Negative Impact Of Trade Unions On Businesses Management Essay

Discuss the claim that increasing numbers of employers are realising that, rather than treating their employees as individuals, there is a ‘positive business case for dealing with their workforce through unions’ – (Gall, G, quoted in Gennard and Judge, p. 64, 2005)


Sydney and Beatrice Webb (History of Trade Unions, 1920) defines trade unions as a continuous association of wage earners for the purpose of maintaining or improving the conditions of their employment.

In today’s market scenario, employees strengthen and enhance their interest by presenting a collective face to the employer especially in deriving a common consensus on basic minimum conditions on which they offer their labour services. Trade unions are one of the best examples of an employee representative organisation. These representative organisations like trade unions tend to be essential, as an individual worker has very little power to influence decisions made by the management. Being a member of the collective group of workers would result in having an edge on making their concerns heard and thus can prove to be more influential.


As defined by the Trade Union Congress (TUC), which was formed in 1868 to protect and guide British trade unions (TUC, 2009), ‘trade unions’ are organisations that represent people at work and their purpose is to protect and improve people’s pay and conditions of employment. The primary role of a union is to engage in negotiations with employers on securing its member’s rights and privileges. These are obtained through campaigning for laws and policies and improving the pay conditions which will benefit the workforce. Few unions also facilitate its members by providing legal advice and guidance on benefits such as sickness and holiday facilities, representation in disciplinary proceedings and education (Employment Law Help, 2009).

As cited by Heery, E (1998), the declared aim of the TUC is to promote a ‘culture of organizing’ among UK unions, such that the recruitment and organization of new members becomes a defining purpose and financial and human resources are reallocated towards this end (Heery, E. 1998).

The relaunch of the TUC in 1994 by John Monks (cited in the Future of Trade Union, Taylor R. 1996) emphasized on focussing more resources on individual workplaces. Special emphasis was placed on advising and supporting workers to understand and make use of their ‘rights’. This was strongly linked with advocacy of ‘social partnership’. The European social market was to be advocated in preference to the new-liberal ‘free-market’. ‘The concept of social partnership of workers, employers and governments co-operating for the common good is a central feature of the European way of doing things’ (Monks, 1994). The practice of trade union was to be focussed on – partnership, adding value by union membership (in organisations like Unionlearn) and employment law. Unionlearn provides generic services, which can be used by individual unions for their training and learning (Unionlearn, 2009)

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‘The primary purpose of the trade unions is to protect the jobs of their members and to enhance their pay and employment conditions by the use of collective bargaining and political lobbying’ (Gennard and Judge, 2005)

The term ‘collective bargaining’ can be described as the process by which employers and recognised trade unions seek to reach agreement through negotiation on issues such as pay and terms and conditions of employment. It is therefore essential to note that organisations which recognise trade unions must ensure that any consultation or communication procedures that they introduce are compatible and complementary to existing collective bargaining processes. (Employee Communications and Consultations. ACAS. p.4).

Trade union plays an active role in employee communications and consultation that facilitates in improving organisational performance, improving management performance and decision-making and improving employee’s performance and commitment. They also help in developing greater trust, increasing job satisfaction, improving employee engagement; encourage a more flexible working environment. (Employee Communications and Consultations: ACAS. p. 5-6)

Recognised trade unions have certain legal rights to information for collective bargaining purposes. However, as the union official would require information to bargain effectively, it is essential to refer to ‘The ACAS Code of Practise No. 2: Disclosure of Information to trade unions for collective bargaining purposes’, which provides advice on good existing practices.

In UK, unions represent a wide range of different jobs and industry sectors with many of the larger unions encompassing several different industry sectors that are providing support to workers with a wide range of skills and job descriptions. Some of the popular unions existing and operating in UK are UNITE, UNICENT, UK Steel Union.

Today, the role played by trade union has become well established within the employment law system with many procedures and policies leading into consultation with a trade union of various labour issues by an employer (Employment Law, 2009).

There are also indications that manager’s attitudes towards trade unions may have become less hostile. (Poole et al., (2005) cited in Inside the workplace – findings from the 2004 WERS, Kersley B, Alpin C, Forth J, Bryson A, Bewley H, Dix G, Oxenbridge S – Routledge publication)

Thus, it can be reiterated that trade unions in the past and in the future would play a decisive and active role in shaping the economic and social developments in Britain.

