On 9 February the Competition & Markets Authority (CMA) published a short guidance note for employers on how to avoid anti-competitive behaviour. The aim of the guide is to boost compliance with the rules regarding anti-competitive behaviour and to remind employers of their legal obligations.  The CMA points out that 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. 

Employers are required to comply with competition law when setting wages and working conditions for new and existing employees.  The guide points out that there are three main types of anti-competitive behaviours in labour markets: 

  • No-poaching agreements: These occur when two or more businesses agree not to approach or hire others employees, or not to do so without the other employer’s consent.
  • Wage-fixing agreements:  Such agreements arise when two or more businesses agree to fix employees’ pay or benefits which includes agreeing rates of salary or setting a maximum limit on pay. 
  • Information Sharing: This arises where businesses share sensitive information about the terms and conditions of employment that they offer to employees.  This reduces competition both in respect of recruitment of employees but also in retention.

The CMA points out that not all illegal agreements or practices are in writing, but employers should be aware that these can arise simply by informal or “gentleman’s” agreements. 

Failure to comply with rules regarding anti-competitive behaviour can lead to significant penalties.  Businesses can face a fine of up to 10% of their annual worldwide turnover, while individuals participating in illegal collusion can also face significant personal fines, imprisonment and be disqualified from their role.   

The guide sets out action that businesses and their legal advisers can take to avoid anti-competitive behaviour and so limit the risk of penalties arising.  These include not agreeing with a competitor to approach or hire the others employees or to fix wages.  It suggests that businesses should ensure that recruitment staff are trained on competition law and how it applies and also that there should be in place solid internal reporting processes and staff are aware of such processes and how they use them.

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