UK labor law quarterly update - June 2023

Welcome to our June UK labor law quarterly update. This edition contains the following content:

News round-up

• Trade union membership falls, despite high levels of industrial unrest
• Hiring agency workers to backfill those on strike: the latest on the judicial review
• Minimum services during strikes: are they on their way?
• Brexit-related labor law reforms: workforce information and consultation

UK labor case law

• Withdrawing check-off: Secretary of State for the Home Department & Others v Cox & Others
• Upcoming labor case law: appeals and outstanding judgments

Eversheds Sutherland labor law podcasts, publications, events and training

• The labor exchange podcast: in our latest quarterly labor law podcast we review the latest hot topics concerning trade union and workforce engagement, including an update on legal action aimed at stopping the use of agency workers during strikes, reflections on Retained EU Law (Revocation and Reform) Bill and an update on significant labor cases before the Court of Appeal and Supreme Court.

• Our 20th Annual labor relations in-person conference: Union and workforce engagement in challenging times, 4 October 2023, London

• Our in-person and e-module training: Collective labor, trade unions and industrial relations - UK law and best practice, November and December 2023

• Our Guide to UK Labor Law

News round-up

Trade union membership falls, despite high levels of industrial unrest

The latest statistics on trade union membership levels in 2022 record the lowest membership rate since 2017, largely reversing the recovery in employee membership numbers from 2017 to 2020.

This is in contrast to a large increase in working days lost because of strikes (with December 2022 seeing the highest recorded monthly total since November 2011) and anecdotal reports from some workplaces experiencing membership and recognition drives from unions.

To consider this and other labor law developments, join us at the 20th Annual labor relations in-person conference: Union and workforce engagement in challenging times (4 October 2023, London) where we will share practical insights and lessons learnt from a challenging economic and industrial relations environment, including responding to disputes and what lies ahead for employers in a General Election year. 

For further information on the statistics, read the Government statistics and ONS on strikes.

Hiring agency workers to backfill those on strike: the latest on the judicial review

In 2022, the Government repealed restrictions which prevented temporary agency workers backfilling employees who take part in industrial action. In response, a coordinated legal response from trade unions resulted in a judicial review hearing being heard in May 2023. The judgment is expected imminently.

The unions argued that the legislative changes permitting the supply of agency workers during strikes are procedurally flawed (including a failure to consult as required by the regulations) and breach trade union rights under the ECHR. Employers hiring agency workers as part of contingency planning during industrial action should monitor developments in case the judicial review overturns the 2022 changes.

Minimum services during strikes: are they on their way?

As reported in our January update, draft legislation before Parliament provides for the setting of minimum service levels (MSLs) for some strikes. If implemented, the Bill would change the conditions that trade unions in certain public services must meet, when organising affected strikes, in order to be protected from court proceedings including claims for compensation, and alter the automatic unfair dismissal rules for employees. It will also have implications for employers involved, including whether, and how, they put MSLs into effect by giving a work notice, as set out in the Bill.

However, despite approaching the end of its Parliamentary process, the Bill has not yet been finalised, reflecting significant revisions put forward by the House of Lords. These have been rejected, in the main, by the Commons and the outcome of this Parliamentary “ping-pong” is currently uncertain.

If the Bill is agreed this summer, full implementation, including secondary legislation, would be expected to follow in the second half of 2023. As part of the implementation process, the Government has issued consultations on setting MSLs in the fire, rescue, ambulance and passenger rail services.

The Labour Party has stated that it would repeal the legislation, if it wins the next General Election and the trade unions have confirmed their intention to challenge the changes in the courts. For further information on the draft Bill (which may be subject to change), read our January update.

Brexit-related labor law reforms: workforce information and consultation

The Retained EU Law (Revocation and Reform) Bill proposed extensive removal of EU retained law by the end of 2023, potentially including key employment and labor law regulations. After a change of mind from the Government, workplace rights falling under the Bill will not now end under the proposed sunset clause, as initially proposed, and will instead be reviewed, and potentially reformed, over time.