The research drawn from the Workplace Employee Relations Survey, shows that companies that recognise unions and practice high commitment personnel practices are far more likely to have both better financial performance and productivity than other competitive companies. Further, John Monks, Former General Secretary, TUC, said that ‘this is the most authoritative research so far that shows that unions can be a boost to business. Partnership makes managers take their workforce with them. This is no burden on business but the secret to success…..but partnership is no easy process. It takes new skills and new attitudes from unions and managers. This is where TUC’s Partnership Institute will come in. We are already helping many workplace partnerships and we know the demand is there for our services. I have always said that unions must be a part of the solution, not part of the problem. The Partnership Institute will show just how powerful the partnership concept can be’ (PR Newswire, April 2000).

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In recent years, trade unions have developed a new function of promoting learning at work place. The Union Learning Representative (ULR) is a new category of union activist, trained in advising members on learning needs and opportunities (GMB @ Work, 2009).

The primary responsibility of ULRs is to give support and encouragement to members for upgrading their existing skills, to raise the profile of training and development at the workplace by providing advice and guidance, to help in identifying learning needs and provision by acting as a link between members and the union and working with local union committees on various learning issues to be discussed with management for consideration and implementation.

In the past, many ULRs have had difficulty in obtaining time off from employers to carry out their duties as ULRs. However, as per the Employment Act 2002, ULRs have received a statutory recognition resulting in them getting a legal right to paid time off to carry out their duties (Prospect: Union for Professionals, November 2009 and Union Learn: Functions and Rights. Sec 3).


Positive impact of existence of trade unions includes that an employer need not engage in individual dialogues with workers and thus the process can be less time consuming. Trivial and personal issues of an individual worker can be dealt by the Unions. Collective representation facilitates better bargaining power on various labour and work issues like increase in remuneration, better working condition etc. Union will also take into account that the wages are not considerably lower than the standard market rates. There is no favouritism and everyone gets standardised hike in annual remuneration package. The unions will negotiate directly on behalf of the workers with the employers and hence individual negotiation by employees is not required. If an employee faces a problem with the management, they can seek legal advice and guidance from ULRs. This representation of an individual employee will avoid undue exploitation of workers by employers. Employee’s motivation would be boosted as employees would be working together as a unit rather than individuals, thereby improving the business productivity.

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The negative impact of trade unions on business would comprise of an employer not facing difficulties in hire and fire policy. For instance, an employer will not be able to get rid of an under-performing employee; an employer has to give equal wage hike to employees which will have no correlation to an individual worker’s performance. While bargaining, the union may put together an exorbitant demand of wage hike that may be difficult for an employer to accept and decline. Unions can be unreasonable in their dealings and demands can put undue pressure on companies to pay unreasonable wages and benefits because all workers may call for a strike and cause a major disruption of services and financial loss. All these would result in strikes, lockouts, losses in production and overall business productivity getting hampered.

Since the hike in the annual salary is guaranteed it may result in a decline in an individual worker’s performance. This change in efficiency and productivity of a worker will have a severe negative impact on business.

Thus, as per the recent research publication of TUC, companies that both recognise unions and practice ‘partnership’ with them perform better and have a competitive edge on business. For an employer achieving faster consensus, improved communication, efficiency, higher productivity and industrial relations, better change management, commitment and clarity on business goals, greater competitiveness will drive business profitability. In return, an employee will benefit by having better opportunity for growth, job security, flexibility and quality of life, training, better management accountability and transparency (PR Newswire, 2000).

“The TUC are delighted to support the Partnership Institute and share their belief that employee involvement is important when striving to achieve harmonious industrial relations.” – Brendan Barber, General Secretary, TUC (Partnership-Institute, 2009)

The role of trade unions in stimulating workplace learning and skills training preceded new labour (MacIlroy 2000)….declaring that ‘the core of the strategy is effective partnership between government, trade unions and employers.

Purcell et al (2003), concludes that the most useful organisations were those that could sustain their people performance over the long term and demonstrate a robust association between people management and performance (cited in Gennard and Judge, 2005).

It can therefore be concluded that by dealing with the workforce through unions is more efficient, effective and democratic than treating employees as an individual. The organisation’s attitude towards the trade unions can definitely have a significant positive impact on employee relation strategies and policies of the organisation.


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