Written by JMW Solicitors LLP
On Thursday 13 July 2023, the High Court quashed regulations which allowed for workers on strike to be replaced by agency staff.
Since 1976, it has been illegal for employers to introduce or supply agency staff to replace those workers who are taking part in a strike or official industrial action. A key rationale behind such a stance was that allowing employers to do so would fundamentally reduce the effectiveness of any collective action.
In 2015, the Conservative Government consulted on trade unions reforms. The consultation included a proposal to revoke the legislation which made it a criminal offence to supply agency workers to replace workers taking part in an official strike (or to cover the duties of a worker who had themselves been reassigned to perform the duties of a striking worker).
The responses received by the Government saw a majority of respondents against the proposal which was deemed unfit for purpose. Subsequently, the proposed revocation of the legislation was dropped.
Fast forward to 21 July 2022 and against the backdrop of industrial action in the rail industry alongside further planned action across a number of other sectors, the Government revoked Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (‘Regulation 7’) and replaced Regulation 7 through the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (‘2022 Regulations’). The 2022 Regulations completely altered the legal position and allowed employers to replace striking workers with agency staff.
The decision by the Government created uproar which culminated with thirteen trade unions, who collectively represent around three million workers, bringing a judicial review challenge at the High Court as to the lawfulness of the Government’s actions.
The grounds of the challenge stated that the Secretary of State had failed to comply with his statutory duty under the Employment Agencies Act 1973 to consult with the necessary bodies before making the 2022 Regulations and, that in introducing the same, the Secretary of State had breached his duty under Article 11 of the European Convention of Human Rights (‘ECHR’) to prevent unlawful interference with the rights of trade unions and their members.
The Secretary of State’s position was that in relation to consultation, his duty had been met during the Government consultation which had taken place in 2015 and, further, that even if an additional consultation was to take place the outcome would not have been substantially different.
Regarding Article 11 ECHR, the Secretary of State’s argument was two-fold. Firstly, that the steps the Government had taken did not amount to an interference with trade union and their members’ rights under the ECHR and secondly, that even if the High Court considered that it was, that any such interference was proportionate.
The High Court Decision
On 13 July 2023, the High Court confirmed that the challenge had succeeded and quashed the 2022 Regulations on the basis of the Secretary of State’s failure to adequately consult with the relevant bodies.
Moreover, the High Court confirmed that the Secretary of State could not rely on a consultation which had taken place in 2015 and, in any event, he had not done so. The purpose of the consultation duty required the Secretary of State to take into account the views, perspectives, and evidence of those concerned in the hope of reassuring Parliament that any proposal had been means tested and approved by those that it concerned. The High Court further observed that there could have been a shortened consultation undertaken but there was no indication that such an approach was even considered by the Secretary of State.
Having decided the case on the consultation grounds the High Court did not express a view on the second argument proposed by the thirteen trade union bodies relating to the potential infringement of Article 11 ECHR.
In the High Court’s judgment, Mr Justice Linden stated that the approach taken by minsters to implement the 2022 Regulations that took effect was so “so unfair as to be unlawful, and, indeed, irrational.”
The Government has indicated that it was “disappointed” with the ruling and would consider the judgment and next steps carefully. A Government spokesperson further stated that “the ability to strike is important, but we maintain there needs to be a reasonable balance between this and the rights of businesses and the public“.
The High Court’s decision has seen the 2022 Regulations quashed meaning that the law reverts to its previous position, and it is once again an offence to supply agency workers to cover the duties of workers on strike.
Should the Government wish to alter the Conduct Regulations further they would have to follow the appropriate steps which would include holding a public consultation and considering any responses received before making a decision as to whether to implement any further proposal – steps the High Court held the Secretary of State had failed to follow in this instance.
The High Court’s judgment does give those who supply temporary workers a reason to exercise caution as the consequences of non-compliance with the Conduct Regulations can be significant.
A potential breach of the Conduct Regulations can be reported and then investigated by the Employment Agency Standards Inspectorate. Any such inspection has the potential to lead to a Labour Enforcement undertaking order or a consideration of prohibition/prosecution proceedings.
Specifically, the potential consequences of non-compliance include:
- under section 3A Employment Agencies Act 1973 (‘EAA 1973’), an employment tribunal may, on an application by the Secretary of State, make an order prohibiting a person (including a company) from carrying on, or being concerned with the carrying on of, an employment agency or employment business for up to ten years on the grounds that the person concerned is unsuitable because of misconduct or any other sufficient reason; or
- under section 5 EAA 1973, any breach of the Regulations may result in an unlimited fine (if convicted on indictment) or a fine not exceeding the statutory maximum on summary conviction. It is to be further noted that where an offence is committed by a corporate entity “with the consent or connivance of” an officer of that entity, the officer may also be prosecuted personally under section 11 EAA 1973.
The High Court’s judgment will have a wide-ranging impact across the entire recruitment sector.
Those operating under the remit of the Conduct Regulations and who supply temporary staff will have to exercise caution when supplying temporary workers to ensure compliance with the Regulations.
With that said, the High Court’s judgment will have a broader effect with the decision also having a notable impact on umbrella companies who have traditionally fallen outside of the ambit of the Conduct Regulations (as they have never historically been regarded as offering work finding services) but who work closely with individuals and/or organisations who are within the Conduct Regulations’ scope. To facilitate cross-sector compliance and noting the close relationship that they share with employment businesses, umbrella companies will need to work alongside such agencies to ensure that any individual or organisation falling within the scope of the Conduct Regulations does not act in a way which breaches them.
This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice.
If you would like to discuss this article or any recruitment issue in more detail, please contact Simon Bloch of JMW Solicitors LLP either by email at firstname.lastname@example.org or by telephone on 0161 838 2628.