Whilst statistics for December 2022 indicate that UK inflation is slowing, it nonetheless remains very high. As a result, the cost of living crisis continues to present a very real problem for employers. Whilst media focus has been on the strikes in the public sector, with many private sector employers in the throes of or about to commence, their annual pay negotiations, we are seeing trade unions pushing hard to secure significant pay rises. Given businesses are grappling with their own financial pressures, this is creating real tension, with employers (many of whom have enjoyed constructive relationships with their unions to date) facing tough and difficult discussions.
So what, as an employer, can you do on a practical basis to prepare – both in terms of avoiding any industrial action in the first place and minimising the impact on your business if industrial action is taken?
Working towards a successful negotiation
Of course the best chance you have of avoiding industrial action is to keep negotiations with your trade unions measured and conciliatory and to be as transparent as you can be without damaging your negotiating position. In the vast majority of cases it will be in both the employer’s and the trade union’s interests (not to mention that of their members’) for a resolution to be found. Remembering that, ultimately, both parties have a common goal will be helpful.
However, whilst wanting to keep communications with your unions conciliatory, it is important that you control the narrative in terms of what information is given to your workforce so that they understand why the business is taking the position that it is. Explaining to your workers, in an accessible way, how increases in costs, or downturns in sales or predicted pipeline, have affected revenues (or whatever your particular circumstances are) may help diffuse a potentially difficult situation. Whilst your aim is to win over hearts and minds, using neutral, non-emotive language and backing up statements with objective examples and illustrations where possible is likely to be most effective.
Despite the recent high-profile strikes, many workers will be reluctant to strike not least as going out on strike has, for some time up until recently, been relatively unusual and many may be unaware of the implications. With this in mind you may want to explain to employees the practical consequences of going on strike, including in relation to pay. Again these communications need to be drafted objectively. Be careful not to be seen as pressurising or bullying and avoid the use of emotionally charged language. This will help in terms of credibility and setting the right tone.
If, despite your best efforts, you believe your negotiations with the union are failing to progress, you may be tempted to try and do a deal with your employees by making an offer to them directly. Whilst this may ultimately be an available route, you need to be very careful before doing so because jumping the gun on this before the collective bargaining process has been exhausted can have very costly implications. This is because, when negotiating with trade unions over terms and conditions, employers will need to keep in mind section 145B Trade Union & Labour Relations (Consolidation) Act 1992. Broadly speaking this section is designed to penalise employers who seek to change their employees’ terms of employment outside of an agreed collective bargaining process, by making offers directly to employees, and in doing so bypassing the trade union. With the recent decisions of Kostal UK Ltd v Dunkley and Others and Ineos Infrastructure Grangemouth Ltd v Jones and Others, employers will need to ensure they have exhausted any collective bargaining procedure before making an “offer” (which has been interpreted widely to include unilateral pay increases) directly to employees. A failure to do so can leave the employer open to very costly class actions in the Employment Tribunal (with potential awards currently set at £4,554 per employee and revised annually with effect from 6 April each year). It is not always straightforward to assess whether a collective bargaining process has been exhausted so you may want to take legal advice on this, particularly given the potentially significant financial consequences of getting this wrong.
The government’s response to the current industrial action
With strikes now disrupting the provision of many important public services, the government has been taking measures in response:
Compensation limits
In summer 2022, the government implemented a change to the compensation limits that can apply to where a trade union faces litigation in the wake of unlawful industrial action. If a union has organised industrial action that does not meet certain prescriptive requirements (more on these requirements below), it can be liable for (amongst other things) inducing employees to breach their contracts of employment. The maximum level of compensation payable for these types of claims depends on the size of the trade union. For the largest trade unions, the cap on compensation has been increased from £250,000 to £1,000,000. Although this increase looks significant, it remains to be seen how much of a difference this change will make in practice as the focus in these types of cases is often on securing an injunction to prevent the industrial action going ahead, rather than securing compensation after the event.
