UK labor law quarterly update - January 2023

• United Kingdom

• Employment law
• Labor law and trade union issues

26-01-2023

Welcome to our January UK labor law quarterly update. This edition contains the following content:

News round-up

• Agency worker strike changes to be challenged in court this year
• The new minimum service levels Bill: a summary of the key points for employers

UK labor case law

• An unusual number of labor law cases are before the Supreme Court in 2023

Eversheds Sutherland labor law publications, events and training

• Our Guide to UK Labor Law

• Our new in-person and e-module training: Collective labor, trade unions and industrial relations - UK law and best practice

News round-up

Agency worker strike changes to be challenged in court this year

Last July, the Government repealed restrictions which prevented temporary agency workers backfilling employees who take part in industrial action. In response to these changes, 11 trade unions (coordinated by the TUC) issued judicial review proceedings in the High Court. They argue that the legislative changes permitting the supply of agency workers during strikes are procedurally flawed (including a failure to consult as required by the regulations) and breach trade union rights under the ECHR. Permission has been granted for the review and a hearing is expected in March or later. Employers hiring agency workers as part of contingency planning during industrial action should monitor developments in case the judicial review overturns the 2022 changes.

The new minimum service levels Bill: a summary of the key points for employers

Overview

Against a backdrop of increased industrial action in public services, the Government has published a new Bill providing for regulations to set minimum service levels (MSLs) for some strikes. The Bill replaces the MSL Bill published last year under the previous Prime Minister and media reports suggest that other potential strike law reforms, including raising the ballot threshold and notice periods, will not be taken forward during this Parliament.

If implemented, the Bill would change the conditions that trade unions in certain public services  must meet, when organising affected strikes, in order to be protected from court proceedings including claims for compensation, and alter the automatic unfair dismissal rules for employees. It will also have implications for employers involved, including whether, and how, they put MSLs into effect by giving a work notice, as set out in the Bill.

According to the Secretary of State, the Bill is not expected to become law, if it is agreed, before the second half of 2023 at the earliest.

The Labour Party has stated that it would repeal the legislation, if it wins the next General Election. The trade unions have stated their intention to challenge the changes in the courts.

We have summarised key elements of the Bill below. However, these may be subject to change as the Bill progresses through Parliament.

Which employers?

Employers within six categories are potentially included. These are: health services; fire and rescue services; education services; transport services; decommissioning of nuclear installations and management of radioactive waste and spent fuel; border security.

Employers in the fire, ambulance and rail categories will receive more detail when the Government consults on MSL regulations. The consultations have been promised in parallel with the Bill making its way through Parliament.

As for the employers in the other sectors included in the Bill, the Government has suggested a different approach. It expects employers and unions in those sectors to reach voluntary MSL agreements, with the Government stepping in and setting MSLs “should that become necessary”.

Which disputes are covered?

Once MSL regulations are in force, it is anticipated that they will apply to any relevant strike then taking place – not just those balloted on a subsequent date (i.e. even if the employer notice was given before the regulations were in force or the ballot date was before the Bill was enacted).

The Bill excludes overtime bans and call-out bans from strikes covered by MSLs.

What are “minimum service levels”?

The Bill does not provide this detail and we await the consultation on the above regulations to better understand the scope and meaning of MSLs.

MSLs in practice: the role of the employer?

The Bill proposes the following role for the employer in putting MSLs into operation, once both the Bill and relevant MSL regulations are in effect:

• in response to a union giving notice of industrial action in a MSL regulated service, the employer has the right (but is not required) to respond with a work notice
• the work notice identifies the people required to work to meet the MSLs set out in the regulations, and the work to be performed by them
• those workers identified should be no more than are reasonably necessary
• the employer is expected to inform those identified in the work notice in advance of the strike that they must comply by performing the work described in the notice during the strike
• timing of the work notice, consultation duties and data protection are covered in the Bill (including, to consult the union before giving the notice and providing at least a week’s notice).

The consequences of non-compliance?

For the union: where a work notice has been issued in accordance with the Bill and regulations, if enacted, and the union fails to take reasonable steps to ensure that union members who are identified in the work notice comply (i.e. not to strike), it risks court action, including damages as result of that failure. Damages may not extend to losses that would have been suffered by the employer anyway.

For the employee: there is no automatic protection from unfair dismissal for an employee who is identified in a valid work notice and, in breach of the notice, participates in the strike (provided the employer gave them the advance notice, described above). However, such an employee retains their ordinary unfair dismissal protection, if they qualify.

For the employer: the Bill requires that the employer issues a valid work notice, before, for example, seeking damages from the union. Deciding not to issue a work notice in the first place is, it appears, not a breach of the legislation by the employer.

UK labor case law

An unusual number of labor law cases are before the Supreme Court in 2023

Dismissal and re-engagement

In 2022, the Court of Appeal overturned an injunction imposed by the High Court which had permanently prevented an employer from proceeding with dismissal and re-engagement proposals (so-called “fire and rehire”) to remove a pay enhancement. Permission to appeal to the Supreme Court has been granted. While the case involved unusual facts and contractual terms, the Court of Appeal’s decision appears to make it extremely difficult for workers and unions to obtain injunctions to prevent such dismissals. Read our Alert on USDAW v Tesco Stores.

Industrial action: employee detriments

Also in 2022, the Court of Appeal overturned an EAT decision that UK strike law was incompatible with human rights law and confirmed that it provides no protection for detriments imposed by employers in response to industrial action. This is particularly relevant where an employer contemplates taking action against those striking, other than deducting pay for work not done during the strike. Permission to appeal to the Supreme Court has also been granted, with a December hearing date. Read our update on Mercer v Alternative Future Group.

Collective redundancies HR1 and criminal liability

As well as collectively consulting in larger scale redundancies, an employer must notify the Secretary of State (or Department for the Economy in Northern Ireland) in advance using the HR1 form. Failure to do so is a criminal offence, exposing the employer, and potentially an individual director or manager, to a fine. This criminal element is sometimes overlooked when assessing redundancy risks. In March, the Supreme Court will consider an appeal where an administrator, appointed after a company went into administration, was charged with this offence together with the company’s director. It is hoped that the decision may provide guidance for senior executives and administrators on the scope of their criminal liability under this legislative provision. R (on the application of Palmer) v Northern Derbyshire Magistrates Court and another.

Gig workers and the scope of trade union rights

In April this year, the Supreme Court will consider an appeal brought by the trade union IWGB in a case concerning Deliveroo riders, in circumstances where the union had applied to the Central Arbitration Committee (CAC) to be recognised for collective bargaining purposes. Previously, the Court of Appeal held that such riders did not fall within the scope of Article 11 of the European Convention on Human Rights (the right to form and join trade unions) because they were not "in an employment relationship" with Deliveroo, given the absence of personal service on the facts. While the outcome will be fact specific, the reasoning of the Supreme Court will be of significance for other gig employers. IWGB v CAC.