In discussing the ‘social dimension’ of European integration there has been a noticeable preoccupation with the legal implications of supra-national policy making. In a country like Britain, where labour market regulation relies less on the direct involvement of the state, such debate can only offer partial insights into the European dimensions of domestic employment and social policy. This paper argues that the principle of subsidiarity refers not only to the competence of different levels of government, but also attributes a critical role to employers and unions in employment and social policy. It is suggested that the institutional framework within which policy is formulated will remain essentially national in character although it will be increasingly informed by practice in other Member States.