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December UK labour law quarterly update

  • United Kingdom
  • Employment law


Welcome to our December UK labour law quarterly update. This edition contains the following content:

UK labour law news

UK labour case law update

UK labour law news

Trade union seeks to extend union recognition rights for outsourced workers

The IWGB union is applying to the Central Arbitration Committee (CAC) for union recognition with two employers for the same workers: a facilities management provider of outsourced reception, security and other services; and the organisation where those services are performed. By so doing, it is seeking to break new legal ground in the UK.

In broad terms, the union is arguing that the workers hired by the facilities management provider should be permitted, under European Convention human rights law, to collectively bargain with their immediate employer and their ‘de facto’ employer, as IWGB puts it. The IWGB claims that it ‘calls the shots’ regarding the terms and conditions offered by the facilities management provider to its staff.

This legal concept of joint employment is recognised in other countries. For example, in the US the law typically requires an employer to directly influence hiring, firing and disciplining decisions of another employer to be a joint employer and it has been argued successfully by US unions in some outsourcing and sub-contracting situations. However, it seems unlikely that the recognition laws in this country provide for joint employment. In the meantime, these CAC applications provide IWGB with the opportunity to apply adverse reputational pressure on the alleged ‘de facto’ employer.

Workforce engagement and corporate governance Code changes

Commenting on a potentially significant change to the UK Corporate Governance Code (applicable primarily to companies with a premium listing of shares), the Financial Reporting Council (FRC) has stated that “Successful companies should be open and accountable to their workforce. The revised Code is clear that two-way dialogue is necessary to achieve good governance.”

At the request of the Government, the FRC is consulting on a new Code Provision requiring the adoption, on a ‘comply or explain’ basis, of one of three workforce engagement mechanisms for ensuring the workforce voice is heard in the boardroom. These are: a director appointed from theworkforce, a formal workforce advisory council, or a designated non-executive director. The board should also explain in the annual report how it has engaged with the workforce. Note that ‘workforce’ has been deliberately worded by the FRC to encourage companies to consider all those paid to work for the company, including agency workers and the self-employed, not just employees.

For further information and comment, read our ebriefing and the FRC consultation.

Global trade unions take fashion brands to arbitration over supply chain dispute

The global unions involved in the Bangladesh Accord (the Accord was signed in 2013 after the Rana Plaza disaster: it is between global brands and trade unions and established a fire and building safety programme in Bangladesh textile factories) are taking two fashion brands to arbitration to enforce the terms of the Accord. The unions’ complaint that the brands have failed to comply with their commitments in relation to a number of their suppliers is due to be heard in the Hague next March.

This is a significant development for the retailers and brands party to the Accord. It also has implications more broadly, for example, where employers are subject to requests to agree global framework agreements with unions such as IndustriALL, Uni Global and others, where arbitration is proposed as a form of dispute resolution.

UK labour case law update

Kostal UK Ltd v Dunkley: first s145B EAT decision on contractual change in absence of collective agreement

K, the employer, had recently recognised Unite for collective bargaining. During the first annual pay negotiation, the employer’s pay increase and Christmas bonus was conditional upon some changes to overtime, sick pay and breaks. The offer was rejected by the union and by members in a consultative ballot. The employer then wrote directly to employees offering the pay increase, bonus and changes to other terms, with a warning that rejection would result in neither being paid. A further letter offering the pay increase and sent to those employees who had so far rejected the offer, warned that if they did not accept, K could serve notice in relation to their contract of employment. Some ten months later, collective agreement was finally reached on the pay proposals.

Fifty-seven employees brought a successful section 145B TULRCA claim against K. In broad terms, 145B prohibits an employer from making an offer to a member of a recognised union which results in any of his/her terms no longer being determined by collective agreement, where that outcome is the employer’s sole or main purpose. The employer argued that the first offer to employees was made so that employees had the opportunity to receive the Christmas bonus and both offers were a temporary solution to an impasse with the union, with collective bargaining continuing thereafter. The tribunal cast doubt on the Christmas bonus timing issue and rejected the second reason on the grounds that ‘the employer cannot drop in an out of the collective process as and when that suits its purpose’.

On appeal, K argued that 145B is not intended to apply to situations, such as this, where collective bargaining continues and that the tribunal’s interpretation, in effect, gives unions a veto on changes to employment terms – which was not the intention of Parliament. In a split decision, a majority of the EAT dismissed K’s appeal and it unanimously upheld the tribunal’s decision to make two awards of £3,800 per member (the fixed compensation under 145B at the time), one award for each of the two unlawful offers. In total, the awards are reported to be in excess of £420,000.

While this outcome is fact specific, it is notable as the first binding authority on 145B. As a result, the EAT’s narrow interpretation of s145B, as well as how it calculated compensation, will be a concern for employers. They need to approach the process of varying collective terms and conditions with care and take advice if they are considering making offers to staff individually. K is seeking to appeal the decision to the Court of Appeal.

Royal Mail Group v CWU: no strike clause upheld in innovative collective agreement

The employer (RMG) was successful in obtaining an injunction to restrain a strike against the union (CWU) in an unusual situation which provides lessons for employers and unions who negotiate ‘no strike’ or similar agreements.

In 2013, the parties had agreed a number of legally binding obligations in their collective agreement (ordinarily, such agreements are not legally binding) aimed at creating industrial stability. These included a requirement to exhaust external mediation, in the event of certain disputes, before industrial action could take place. RMG claimed that CWU was in breach of this agreement by calling for strike action before external mediation had been invoked and exhausted. The CWU argued that the RMG should have triggered external mediation earlier, given the ongoing months of disagreements, and the duty to refer the matter to external mediation had therefore lapsed.

However, in the absence of an express clause dealing with mediation timescales, the judge disagreed with the CWU, preferring to allow the parties more time for mediation and declaring the strike to be in breach of the collective agreement.

Taylor & Unite v Birmingham CC: employer ordered to withdraw redundancy notices

In another unusual IR case, the High Court ordered the employer (BCC) to withdraw redundancy notices it had served on some refuse workers in the context of a long-running dispute involving Unite. The facts serve as a reminder to employers to agree a common internal position before entering strike negotiations and to be alert to the risk of making legally binding commitments during such negotiations - it may be too late to row back from such commitments at a later date.

A refuse strike, in protest against proposed redundancies and other changes, took place in June and July. In August, the parties met at Acas and an agreement was reached resulting in Unite suspending the strike and BCC agreeing not to make the redundancies.

However, there was opposition to this agreement within BCC and those opposed moved forward with serving the redundancy notices. The Court decided that the agreement reached at Acas was capable of being legally binding and that the notices were issued in breach of that agreement.

IWGB v RooFoods Limited T/A Deliveroo: gig worker union recognition application fails

The IWGB union applied to the CAC to be recognised for collective bargaining by Deliveroo. The application related to a bargaining unit comprising some of Deliveroo’s delivery riders in the Camden area of London.

The status of the riders made this an unusual application: were they independent contractors or ‘workers’? The CAC decided that they are the former, meaning that the application had to be rejected as trade union recognition is not available to genuinely self-employed contractors. Read our briefing.

Parker v Boots Pharmacists’ Association & anor: statutory derecognition of a non-independent trade union commences

The CAC has accepted an application triggering the statutory derecognition process in respect of the BPA, a non-independent trade union recognised by Boots. The application follows a failed recognition application by the independent Pharmacists' Defence Association Union (PDAU), which was blocked by the existing deal with the BPA. Read more on this case and its background.