Strike cover by agency workers
Previously, employment agencies were prevented, by law, from supplying agency workers to provide cover during strikes. That legislation was revoked last year so employment agencies are no longer prevented from supplying temporary workers to cover the duties normally performed by a worker who is taking part in a strike or by any other worker who has been assigned to cover the striking worker. There have been press reports of various employers taking advantage of this change in the law to bring in agency workers. However, given the workforce shortages in many sectors, together with the potential reluctance of some employment agencies and agency workers to provide strike cover and the potential for negative publicity, it will be interesting to see the extent to which the use of agency workers to cover striking workers becomes more commonplace. In the meantime, the validity of these changes are currently subject to a legal challenge after a number of trade unions launched judicial review proceedings. A High Court hearing is expected to take place from late March onwards.
Minimum service levels
In January 2023, the government introduced new draft legislation aimed at ensuring minimum service levels during strikes in services within six key sectors including health services, education and transport (although the government press release said it intended to focus on fire, ambulance and rail services in the first instance). Under the draft bill, the Secretary of State would be given broad powers to set minimum service levels in those sectors, although the government has indicated that it hopes voluntary agreements on the level of service required will be reached in some sectors so that those powers do not need to be exercised.
Under the draft bill, for any service in which a minimum service level has been set, an employer would be able to serve a ‘work notice’ to relevant trade unions specifying which workers are required to work during a strike to ensure those minimum service levels are met. The notice must also specify the work that those workers will be required to carry out during the strike. Employers would be required to consult with the union about the number of workers identified on, and the work to be specified in, the notice and would not be able to identify more workers than ‘reasonably necessary’. When deciding who to identify on the work notice, the employer would also not be permitted to take into account whether or not a worker is a member of a trade union. Any ‘work notice’ will need to be issued at least seven days before the earliest strike date to which it relates and can potentially be varied up until the end of the fourth day before the strike date.
If the trade union failed to take ‘reasonable steps’ to ensure that all of its members who are identified in the work notice comply with it, it would lose its protection from liability for inducing employees to take part in a strike and breach their employment contracts. At this early stage in the life of the bill, there is little detail on what will constitute ‘reasonable steps’ for these purposes. This could be a key battleground in due course.
The bill would also have a significant impact on individual employees - an employee who takes part in a strike contrary to a valid work notice requiring them to work during a strike would also lose the right to be regarded as automatically unfairly dismissed if they were dismissed for taking part in a strike.
The bill has been met with significant opposition from other political parties and trade unions and it is unlikely that the bill’s progress through Parliament will be smooth not least as it is short on detail and leaves many questions unanswered. Even if the bill does become law in due course, it is not a fix that can be applied now.
Contingency planning
Whilst it is sensible to approach negotiations with an open mind, employers will still want to make sure that they have a contingency plan in place in the event industrial action should arise. Some suggestions to consider are below:
Contingency staffing plans to cover any period of disruption:
In addition to considering the use of agency workers (see above), employers may also want to consider:
- re-allocating or seconding non-striking workers (subject to ensuring appropriate contractual terms are in place);
- deploying (where appropriate) sub-contractors or temporary staff;
- directly engaging temporary cover; and/ or
- temporarily outsourcing affected business functions to third party contractors (being careful to consider any wider ramifications of this type of move).
Policy amendments: Employers may also wish to change their application of certain policies. These changes may not be popular but they may help alleviate the impact of any industrial action (and indeed may also deter people from taking strike action.) Examples include:
- implementing a temporary ban on holiday (but be careful in doing so not to breach the Working Time Regulations and/ or the contract of employment);
- issuing cancellation notices for any pre-booked holiday during the relevant period (subject to considering whether to offer compensation for cancellation charges and subject to certain minimum notice periods specified by statute or agreement); and/ or
- adjusting sickness reporting requirements (for example requiring medical certification for one day's absence to help combat the risk of some employees calling in sick as a mechanism of being absent from work whilst avoiding actually taking part in industrial action and losing pay. Be aware, however, that there are complexities to this type of arrangement which would require specific legal advice).
