The State of the Union

Erica Aldridge, Legal Director and Matthew Leake, Partner at Kennedys ask if legislative changes will take the sting out of industrial action?

After a year dominated by industrial action across various sectors, it is clear that, notwithstanding the continual decrease in membership since the 1980s, trade unions continue to wield a great deal of power and industrial action in particular remains an effective tool available to them when seeking to negotiate with employers.

As part of its 2019 manifesto, the Conservative party pledged to address the disruption caused to passengers during transport strikes stating that: ‘Rail workers deserve a fair deal but it is not fair to let the trade unions undermine the livelihoods of others.’ Following this pledge, a number of legislative changes have recently been introduced or proposed which seek to reduce the impact of industrial action, thereby potentially weakening the position of trade unions, and we look at the impact of these measures below.

Resources during industrial action

At present, industrial action arranged or authorised by a trade union will be protected from any legal action by the employer provided the industrial action is carried out in contemplation or furtherance of a trade dispute and in accordance with legislative requirements, including in respect of balloting and picketing.

Such industrial action may be continuous or non-continuous and, in the absence of any employees who wish to continue working notwithstanding the industrial action, can cause an organisation’s business to grind to a halt. The coordinated strike action by unions across train operators and networks this year has effectively demonstrated this with some train operators able to operate no or only minimal services on strike days. This inevitably has caused significant disruption to passengers.

Introduction of Minimum Service levels during industrial action

The Transport Strikes (Minimum Service Levels) Bill (“The Strikes Bill”), which had its first reading in Parliament on 20 October 2022, seeks to address this particular issue. The Strikes Bill proposes to introduce minimum service level specifications for specified transport services during periods of industrial action. Such minimum service level specifications may be set in one of three ways:

• By way of negotiation and agreement directly between the employer and the trade union. Any agreement reached would form a legally binding Minimum Service Agreement (MSA).

• By a determination by the Central Arbitration Committee (CAC) which would result in a Minimum Service Determination (MSD). Such a determination may be made where the union and employer are unable to reach an agreement by negotiation after three months.

• Alternatively, the Secretary of State will have powers to set minimum service level specifications where the CAC has failed to make a MSD.

Under the proposed Strikes Bill, unions will be under an obligation to take steps to enter into an MSA with their employer where the employer serves them with a ‘notice of intent’ i.e. a notice of intention to enter into an MSA. Therefore, it will not be open to unions to simply refuse to engage in negotiations with employers in order to try and avoid a MSA being reached and, as above, should negotiations fail to result in an agreement after three months, the matter may be referred to the CAC to make a determination.

Equally, unions can themselves choose to serve a notice of intent on the employer which will then place the employer under a duty to take steps to enter into an MSA with the union. It seems far more likely that such a notice would be served by the employer as it is squarely in its interests to have a guaranteed minimum workforce in place during any strike but it will remain to be seen how this operates in practice.

One particular point to note is that, when issuing a notice of intent, an employer will be required to serve the notice on all unions who have members employed in connection with the provision of the service. Therefore, given that different grades of roles in the railway traditionally fall within the scope of different unions, an employer may be required to serve notice on a number of trade unions. However, the Strikes Bill also provides that, should the employer fail to serve a notice of intent on all unions, all unions will still be bound by the terms of any MSA agreed, even if they did not engage with the negotiations or agree to the terms. The Strikes Bill currently makes no distinction between unions which are formally recognised by employers for collective bargaining purposes and those which are not and it will be interesting to see whether this is clarified in future revisions.

Effect of Minimum Service Level Specifications

It is all very well for an employer and union to agree a minimum service level specification but of course this is only of value in the event that the union (or unions) then adhere to the terms and the specified minimum staffing levels.

Where a minimum service level specification is in place, on being notified of impending industrial action an employer may serve a ‘work notice’ on the union, identifying the specific individuals required to work during the industrial action and the work that they will be required to carry out. This must be done no later than the 7th day before the intended strike action and, before serving such a work notice, the employer must take such steps as are reasonably practicable to consult the union and have regard to any views expressed by it.

The work notice may not identify more people than are reasonably necessary in order to perform the level of services set out in the minimum service level specification. Also, an employer cannot have any regard to an individual’s trade union membership status when determining whether they will be required to work.

Where such a work notice is served and a union fails to take reasonable steps to ensure that the individuals named in the work notice do not take part in the industrial action, the union loses its protection from liability in tort and an employer will have a potential remedy against the union for any losses incurred as a result of the failure. For such a claim, much will depend on what will be deemed to be ‘reasonable steps’ and the level of active intervention required by the union to meet this requirement. It is understood that the final version of the Strikes Bill is likely to include guidance and examples of what may amount to reasonable steps in order to provide greater clarity on this.

Ability of employers to cover staff shortages with agency staff

Separately, a change has already come into force to allow employers to use agency staff to cover staff shortfalls caused by industrial action. The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (The Agencies Regulations), labelled by the then Transport Secretary Grant Shapps as a measure to: ‘Ensure any future strikes will cause even less disruption and allow adaptable, flexible, fully skilled staff to continue working throughout’ took effect on 21 July 2022. The Agencies Regulations removed a previous prohibition on employment agencies from providing temporary workers to employers for the purpose of temporarily replacing striking employees.

The removal of this restriction, together with proposed changes contained in the Strikes Bill may leave rail employers feeling buoyed that they will be able to maintain their services during any future industrial action. However, it should be noted that the change introduced by the Agencies Regulations is currently being challenged by way of a judicial review application brought by a number of trade unions including Unison and the TUC on various grounds including an alleged failure by the government to consult trade unions and an alleged breach of the right to freedom of assembly and association under the European Convention on Human Rights. Therefore, it is likely to be some time before there is clarity around the law on this point. Also, it is possible that the provisions for Minimum Service Level Specifications set out in the Strikes Bill may face a similar judicial review challenge.

Increase in compensation for unlawful industrial action

At the same time that the Agencies Regulations took effect, changes were also made to the limits on compensation levels payable by trade unions in the event of unlawful industrial action/ Specifically, the compensation limits were significantly increased as follows:

• Where a union has less than 5000 members: £40,000 (£10,000 previously).

• Between 5000-24,999 members: £200,000 (£50,000 previously).

• 25,000 to 99,000 members: £500,000 (£125,000 previously).

• 100,000 members or more: £1,000,000 (£250,000 previously).

Therefore, in many cases, the potential penalty for the leading rail unions for supporting or authorising unlawful industrial action (e.g. action not adequately supported by a properly held member ballot), is now more significant.

However, employers need to be realistic that trade unions are often well versed in the requirements and procedures for carrying out lawful industrial action, and therefore it may be unlikely that these increased compensation limits will have a material impact in deterring industrial action.

Comment

The government has clearly signalled its commitment to balancing the rights of employees to strike against the rights of transport users and to reducing the detrimental effect of strikes on customers and the economy. This is of course good news for rail companies, the public and business and should mean that, whilst still inconvenient, future rails strikes will have less ability to cripple the rail network.

However, there is still some way to go before the Strikes Bill becomes law and, prior to this, the proposed measures may be subject to amendments and legal challenge. As such, the full effect and benefit of these measures will not be clear for some time.

erica.aldridge@kennedyslaw.com

matthew.leake@kennedyslaw.com