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Employment Relations Bill


 

These notes refer to the Employment Relations Bill
as brought from the House of Commons on 13th April 1999 [HL Bill 48]

EMPLOYMENT RELATIONS BILL

EXPLANATORY NOTES

INTRODUCTION

1.     These notes relate to the Employment Relations Bill as brought from the House of Commons on 13th April 1999. They have been prepared by the Department of Trade and Industry in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

2.     The notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require any explanation or comment, none is given.

SUMMARY AND BACKGROUND

3.     The provisions of this Bill form part of a package of reforms to employment and trade union law outlined in the Government's White Paper, Fairness at Work, published in May 1998 (Cm 3968) and developed in the light of consultation, as announced by the Secretary of State for Trade and Industry on 17 December 1998 (Commons Hansard WA cols 692-693). They consist of:

  • new statutory procedures for the recognition and derecognition of trade unions for collective bargaining, to apply when unions and employers are unable to reach agreement voluntarily, and a requirement for employers to inform and consult unions recognised under the statutory procedure on their training policies and plans;

  • changes to the law on trade union membership, to prevent discrimination by omission and the blacklisting of people on grounds of trade union membership or activities;

  • changes to the law on industrial action, in particular to certain aspects of the ballot requirements and to enable dismissed strikers to complain of unfair dismissal in certain circumstances;

  • new rights and changes in family-related employment rights, aimed at making it easier for workers to balance the demands of work and the family;

  • a new right for workers to be accompanied in certain disciplinary and grievance hearings;

  • other changes in individual employment rights; and

  • other, miscellaneous provisions.

4.     Most of the Bill consists of amendments to the Trade Union and Labour Relations (Consolidation) Act 1992 ("the 1992 Act") and the Employment Rights Act 1996 ("the 1996 Act"). The Bill does not extend to Northern Ireland. It is intended that the subject matter of the Bill should become a transferred matter under the Northern Ireland Act 1998. It would thus fall to the Northern Ireland Assembly to decide on the extent to which measures equivalent to those in this Bill should be put into effect in Northern Ireland, subject to the provisions of the 1998 Act.

Trade union recognition and derecognition

5.     The Bill gives effect to the Government's proposals for a new system of trade union recognition, as set out in Chapter 4 of Fairness at Work. These were informed by discussions between the CBI and TUC and further developed in the light of the consultation on the White Paper, as announced on 17 December 1998. The statutory procedure for which the Bill provides is intended for use only if attempts to reach a voluntary agreement fail.

Trade unions and individual employment rights related to trade unions

6.     The Bill contains provisions on three other matters related to trade unions and related individual employment rights which give effect to the Government's proposals set out in Chapter 4 of Fairness at Work:

  • to protect workers against discrimination by omission on the grounds of trade union membership or non-membership or trade union activities;

  • to protect workers against blacklisting on the grounds of trade union membership or activities; and

  • to remove the requirement for trade unions in certain circumstances to identify to employers those workers who will be balloted or called out on industrial action.

7.     As announced on 17 December 1998, the Bill will not affect the right of employers and employees to agree individual contracts even where a union is recognised for collective bargaining in respect of the bargaining unit where the employees work. It does however provide for employees to be protected against being forced into accepting individual contracts in such circumstances.

8.     Following the Government's invitation in Chapter 4 of Fairness at Work for views on how to simplify the law on industrial action ballots and notice, the Bill contains provisions aimed at clarifying and simplifying the present law in this area in a number of respects.

Family-related employment rights

9.     In Chapter 5 of Fairness at Work, the Government set out proposals aimed at helping employees to combine work and family life satisfactorily by simplifying and extending existing maternity rights and introducing new rights to three months' parental leave for men and women when they have a baby or adopt a child and to time off for urgent family reasons, in line with the provisions of the Parental Leave Directive. The Bill implements these proposals by conferring basic rights and giving the Secretary of State powers to make regulations on the details. It is intended that there should be a further round of consultation on the regulations.

Right to be accompanied in disciplinary and grievance hearings

10.     The Bill implements the Government's proposal in Chapter 4 of Fairness at Work that employees should have the right to be accompanied by a fellow employee or trade union representative of their choice in disciplinary and grievance procedures.

Other rights of individuals

11.     The Bill gives effect to the Government's proposals regarding the dismissal of employees for taking part in lawfully organised official industrial action, as set out in Chapter 4 of Fairness at Work.

12.     The Bill also gives effect to the Government's preferred option, stated in Chapter 3 of Fairness at Work, for dealing with cases where employees are obliged to accept fixed term contracts containing waivers of their rights to unfair dismissal and statutory redundancy payments. It prohibits the use of waivers for unfair dismissal but not redundancy payments.

