INSIGHT
It may be a surprise to employers that their employment practices can risk violation of competition laws. However, in a timely reminder, the Competition and Markets Authority (CMA) has published a short guide to provide advice to employers on exactly this topic. The CMA guidance echoes that issued in the US in 2016 by the Federal Trade Commission.
The CMA guidance highlights three main types of anti-competitive behaviours in labour markets:
- No-poaching agreements: where 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: where 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: when sensitive information about terms and conditions that a business offers to employees are shared between businesses. This in turn reduces competition between those in recruitment and retention.
As the guidance mentions, illegal agreements or practices do not have to be in writing, they might take the form of informal practices like “gentleman’s agreements”. The guidance applies to practices relating to freelancers and contracted workers as well as to employees.
As the guidance notes, anti-competitive agreements can negatively impact labour markets, including reducing employees’ pay packets, reducing employee mobility and choice, and limiting a business’s ability to expand. So the CMA can be expected to be assiduous in enforcing these provisions.
Quarmans can help business’s ensure that their practices comply with these guidelines, and help provide appropriate reporting processes and training.