Such measures should be introduced with caution and any changes in policy must be communicated to all employees in advance of the strike day. Again we would suggest seeking specific legal advice before introducing these changes.
Preparing guidance for managers: Managing employees who are taking industrial action will be challenging for even the most experienced of line managers. It is worth preparing guidance for managers on how you will be preparing for the industrial action, any steps you will be taking to minimise the impact of any industrial action together with a set of FAQs so that messaging is consistent and your managers feel supported in what will be a challenging situation. Guidance and training should be prepared and introduced in good time.
On receiving a notice of industrial action
Most employers and trade unions are likely to want to avoid reaching the point at which the union instigates industrial action. It is, however, worth having an awareness of the process that can be triggered once an official notice of industrial action has been received.
If an employer receives notice of industrial action, this does not necessarily mean the industrial action will go ahead. Negotiations with the trade union can continue in the time following the issuing of the notice and the intended start date of the industrial action, with a view to agreeing the disputed terms and conditions and calling off the industrial action. Equally negotiations can take place after the industrial action has started with industrial action being brought to an early end if a compromise position can be agreed between all parties.
Whilst negotiation remains the most important preventative measure in that situation, there are also other steps employers should consider when faced with a notice of industrial action. The main step for the employer (with the help of their legal advisers) is to consider whether or not the intended industrial action is lawful. There are a number of prescriptive requirements for trade unions to follow for the industrial action to be lawful. Unless it can show that the industrial action and the process followed meets those prescriptive requirements, the potential consequences for a trade union that authorises or endorses industrial action can be significant - it could be liable for inducing a breach of an employee’s contract, for example, which can have expensive consequences for the union, particularly given the recent increase to compensation limits.
The full detail of those prescriptive requirements is beyond the scope of this note. Perhaps the three key requirements to be aware of are:
- the action must be in contemplation or furtherance of “a trade dispute”. A dispute between an employer and its workers relating to terms and conditions of employment will satisfy the requirement to be a trade dispute and there are also a number of other types of dispute that may be covered;
- the action must have the support of the majority in a valid ballot of union members – a valid ballot needs to have an adequate turnout (usually at least 50% of those entitled to vote) and the union should only ballot all members who it is reasonable for it to believe will be induced to take part in the action. (There are additional, more onerous requirements regarding the level of support required in ballots of workers engaged in certain important public services); and
- the union must have complied with a series of specific notification requirements. These requirements cover notification of the ballot, notification of the ballot result and notification of industrial action and include specific requirements relating to the content and the timing of those notices.
With these complex requirements in mind, after receiving each of those notices, the employer should analyse the paperwork provided and consider whether there are any potential areas of non-compliance. If there are, there may be grounds for applying to court for an injunction to prevent the industrial action going ahead, but such an application should only take place after engaging in pre-action correspondence with the trade union regarding the alleged beaches.
Before entering into this type of correspondence and potentially seeking an injunction, an employer will want to carefully consider the costs and time-intensive nature of the application, the potential risks and the impact it could have on industrial relations. There are lots of factors to consider and weigh up, whilst also continuing negotiations with the trade union to seek a potential resolution to the discussions over terms and conditions. In addition, the deadlines for taking legal action are extremely tight so it is important to get legal advice at the earliest opportunity and discuss the various options that may be available at that stage.
We have considerable experience of advising employers who are facing a threat of industrial action, including in relation to seeking injunctions. If your organisation is facing threatened industrial action and you would like advice and/or want to know more about minimising the impact of such action, please contact Adrian Martin or another member of our Employment team.
Disclaimer
This briefing gives general information only and is not intended to be an exhaustive statement of the law. Although we have taken care over the information, you should not rely on it as legal advice. We do not accept any liability to anyone who does rely on its content.