The Competition and Markets Authority (CMA) has published a new short guide for employers on how they can comply with competition law.
Collusion between employers is illegal and there are significant financial and personal consequences for breaking the law.
Anti-competitive agreements can negatively impact labour markets, including:
- reducing employees’ pay packets
- reducing employee mobility and choice
- limiting a business’s ability to expand
There are 3 main types of anti-competitive behaviours in labour markets (which are all examples of business cartels):
No-poaching agreements
No-poaching agreements occur when 2 or more businesses agree not to approach or hire each other’s employees (or not to do so without the other employer’s consent).
Wage-fixing agreements
Wage-fixing agreements occur when 2 or more businesses agree to fix employees’ pay or other employee benefits. This includes agreeing the same wage rates or setting maximum caps on pay.
Information sharing
Sensitive information about terms and conditions that a business offers to employees might be shared between businesses. This in turn reduces competition between those in recruitment and retention.
Not all illegal agreements or practices are in writing; they might take the form of informal practices – sometimes known as gentleman’s agreements.
These agreements or practices might cover freelancers and contracted workers as well as permanent salaried staff.
Actions businesses can take
Businesses, legal advisers and recruiters can follow these steps:
- understand how competition law applies to no-poaching and wage-fixing agreements
- don’t agree with a competitor to fix wages
- don’t agree with a competitor not to approach or hire each other’s employees
- don’t share sensitive information about your business or employees with a competitor
- provide recruitment staff with training on competition law and how it applies in the recruitment context
- ensure solid internal reporting processes are in place, and that staff are aware of these and how they can use them
This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are reported, the information does not set out all of the facts, the legal arguments presented and the judgments made in every aspect of the case. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, we cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.
