the share of GDP going to wages has gone down and the share to profits up.
That, of course, was the very purpose of the anti-union laws – to reduce the power of working people, through their unions, to protect or enhance their wages and working conditions.
HMRC data shows that, currently, the median wage (the point at which half the workforce earn less, and half earn more) of payrolled employees is £31,524 gross, with take-home pay at £26,217 annually. That translates to £606.23 gross per week and £504.17 after tax. For a family of four with one earner, that is completely inadequate. Yet, by definition, half of full-time employees earn less than that.
The medians for part-time workers, the self-employed, women, ethnic minorities and the disabled are lower still.
The Joseph Rowntree Foundation estimates that, for a socially acceptable minimum living standard, a couple with two children needs to earn £74,000 a year between them. Even with both parents working, the majority of families cannot reach that standard.
Consequently, 1.7 million children in poverty live in families where at least one adult is in work, and 1.6 million children live in poverty in families where every adult in the family is in work.
Collective bargaining
The only way to increase the real value of wages is widespread collective bargaining. That is the reason that the OECD, the IMF and the ILO all now advocate it, and why the EU’s 2022 Adequate Minimum Wage Directive requires EU Member States with a level of collective bargaining coverage below 80% of the workforce to produce an action plan to achieve at least that level. As noted above, until the impact of the anti-union laws, this country had a level of collective bargaining coverage in excess of 80%!
The absence of collective bargaining for three-quarters of our workers is the principal explanation for low pay. That absence is also a key component of the lack of demand in the economy and a major contributor to government expenditure on subsidising low wages: 32% of those on universal credit are actually in work.
The New Deal
The Labour Party in 2021 produced a Green Paper outlining the measures required to rectify the situation called a New Deal for Working People. Enthusiastically endorsed by Party Conference and the Leadership, it remained policy until watered down just before the 2024 election. The Employment Rights Act 2025 (ERA) which followed diluted the New Deal yet further.
The Employment Rights Act 2025 contains many useful measures, but it simply does not go far enough to re-empower workers and their unions. The Campaign for Trade Union Freedom and many unions have called for a second Employment Rights Bill.
What a second Employment Rights Act should do
The shortfall between the Act and the New Deal is too extensive to set out here. But some items requiring further legislation stand out.
First, the New Deal committed Labour to restore extensive collective agreements covering every sector of the economy to ‘establish minimum terms and conditions, which would be binding on all employers and workers in the sector.’
The current Act has no mechanism to achieve this. Instead, it establishes ‘negotiating bodies’ for school support staff and adult social care workers in which the government sets the scope of discussions, retains the power to override any agreement reached, and can impose a decision where agreement is not reached. Clearly, these modest steps will not restore 80% collective bargaining coverage.
Second, Labour in the New Deal promised a single legal status of worker with all employment rights so that ‘all workers, regardless of sector, wage, or contract type, will be afforded the same basic rights and protections.’ The only exception would be the genuinely self-employed, in business on their own account with their own clients or customers. The government has promised consultation on this, which will require a second Act to implement.
In the meantime, the 2025 Act makes matters worse by allocating some rights to some classes of worker and some to others (e.g. the right to unfair dismissal is only for employees; the guaranteed hours protection for zero-hours contracts is not available for the self-employed). This is a perverse incentive to employers to degrade the status of their workers so as to minimise their entitlement to the new or extended rights.
Third, the New Deal sought to ‘ensure that UK law complies in every respect with the international obligations ratified by the UK’ in relation to ‘laws regulating industrial action,’ specifically citing the European Social Charter and the International Labour Organisation. The UK has been held to be in breach of these obligations for decades. The current Act does put some of these breaches right by repealing the Strike (Minimum Service Levels) Act and much of the Trade Union Act 2016 and by slightly simplifying balloting and notice requirements. But the UK remains in breach of other obligations in a number of important respects.
For example, the European Social Rights Committee published a report on 26 January 2026. The Committee held that the UK is in ‘non-conformity’ with six of the labour rights in the European Social Charter it examined, and in ‘conformity’ with none. Amongst them were: the failure of the Government ‘to guarantee trade union rights of platform workers whose employment contract include a “substitution clause”’; the insufficiency of the Act to ‘promote’ collective bargaining in order to ensure its ‘effective exercise’; and the failure of the Act to repeal the ban on prison officers in England and Wales taking strike action (though they are permitted in Scotland).
On 13 February, the ILO Committee of Experts, which supervises each State’s compliance with the ILO Conventions it has ratified, considered the UK’s conformity with ILO Convention 87 which guarantees the right to strike. The Committee repeated (as it had done for over 30 years) its condemnation of British law’s prohibition of all forms of secondary action and highlighted the P&O Ferries case in 2022 where ‘maritime and dockworkers … were unable to proceed with a sympathy strike … during the illegal dismissals of 800 workers’. The Committee has long held that: ‘workers should be allowed to take action under sympathy strikes, as long as the initial strike they are supporting is itself lawful.’
There are other shortfalls in the Act. Action on zero-hours contracts (which the New Deal would have banned) is welcome but flawed by almost incomprehensible complexity. Fire and rehire reform fails to allow unions to seek an injunction to stop action in breach of the law. Union access to workplaces is welcome but, again, there is no option of obtaining an injunction to enforce an Order for access against a recalcitrant employer. Generally, the new or extended rights require individuals to take claims to an already overwhelmed tribunal service with waits of up to three years and where some 50% of employers ultimately fail to pay the compensation which has been ordered.
Collective bargaining machinery had shortcomings, of course, but at least it gave workers a more powerful voice. We need to restore that voice. As TULO demanded, after the local election disaster on 8 May, the government must ‘deliver the rebalancing of power in the workplace promised in the New Deal for Working People, in full, without any carve-outs or loopholes’. The Socialist Campaign Group agrees.
- You can read the SCG pamphlet ‘The Socialist Policies We Need’ in full here. The foreword says that “We hope this contributes to a debate across the Labour Party, trade unions and the wider movement about the political programme needed to deliver the change people voted for, to build a better future for our communities and to prevent the rise of a Trump-style government here in Britain.“
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