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March UK labour law quarterly update

  • United Kingdom
  • Employment law


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

UK labour law news

UK labour case law update

UK labour law news

Union challenges CAC decision that Deliveroo drivers are not workers

Last year, the IWGB union had its application to be recognised for collective bargaining by Deliveroo on behalf of some of its riders rejected by the CAC. In February 2018, the union announced that it has sought permission to challenge that decision in the High Court by means of a judicial review. Overturning a CAC decision is challenging at the best of times and, in this case, it will be difficult given the CAC’s considered and comprehensive judgment. At the same time, IWGB is reported to be contesting riders’ independent contractor status in the employment tribunal, with a hearing expected this summer.

Meanwhile, the IWGB has won recognition on behalf of couriers working for an outsourced contractor delivering blood supplies to NHS hospitals. Previously treated as independent contractors, the company conceded their worker status (and in some cases, employee status) last year after an IWGB campaign. In March 2018, the CAC confirmed IWGB’s entitlement to be recognised by the company.

However, the union has not been successful in another case involving the CAC. It unsuccessfully applied for joint employment recognition with two employers for one set of workers: a facilities management provider, its workers and the organisation where its services are performed. The union argued that the latter controlled the terms and conditions provided by the former. The CAC decided that British law does not provide for joint employment recognition.

United Voices of the World union wins recognition

Another new, small trade union, United Voices of the World, has secured recognition at a cleaning contractor in London. Formed in 2014, the union represents low-paid and predominantly migrant workers and focuses on securing the living wage for outsourced workers such as those in cleaning, portering and security.

The trend for smaller unions to pursue focused and sometimes well-organised campaigns and to test the law to support their cause is becoming increasingly apparent. This is particularly the case where the workers involved are on the fringes of organisations, such as in the gig economy or in outsourced services, and businesses need to be aware of the potential impact on their reputation and operations.

Changes to annual trade union reporting and a new Certification Officer in place

Trade unions are required to provide information annually to the Certification Officer, for example, providing membership, financial, staffing and other data.

The duty to report was expanded under the Trade Union Act 2016 and unions whose reporting periods begin after 1 March 2017 must now report on strike ballots held and provide details of any industrial action taken during that period. For those unions with political funds there is a requirement for additional information for political fund expenditure. The revised reporting form is now available.

Meanwhile, the new Certification Officer, Sarah Bedwell, has taken up her post. The Certification Officer is responsible for the statutory regulation of trade unions and employers’ associations.

Review into e-balloting for industrial action rejects its immediate introduction

The independent review by Sir Ken Knight into electronic balloting (e-balloting) for trade union industrial action ballots reported at the end of last year. Having reviewed the evidence on the security of e-balloting, the report rejects the immediate introduction of e-balloting and instead recommends that testing should examine its reliability, including whether the technology is capable of withstanding cyber-attacks. The government appears in no rush to respond, saying that it will ‘consult with experts from relevant organizations before responding’. Read the e-balloting report here.

UK labour case law update

Kostal UK Ltd v Dunkley & Others: important decision on changing collective terms

In our last update, we reported on the Kostal (K) judgment and suggested that K might seek to appeal this decision. This has been confirmed and the decision on whether permission to appeal will be granted is imminent. A reminder of the facts and judgment in this significant case is set out below.

This EAT case affects the ability of employers to change employment terms and conditions in a unionised workplace without collective agreement. The facts, in brief, are: 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 EAT decided that if at least one term of employment will, as a result of the offer, be directly and not collectively agreed, that is sufficient and 145B does not require a future surrender of collective bargaining terms. It went on to consider K’s sole or main purpose in making the offer, as required by 145B. The burden of proving that purpose falls on the employer and, on the facts, the EAT agreed with the tribunal that K had failed to advance an alternative proper aim or purpose for making direct offers to the workforce. In essence, it decided that K adopted direct approaches to individual workers in a way that was unreasonable and designed to undermine the union’s mandate, breaching 145B.

While controversial, the decision is fact specific and the EAT rejected K’s submission that their interpretation gave unions a veto over changes to terms and conditions. According to the EAT, ‘…employers who act reasonably and rationally for proper purposes and are able to demonstrate that their primary purpose in making individual offers is a genuine business purpose, retain the ability to make offers directly to their workforce without fear of contravening s145B’. Employers with recognised unions should be aware of this case and take advice to avoid potentially incurring costly compensation. We will update readers on the progress of any appeal.

Hinrichs & others v Oracle Corporation UK Ltd: significant EWC decision from the CAC

The employer, OC Ltd, operated a European Works Council (EWC) under the subsidiary, or fall back, rules having failed to reach agreement on a bespoke EWC with worker representatives.

An exceptional information and consultation (I&C) EWC meeting was called by OC Ltd and during a 50 minute web call, the EWC reps were shown five confidential power point slides informing them of a reorganisation putting jobs at risk and relocating activities across borders. Following exchanges between the parties, a refusal by the EWC to issue an opinion alleging insufficient information to do so, and OC Ltd moving ahead with the redundancies, the EWC made a complaint to the CAC.

The CAC interpreted the subsidiary rules to mean that a single meeting, such as in this case, without as a minimum the provision of earlier information to the reps failed to comply with OC Ltd’s legal obligations. Importantly, the CAC stated that the same approach applied to all EWCs covered by current UK legislation (i.e. most EWCs signed since 16.12.99) as the law anticipates a two-stage EWC I&C process with consultation taking place following ‘provision of at least some substantive information.’

The CAC characterised OC Ltd’s default position of not wishing to disclose information to the EWC and to classify as confidential anything it had to as against the ‘thrust and intent’ of EWC law. It found the blanket and ongoing confidentiality attached to the power point slides to be unreasonable and, instead, parts of the presentation could have been declassified or confidentiality imposed for a limited time only.

Helpfully and importantly, the CAC confirmed that an employer is not required to wait for the EWC opinion before it can take action at national or local level – ‘management’s right to manage is protected.’ However, the expectation is that management does all that it can in terms of arranging for EWC I&C to happen, thereby enabling it to give an opinion in a timely fashion. Finally, it noted that EWC meeting could, depending on the circumstances, be a virtual meeting and did not have to be face to face.

Keeping Kids Company (in compulsory liquidation) v Smith & Others: redundancy guidance

In June 2015, KKC, in a financially precarious position, applied for grant funding. The grant application included a plan for its restructuring under which over half of the employees would be made redundant by mid-September 2015. Failing receipt of funds, KKC would become insolvent.

At the end of July, the grant was agreed. However, following negative publicity, KKC was forced to repay the funds, it closed down and all employees were made redundant without prior consultation. The employees made claims for protective awards.

The EAT agreed with the tribunal that the duty to consult was triggered by the time of the June grant application as the business plan constituted a ‘proposal to dismiss’. KKC could not rely on the fact that it was waiting for a response to its grant application.