Employment law update: rapid change demands radical reform

So-called ’employment law’: it’s falling apart. Let’s rip it up and start again.

“The workplace is the crucible in which a society is forged”

I say this, hopefully inspirationally but probably portentously, to junior employment lawyers as they start their career. I have been doing so for many years: why write new material when you can recycle the old?

The context is teaching them about the equalities legislation and explaining to my new formed colleagues how what we do helps to change social attitudes. Of course, the hardest fought victories were those won by the disempowered, themselves. That said, surely there can be little doubt that the establishment of new social norms at work must have had an important effect on how people think and behave throughout their lives, not just in their offices, shops and factories – the locations where most work used to take place.

This week, I have taken part in a couple of discussions which have led me to think that I might have touched on a more profound truth that I imagined with my phrase-making. On Wednesday, I was with Peter Cheese of the CIPD at an event organised by Jericho Chambers as part of the CIPD’s initiative “The future of work is human“. The provocation I delivered to the group I was facilitating was that we need new forms of organised labour in order to restore both fairness and efficiency to the market.

However, the wider discussion was part of CIPD’s ongoing attempt to grapple with increasing use of technology in what we can, at least for now, still call the workplace; technology which threatens to reduce dramatically and perhaps even eliminate the need for human contribution. If work is to exist at all, what form should take? How should it be organised? What should we do?

As I write, I’m returning from Brussels from a seminar organised by the leading Benelux law firm Nauta Dutilh. It is an informal but regular annual gathering of old friends and new from leading law firms across Europe. It is not just one more conference on the circuit, but a reunion of lawyers at all levels within our respective organisations, forging close links and mutual understanding between the individuals who actually do the work on multinational transactions and cases for multinational clients. In previous years, the organisers picked a topic on which each firm is presented (a job usually given to the most junior member of each delegation) but this year our hosts Philippe Francois and Thierry Duquesne devised something entirely new: a presentation from work futurist Denis Pennel, followed by a discussion on what ideal employment contract might look like in the brave new world he seemed to be opening up for us.

His premise was that technology would not make us all redundant but like all the revolutions which had preceded this one it would merely focus human endeavours onto new fields. I shall assume for the purpose of this blog that he is right, although no doubt there are those who will immediately rush to tell me our future is merely to be watched over by machines of loving grace.

However, the trends he cited are indisputable. The concept of the employer is fragmenting. The wage-work bargain is becoming stark in its clarity, with labour becoming disaggregated into a series of tasks which may be performed by different individuals with only the loosest connection: the organisation which commissioned them. At the same time, millennials have less respect for authority, and thus little loyalty to any particular employer, but possess greater social commitment and awareness and ask more from life than simple materialist consumption. Good for them.

Denis’s thoughts chime with those of many other analysts and commentators. The evidence he collected and presented was particularly impressive and his argument is compelling. The cliché that the pace of change is increasing is no less true for all that it is commonplace.

For me at least, both the discussions we had at the CIPD about the whole world of work and those we had in our small groups at the Nauta Dutilh gathering about a new and ideal form of employment contract led to the alarming realisation that there is no part of the UK market (or indeed its counterparts across the Channel) that is truly fit for purpose or, worse, capable of adaptation to the new structures that technology and economics will, if we’re not careful, impose upon us. By way of obvious and immediate example, in the UK we have full employment but, without any real wage growth for over a decade, our productivity is woeful and similarly stagnant. Our much vaunted flexibility of labour is in large part merely a massive distortion of the market by the tax system: work by Helen Miller of the Institute for Fiscal Studies has shown there are hundreds of thousands of people for whom it would be much more economically efficient for them to be in employment, as opposed to the self-employed in which they are now classified.

Similarly, our employment rights protect not the precariat who might be thought to be most in need of financial support but to those with more than two years’ employment, whatever that might mean in the future. By reinforcing the old idea or “property in the job”, we protect the already economically advantaged.

I am driven inexorably to socialisation of both problem and solution. The state has made employers its agents both for delivering social protections and for tax collection. As technology strips away what is unnecessary or incidental to the relationship between the hirer of labour and its provider, the state lazily and loftily demands and assumes that business does those things which are neither its purpose nor for which it is equipped.

As a result, we as a society find ourselves wondering whether disruptive business models truly deliver value or do they thrive largely merely by avoiding paying tax and driving their workforce into the expensive arms of the National Health Service by “empowering” workers to “choose” to work ever longer hours under stressful conditions? If we are in effect already socialising the costs of these new ways of working, should we not do so fairly and not merely for the benefit Silicon Valley shareholders at our ultimate expense?

Nor should we think this is merely (merely!) an issue of employment status. Jeremias Prassl has shown it’s not only deployment status which is increasingly uncertain but that of the concept of the employer itself. What really are the new platforms and corporate structures? Who should assume which obligations is as important a question as to who should perform which duties?  In our break-out group in Brussels, we envisaged that unless there is comprehensive reform we may see the rise of ‘off balance-sheet’ employers in an attempt to avoid perceived fiscal and social burdens.

My own manifesto for change? Start with abolishing employment protection rights in their current form altogether and replace them with a meaningful social safety net provided by the state. And abolish labour taxes (National Insurance) altogether. This last would at least be honest for such taxes ceased to hypothecate many, many decades ago. The Blair government hiked National Insurance to resuscitate the NHS, not to provide pensions.

That would free both the engagers and providers of labour to negotiate, collectively or individually, bargains which truly reflected the needs of particular relationships without having to satisfy wider social purposes. To go back to my own words and to borrow those of Harold Wilson, it is now the white heat of technology which is melting our current social model: if we wish to build a new one, we must change the mould.

What about moral hazard? What restraint is there on the bad and the bully if they cannot be taken to tribunal? A properly empowered labour inspectorate, to which individuals could make complaint and disclosure, could impose fines and order improvements. And if the safety net becomes a universal basic income, it is socialism only that capitalism may thrive.

Even as I write, I know this will never be realised in my working life. And I am aware I am grossly oversimplifying, but although I am by instinct and experience a gradualist, I cannot help but look at the scale of the challenge and conclude it demands a properly radical response.

We should not be frightened. We forget that the concepts of employer and employee have shallow roots. It used to not be employment law, but that of ‘master and servant’. Onto that relationship, lawyers grafted the language of contact and indulged in the fiction of the individual bargain, Wedderburn’s ‘cornerstone of English labour law’. The courts, trade unions and modernity came to the present, uneasy, compromise in systemising and regulating this. Is it really sacrosanct? If the market changes out of all recognition, shouldn’t the laws which enable and support it?

I have built a career on the foundations which were laid by Henry Ford on one side of the Atlantic and the dockworkers and the match girls on the other. I thank the judges of the King’s Bench and the bewhiskered parliamentarians who constructed the rest of the rickety edifice as well as the social reformers of the last few decades have worked within it to do much good. I owe you all my living, but I hope future generations inherit a different legacy.

Now, back to the day job.

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