Unions’ financial liability increased and government moves to repeal agency worker ban

This article looks at the implications for employers of these latest developments.

Increase in unions’ financial liability

Background

Trade unions enjoy special protection to call on their members to perform certain unlawful acts. In particular, section 219 of the Trade Union and Labour Relations (Consolidation) Act 1992 allows them to induce workers to break their contracts of employment by taking industrial action, such as by going on strike. However, in order for this special protection to apply, a trade union must be acting in contemplation or furtherance of a trade dispute, such as a pay dispute. It must also ensure that it only acts after securing its members’ support through a properly conducted ballot of them.

If a trade union were to call on its members to take industrial action without enjoying the protection provided by section 219, it faces potential legal claims for any loss that it causes, such as to the employer(s) affected by any strike. However, since 1982, its liability has been capped at a maximum of £250,000 (for trade unions with 100,000 or more members).

Reform

With effect from 21 July 2022, the government has moved to quadruple this cap to £1,000,000, with matching increases in the caps for smaller unions of £40,000 for unions with up to 5,000 members, £200,000 for those with between 5,000 and 25,000 members, and £500,000 for those with between 25,000 and 100,000 members.

Implications for employers

In practice, it is rare for employers to take legal action against trade unions to recover their losses for unlawful industrial action (as opposed to legal action to secure an injunction to stop it continuing). As such, the practical implications of this change may be minimal. It is nonetheless welcome because of its indirect implications. These are that, because of their increased financial risk, unions will now be even more likely to repudiate unprotected acts committed by its official or officers, which should help to avoid their actions leading to unlawful strike action.

Repeal of the prohibition on supplying agency workers during strikes

Background

All staffing suppliers (including recruitment agencies and other providers of contingent workers) are subject to a statutory compliance regime that is primarily set out in the Conduct of Employment Agencies and Employment Businesses Regulations 2003. These regulations are designed to protect both agency workers and the businesses seeking to engage them (i.e. employers).

Staffing suppliers are currently prohibited from supplying any agency workers in the context of official industrial action to perform duties that are either: (a) normally performed by a worker taking part in a strike or other industrial action; or (b) normally performed by any other worker who has been assigned by the employer to perform the duties of a worker taking part in a strike or other industrial action.  Breach of this regulation is a criminal offence.

Reform

The government has now laid legislation before Parliament that will repeal the prohibition on staffing suppliers from supplying any agency workers in the context of official industrial action. Importantly, and despite the backdrop to this legislation being the ongoing rail strikes affecting the country, the prohibition will be repealed in its entirety, and not only in the context of important public services, such as transport services.

Implications for employers

The relevant legislation has not yet been approved by Parliament and so, even if approved, will be of no assistance to employers currently or imminently facing strikes. However, it is questionable whether this reform will ever be of assistance to employers facing strike action. This is because using agency workers to replace strikers risks exacerbating the underlying industrial dispute and may well be challenged by those on strike on human rights grounds. In addition, many staffing suppliers are also expressing significant concerns about whether they would wish to supply workers in the context of industrial action, given how inflammatory that might be to the situation and how it might put their own workers in harm’s way. There is also the challenge of finding suitably-skilled agency workers.

Of greater significance, at least in the current context of the ongoing rail strikes, would be if the government were finally to implement its 2019 Conservative Party manifesto commitment to introduce minimum services levels during transport strikes. However, such a reform, if ever brought forward, would almost certainly be as controversial as repealing the prohibition on staffing suppliers and also be challenged on human rights grounds.