UK labor law quarterly update

News round-up

• Compensation uplift for breaching collective consultation: January 2025 implementation
• The Employment Rights Bill: focusing on the new union right of access and statutory recognition changes

UK labor case law

• Tesco Stores v USDAW: dismissal and re-engagement
• RMT & Unite v Tyne & Wear Passenger Transport Executive t/a Nexus: mistakes in collective agreements
• Secretary of States v PCS: unions enforcing check-off arrangements

Eversheds Sutherland labor law podcasts, publications, events and training

• The Labor Exchange podcast: In our latest Labor Law Exchange podcast, Stephen Chegwin and Clare Ward review three significant UK labor law cases, with additional details provided in this edition's labor law update below. 
  
  Listen on: Apple, Spotify and Twenty Three.

• Our Collective labor, trade unions and IR - UK law and best practice training, Birmingham and virtual, February 2025

News round-up

Compensation uplift for breaching collective consultation: January 2025 implementation

The statutory Code of Practice on dismissal and re-engagement, in force from July 2024, applies where an employer is seeking to change terms and conditions and one of the options, if agreement is not reached, is to terminate and offer new terms. The Code includes a step-by-step information and consultation process.

There is no stand-alone claim for failure to follow the Code. However, tribunals have the power to apply a compensation uplift, if an employee successfully brings one of the listed claims (such as for unfair dismissal), of up to 25% if an employer unreasonably fails to comply with the Code. From 20 January 2025, legislation adds protective awards (for non-compliance with collective consultation requirements) to the list of claims where the uplift applies, increasing employers’ risks should they fail to comply with the Code. The government has proposed further significant changes to “fire and rehire” – read our tracker for information.

The Employment Rights Bill: new union right of access and statutory recognition changes

As the Employment Rights Bill progresses through Parliament, attention has centred on day one unfair dismissal rights in particular. However, the Bill’s changes to collective employment law, including trade union and employer rights and duties, are also significant – for both unionised and non-unionised employers.

Below, we focus on the new right for trade unions to access workplaces and the changes to statutory recognition. Strategically, these major changes are linked and should be viewed holistically: access facilitates member recruitment by a trade union with the aim of gaining statutory recognition under a simpler, cheaper and easier process.

Watch out for future in-focus updates on changes to industrial action law and new rights and protections for union representatives, and read our tracker to keep abreast of developments across the Bill and timescales for implementation.

Right of Access

A new legal procedure provides for unions to request workplace access and to negotiate workplace access agreements with employers, and for the Central Arbitration Committee (CAC) to determine disputes. Access is granted to allow union officials to meet, represent, recruit or organise workers or to facilitate collective bargaining (not for organising industrial action). The potential financial penalty for non-compliance is yet to be determined and implementation is unlikely to happen until 2026.

Obtaining workplace access: process in overview

It should be noted that there is a presumption that, once requested, a union will be granted access. Under the “access principles” in the Bill, employers are expected to take reasonable steps to facilitate access by officials, should only refuse access entirely where it is reasonable in all the circumstances to do so and union officials should exercise their access rights in any manner that does not unreasonably interfere with the employer’s business.

The government will provide further detail on what constitutes reasonableness in these circumstances, including the terms of an access agreement and when an employer may deny access (to include factors like the size and nature of the workplace and the number of members which the union has in the workplace). The right to access is currently framed as being only to the physical workplace. Will it be amended to include virtual access and/or access to data on workers so that unions can contact them by telephone/email or via the employer’s intranet, for example? Unions are pressing for the Bill to be amended to give these wider rights of access. One to watch.

Practical implications

There are concerns that this new access process is administratively burdensome, particularly for smaller employers. Key details are also currently missing and it is hoped that they will be clarified to minimise the risk of disputes. For example, how employers should respond to multiple requests (from potentially competing unions) and repeated requests (from the same union). In addition, where an access agreement is agreed and jointly notified to the CAC by the employer and the union, it becomes legally enforceable and the Bill currently provides that it may not be revoked or varied by the employer without the union’s agreement. There is also currently no ability for the CAC to revoke an access agreement.

For unionised employers, the Bill is silent on any restrictions on access for non-recognised unions in workplaces where there is already an incumbent recognised union, despite the potential for destabilising industrial relations (IR) if another union requests access to organise. Unionised employers should review any existing access arrangements (checking for differences when compared to the new right) and assess the IR risks of a new trade union seeking access. Again, it is hoped that a code of practice or government guidance to the CAC on access principles will deal with this point. The existing code addressing access during statutory recognition is a useful reference point.

All employers should prepare ahead of the new access right being implemented (potentially in 2026), including conducting a health check of current employee relations and engagement, reviewing their IR strategy, training managers in the new right and identifying any key issues arising from having third parties accessing a workplace (health and safety, regulatory requirements, data privacy, confidentiality, liability etc). 

