On Thursday 9 February, the Competition and Markets Authority (CMA) published a new short guide for employers on how they can comply with competition law.
Anti-competitive agreements in employment markets
This is the first time that the CMA has provided guidance on the application of competition law to labour markets. The guidance focuses on the prohibition on anti-competitive agreements. The CMA notes that the main types of behaviours in labour markets that would breach the prohibition on anti-competitive agreements (which do not necessarily need to be in writing to be caught) include:
- No-poaching agreements: whereby businesses agree not to approach or hire each other’s employees (or not to do so without the other’s consent);
- Wage-fixing agreements: which includes businesses agreeing the same wage rates for their employees or setting maximum caps on pay; and
- Information sharing: when businesses share sensitive information about employee terms and conditions.
The CMA notes that the above may cover freelancers and contracted workers, as well as permanent salaried staff.
Consequences of a breach
The guidance states that if employers engage in such behaviour, they will be considered to breaching competition law by colluding with each other.
Consequences for breaching the prohibition on anti-competitive agreements include (amongst others) fines of up to 10% of group worldwide annual turnover; agreements being unenforceable; potential director disqualification; follow-on claims for damages and negative publicity arising from any CMA investigation.
Advice for employers
The CMA does set out some steps that employers can follow to avoid breaching competition law, including:
- understanding how competition law applies to no-poaching and wage-fixing agreements,
- establishing internal reporting processes to enable staff to report such agreements and;
- training recruitment staff on how competition law applies in the recruitment context.
Juliette Enser, CMA Senior Director of Cartels, said: "Businesses have no excuse for not following the law and ignorance is no defence when it comes to colluding with competitors to rig the labour market in their favour."