As part of this review, the Government has so far confirmed that it will preserve retained EU labor law regarding TUPE (subject to a proposal to remove TUPE information and consultation obligations for some small employers and/or limited transfers), ICER and TICER (the UK regulations which, broadly, provide for national staff forums and for EWCs).

UK labor case law

Withdrawing check-off: Secretary of State for the Home Department and Others v Cox and Others

C, a member of the PCS union, was employed by a government department, H. Following H’s decision to withdraw C’s check-off arrangements (where C authorised H to deduct union subscriptions from C’s wages and pay the money to PCS), C claimed breach of contract and PCS brought a claim against H seeking damages for the loss of subscriptions. After hearings in the High Court and Court of Appeal, it was decided that: the check-off arrangements constituted a term of C's contract; C had not accepted any variation of the contract of employment by continuing to work after the change had been introduced; the parties had not intended for the contractual check-off provision in C’s contract of employment to be enforceable by PCS.

While this outcome is fact specific, it provides helpful guidance on some of the factors to be weighed when deciding whether an employee has accepted a change to contractual check-off arrangements. The key question is whether there is an unequivocal acceptance of the change, and protest or objection by the union at the collective level may be sufficient to negate any such inference. It also suggests that, typically, it will be challenging for a union to successfully enforce check-off where they are not party to the contract. It has been reported that PCS is seeking permission to appeal.

Upcoming labor case law: appeals and outstanding judgments

Dismissal and re-engagement

Last year, the Court of Appeal overturned an injunction which had permanently prevented an employer from proceeding with dismissal and re-engagement proposals (so-called “fire and rehire”) to remove a pay enhancement. Permission to appeal to the Supreme Court has been granted with a hearing listed in January 2024. Read our Alert on USDAW v Tesco Stores.

Industrial action: employee detriments

Also in 2022, the Court of Appeal decided that UK strike law provides no protection for detriments imposed by employers in response to industrial action. This is particularly relevant where an employer contemplates taking action against those striking, other than deducting pay for work not done during the strike. An appeal will be heard by the Supreme Court in December 2023. Read our update on Mercer v Alternative Future Group.

Mistakes in collective agreements

In Tyne & Wear Passenger Transport Executive t/a Nexus v RMT Union & Unite, employees claimed that, based on their understanding of a collective agreement, they had been underpaid. In its defence, the employer asserted that there had been a mistake in interpreting the collective agreement. It applied unsuccessfully to the Court to, in effect, add additional words to the terms of the agreement to rectify the mistake. The Court of Appeal decided that rectification as a remedy is not available in respect of a collective agreement which is not legally binding (most are not). Permission to appeal to the Supreme Court has been granted and a hearing date is awaited.

Gig workers and the scope of trade union rights

After a hearing in April, the Supreme Court judgment is awaited in IWGB v Central Arbitration Committee.The case involves the trade union, IWGB, and Deliveroo riders, in circumstances where the union had applied to the Central Arbitration Committee (CAC) to be recognised for collective bargaining purposes. The Court of Appeal had held that such riders did not fall within the scope of Article 11 of the European Convention on Human Rights (the right to form and join trade unions) because they were not "in an employment relationship" with Deliveroo, given the absence of personal service on the facts

Rights to information and consultation: EWCs

In June 2023, the Court of Appeal heard the case of EasyJet PLC v EasyJet EWC and another. The decision will be significant in clarifying the obligations of employers towards their UK EWCs after Brexit, where central management is situated in the UK. The CAC and EAT both decided that the CAC continues to have jurisdiction to hear UK EWC complaints. This is despite EasyJet designating its German business as central management after Brexit and the practical difficulties in maintaining an EWC in the UK at the same time as being required to create a new EWC within the EU.

A second appeal, Olsten (UK) Holdings Limited v Adecco Group EWC, has also been heard before the Court of Appeal in June. Employers are required to inform and consult with their EWCs on “transnational” matters and the Court will address the meaning of “transnational”. The EAT held that redundancies in two different EEA countries in the same undertaking or group do not need to have a direct link, common cause or decision in order to qualify as “transnational”. In this case, the employer had refused to meet with the EWC on the grounds that the redundancies, announced in four different countries, had no common cause.