Changes to statutory recognition

The Bill’s changes to the current legal procedure, which applies when a union seeks statutory recognition, include:

1. deleting an initial admissibility test which a union must currently meet (the requirement for evidence that the majority of workers in the bargaining unit would be likely to support the union conducting collective bargaining on their behalf)
2. enabling regulations to relax the remaining admissibility test by dropping the current requirement that the union has at least 10% membership in the proposed bargaining unit to a lower percentage of 2%- 10% (exact figure to be decided)
3. removing the condition, when workers vote in a recognition ballot, that recognition is supported by at least 40% of the workers in the bargaining unit, such that a union would only need to secure a simple majority of those voting to obtain recognition

By lowering requirements in these three ways, recognition applications will be successful where a simple majority of those voting are in favour, even where membership levels in the bargaining unit may be low and the actual numbers voting in favour small.

The government is also committed to introducing electronic balloting for statutory ballots and is consulting on making further statutory recognition changes, including to union rights, employer duties and the process. Implementation of these changes is unlikely to happen until 2026.

Practical implications

These changes will make it easier, quicker and cheaper for trade unions to apply for recognition and to win a recognition ballot, potentially with low membership levels in the bargaining unit. This outcome may present IR challenges for employers. For example, some employees may question its legitimacy where recognition is built on slim foundations. Encouraging all employees to participate in recognition ballots will be an important consideration where this may be a risk. In addition, easing the requirements, as outlined above, may result in unions seeking recognition for larger bargaining units, with lower levels of membership, than has previously been the case, reversing the trend over recent decades.

More broadly, an anticipated increase in recognition requests, together with the easier process, may persuade some employers to proactively and voluntarily engage with preferred union partners, ahead of any statutory recognition request. This would provide greater certainty regarding recognition arrangements and bargaining units than simply waiting for a statutory request from the “first mover” out of any number of unions which might have members within the workforce.

Employers should review their engagement strategy, including assessing existing employee relations and union relationships, monitoring for changes, addressing engagement concerns and evaluating a range of engagement channels, including staff forums. The strategy should also consider how the business would respond in the event of a statutory recognition application, reflecting the limited timescales afforded to employers once an application is lodged, and evaluate voluntary recognition arrangements, if appropriate. Upskilling HR and managers on engaging with unions in a changing legal landscape is recommended before the changes are implemented.

UK labor case law

Tesco Stores v USDAW: dismissal and re-engagement

The Supreme Court has upheld a High Court decision to grant an injunction to prevent an employer proceeding with ‘fire and rehire’ proposals (where employers seek to change employment terms by dismissal and re-engagement) to remove a pay enhancement which had been agreed as a “permanent” contractual entitlement. For further information on this case, read our briefing. For further information on the government’s legislative steps to reform ‘fire and rehire’, read our tracker.

RMT & Unite v Tyne & Wear Passenger Transport Executive t/a Nexus: mistakes in collective agreements

N’s employees claimed successfully that, based on their understanding of a collective agreement, they had been underpaid, winning a deduction from wages complaint. In response, N launched legal action against the unions arguing that there had been a mistake in interpreting the collective agreement and asking the court to, in effect, add additional words to the terms of the agreement to rectify the mistake.

The Supreme Court decided that N should have brought the claim for rectification against the individual employees whose legal rights are affected, not the union, and the action therefore failed.

It dismissed N’s concerns that proceeding against the individual employees would have undesirable consequences, including damaging industrial relations, and noted that it could have raised mistake as a defence to the initial deduction from wages action brought by the employees. Had they established a mistake at that stage, the employment tribunal could have treated the agreement as rectified and dismissed the employees’ complaint on that basis. The Court’s confirmation that rectification of a mistake could be raised in a tribunal defence provides helpful clarification for employers - such arguments should be considered at the outset, before it is too late.

Secretary of States v PCS: unions enforcing check-off arrangements

Three government departments withdrew check-off arrangements (where employees authorised their employer to deduct union subscriptions from their wages and pay the money to the PCS union) and the employees successfully complained in court that this amounted to a breach of contract.

The withdrawal of check-off led to a substantial reduction in PCS’s subscription income. However, as they were not party to the check-off agreement between employer and employee, they could not sue for breach of contract as well. Instead, they brought their own claim relying on a little known statute which provides for third parties to enforce terms in a contract.

The Supreme Court upheld their claim, in particular, because the employees’ contracts of employment included nothing that indicated a common intention of the parties that the check-off arrangements should not be enforced by PCS. Damages to be paid by the employers to PCS will follow.

This decision adds to the risks for employers contemplating withdrawing check-off arrangements which have been incorporated into individual employment contracts.

Employment law is a devolved matter in Northern Ireland and the issues set out above may not all apply in NI. For NI specific advice contact our Belfast office.