Legislation: The state of the union

Christopher Mordue explains some of the changes to employment law facing organisations in April

The unrelenting pace of UK employment law change continues in high gear next month, with the principal legislative measures coming into force on 6 April primarily relating to collective employment issues.

Information & consultation

Information and Consultation Regulations is undoubtedly the most important piece of new employment law in 2005.

An important point to remember is that they allow no legal right for trade unions to request, or be involved in, new consultation procedures. The regulations provide only for consultation with elected employee representatives. Employers are, of course, free to involve trade unions in their arrangements, but there are tactical opportunities for employers who feel that their unions do not represent the whole of their workforce or who wish to use greater information and consultation arrangements to reduce pressure for statutory trade union recognition.

Statutory trade union recognition

The statutory process under which unions can obtain the right to collective bargaining on pay, hours and holidays – subject to majority support for this in an appropriate bargaining unit – was first introduced under the Employment Relations Act 1999. Although the procedure is extremely complex, a government review in 2003 concluded that it was working well. Changes to the procedure made in April under the Employment Relations Act 2004 represent fine-tuning, rather than major reform.

Employers will have new obligations to provide unions and Central Arbitration Committee (CAC) with information about workers in the bargaining unit, including listing the categories of workers in the unit, their workplaces and the number of workers in each category at each workplace.

If the employer fails to comply, the union can ask the CAC to proceed to decide the bargaining unit even before the 20-day period for negotiations on this point has expired. The CAC also has new powers to ask employers and unions to provide information that will assist in determining issues under the recognition procedure, such as details relating to union membership and the likelihood of the workers supporting recognition. The rationale is that greater sharing of information will increase the possibility of disputes that might arise during the recognition procedure being resolved by agreement.

Unions are also granted new rights of access to workers in the proposed bargaining unit. Currently, unions can only formally communicate with these workers during the period of a recognition ballot. From 6 April, earlier (albeit indirect) access is allowed – once the formal procedure begins the union can ask the CAC to appoint a suitable independent person, through whom they can communicate by post with the workers.
The employer has 10 days to give the CAC the names and home addresses of the workers and must keep this information updated to take account of leavers and new recruits. If the employer fails to do this, the CAC could ultimately award recognition if certain conditions are satisfied.

If the CAC orders a ballot on recognition, the employer must allow the union to hold meetings with the workers. From 6 April, the employer’s duty of co-operation in respect of such meetings is expanded, and will be breached where the employer unreasonably refuses to allow the union to meet workers without a representative of the employer being present, sends a representative to the meeting without being invited to do so, or where the employer records – or seeks to find out – what occurs at the meeting. Additionally, employers are prohibited from inducing workers not to attend the meeting or taking or threatening action against those who attend.

No change is made, however, to the scope of statutory recognition – unions can still only obtain collective bargaining rights over pay, hours and holidays under the statutory process. The government has declined to extend recognition to cover training and equality issues.

However, the 2004 Act does allow pensions issues to be added to the list of statutory recognition topics. If this power is exercised, the change is likely to apply retrospectively – those employers against whom statutory recognition has already been awarded would also have to bargain on pensions.

Trade union victimisation

The Employment Act 2004 also strengthens the law on trade union victimisation in several key respects. The protections which employees have against detriment on the grounds of union membership, or trade union activities, are extended to all workers and now also cover detriment for seeking to use the services of a trade union.

A related – and important – reform makes it unlawful for an employer to undermine collective bargaining arrangements by offering workers incentives to enter into individual employment contracts.

This follows the European Court of Human Rights ruling in Wilson v UK in 2002 ([2002] IRLR 568) that such practices were a breach of the right to associate under Article 10 of the European Convention.

Offers like these will be unlawful where the employer’s sole or main purpose in making the offer is to result in the workers’ terms and conditions not or no longer be determined by collective agreements.

Employers will still be able to offer individual contracts if their sole or main purpose is to reward those workers for their high level of performance or to retain them because they are especially valuable to the employer.

Breach of the new rules entitles the worker to an award of 2,500. Once the variation comes into effect, however, it is binding on the worker.

However, between the offer being accepted and the variation coming into effect, the worker can change his mind and the employer would be unable to recover any sums paid to the worker for agreeing the new contracts.

Industrial action

Changes to the law on industrial action mean that the statutory information which unions must give to employers before ballots on industrial action is now much simplified – the current requirement to provide “such information in the union’s possession as would help the employer to make plans and bring information to the attention of employees” is replaced with a requirement to provide a list of the categories of employee to which the employees concerned belong, a list of the workplaces at which they work and the numbers of employees by workplace and category.

Striking employees are also granted additional protections – the current period of eight weeks during which it is automatically unfair to dismiss those taking official industrial action is extended to 12 weeks, and any period during which the employees are ‘locked out’ by the employer will not count.

TUPE reform

The long-delayed overhaul of the Transfer of Undertakings (Protection of Employment) Regulations finally looks set to happen this year with new TUPE Regulations being introduced in two stages, the first of which relates to pensions.

Although the Regulations have only been published in draft form, they are unlikely to change before implementation.

The basis of TUPE is that on a change of employer – whether due to a business sale or an outsourcing exercise – transferring employees have their existing contractual rights protected.

The principal gap in this protection has been rights in relation to old age, invalidity and survivor’s benefits under occupational pension schemes – these benefits are exempted from transfer under TUPE rules.

The new rules fall far short of requiring a transferee to replicate in full the pension scheme of the former employer, or indeed to offer a scheme which is broadly equivalent or comparable. However, there will, for the first time, be an obligation on a transferee to provide a minimum level of pension benefit to the transferred workforce.

Employers will be relieved that there is no obligation to offer the same type of scheme as was provided by the transferrer. For example, if the transferrer has a final salary scheme, the transferee can offer a money purchase scheme in its place. At a time when many employers are closing final salary schemes, this is an important area of flexibility.

The options open to the transferee in providing the required basic level of pension provision are:

  • a defined benefit (final salary) scheme which meets certain minimum requirements
  • membership of a defined contribution (money purchase) scheme under which the employer matches employee contributions up to 6% (and either party can contribute more if they choose to)
  • membership of a stakeholder pension scheme, again where the employer matches employee contributions up to 6%.

Many transferees will find that offering membership of their existing schemes to transferring employees will suffice under these new rules. Note however, that it does not appear possible to offer standard personal pension plans instead of an occupational scheme. Transferees should also remember the need to consult the transferred workforce about the pension arrangements to be introduced after the transfer, since these will be classed as measures taken in connection with the transfer.

The regulations also provide that the new pension arrangements will be part of the contract of employment – this will make subsequent changes to those arrangements more difficult to impose without agreement.

The second wave of TUPE reform is now anticipated to take effect in October 2005, when a new definition of a transfer of an undertaking is expected to provide greater clarity about the application of TUPE regulations to outsourcings, transferrers will become obliged to make full disclosure of transferring liabilities to transferees, and the position on changing terms and conditions after a TUPE transfer is expected to be clarified.

What’s new in April 2005

  • The Information and Consultation of Employees Regulations 2004 come into force for employers with 150 or more employees
  • The Employment Relations Act 2004 is in force, amending various sections of the Trade Union and labour relations (Consolidation) Act 1992 on statutory trade union recognition, industrial action, the protection of workers against discrimination on the grounds of union membership or activities, and introducing new prohibitions on offering sweeteners to workers to opt-out of collective bargaining arrangements
  • The draft Transfer of Employment (Pensions Protection) Regulations 2005 – assuming they are implemented on 1 April 2005 – will oblige transferees to provide pension benefits to transferring employees after a TUPE transfer.

Comments are closed.