13.     In Chapter 5 of Fairness at Work, the Government welcomed the Part-Time Work Directive and announced its intention to carry out further consultation with a view to implementing the Directive by April 2000. The Bill contains regulation-making powers for the Secretary of State to ensure that part-time workers receive no less favourable treatment than full-time workers. It is intended that there should be further public consultation on the regulations.

14.     Following consultation on the Government's proposal in Chapter 3 of Fairness at Work for legislation enabling it to extend the coverage of some or all existing employment rights by regulation to all those working for another person, the Bill contains order-making powers for the Secretary of State.

Other, miscellaneous provisions

15.     The Bill makes a number of provisions on institutional matters:

  • The new statutory recognition and derecognition procedures create a new role for the Central Arbitration Committee. The Bill amends the arrangements for the appointment of CAC members and for the proceedings of the CAC in respect of cases under the new procedures.

  • The Bill implements the Government's proposals in Chapter 4 of Fairness at Work to abolish the Commissioner for the Rights of Trade Union Members (CRTUM) and the Commissioner for Protection Against Unlawful Industrial Action (CPAUIA). (The Commissioners' main functions are to provide assistance to individuals taking or contemplating certain legal proceedings against unions or union officials.) The Bill gives new powers to the Certification Officer to hear complaints involving most aspects of the law where CRTUM is currently empowered to provide assistance.

  • The Bill provides that the general duty of ACAS should be "to promote the improvement of industrial relations", repealing the current emphasis given by the 1992 Act to ACAS's functions in relation to the settlement of trade disputes.

16.     The Government announced its intention in Chapter 2 of Fairness at Work to make funding available to assist and develop partnerships at work. The Bill provides statutory authority for this.

17.     In Chapter 3 of Fairness at Work, the Government indicated that it was reviewing the rules governing the conduct of employment agencies. The Bill amends and extends the order-making power in the Employment Agencies Act 1973 under which the Secretary of State regulates the industry; amends the prohibition on charging fees to people seeking work; and amends and extends the range of premises that may be entered by inspectors. The Bill also lengthens the time limit for prosecutions under the 1973 Act and provides for information obtained under the compulsory powers in the 1973 Act to be disclosed for the purposes of any criminal proceedings and not just those relating to offences under that Act.

18.     In Chapter 3 of Fairness at Work, the Government announced its intention to abolish the maximum limit on the compensatory award for unfair dismissal. It also announced that it was considering the future of the existing system of additional and special awards and that it intended to index-link the various limits which are currently subject to review either annually or at the Secretary of State's discretion. Following the consultation on Fairness at Work, the Secretary of State for Trade and Industry announced on 17 December 1998 that the Government had decided to increase the limit on the compensatory award from £12,000 to £50,000, rather than abolish it, and to consolidate the existing system of special and additional awards into a single award to apply in cases where an employer fails to comply with a re-employment order. On 30 March, the Secretary of State for Trade and Industry announced (Commons Hansard cols 875-876) that compensation would not be subject to the monetary limit where an individual had been dismissed unfairly under the provisions in the Public Interest Disclosure Act 1998, or for reasons relating to health and safety matters. The Bill gives effect to these proposals.

COMMENTARY ON CLAUSES

Trade unions

Clause 1 and Schedule 1: Collective bargaining: Recognition

19.     Clause 1 and Schedule 1 establish new statutory procedures for the recognition and derecognition of trade unions as entitled to conduct collective bargaining on behalf of particular groups of workers, and for the right of workers to take part in these processes without fear of detriment or dismissal. Clause 1 inserts a new Schedule A1, as contained in Schedule 1 to the Bill, into the 1992 Act. References to paragraphs, sub-paragraphs and Parts in what follows are references to the paragraphs, sub-paragraphs and Parts of the proposed new Schedule A1 to the 1992 Act.

20.     The statutory process for recognition of a union to conduct collective bargaining on behalf of a particular group of workers is set out in Part I. The procedure gives the union and employer the opportunity to agree an appropriate group of workers (referred to as the bargaining unit) and whether the union should represent them in collective bargaining, but if no agreement is reached there is a mechanism for the Central Arbitration Committee (CAC) to decide on the appropriate bargaining unit or whether the union should be recognised, or both. Part II deals with the possibility that an employer could recognise a union voluntarily, to avoid a declaration of recognition being made, and then fail to carry out the agreement reached. With the exception of Parts II and VI, voluntary recognition is otherwise unaffected by the Bill. Part III sets out procedures which may be followed if a union is recognised through the statutory procedures in Schedule 1 and, as a result of a change in the employer's business, either the union or the employer believes the bargaining unit has changed. It also deals with cases where the bargaining unit has ceased to exist. Part IV deals with the derecognition of a union whose recognition resulted from a declaration by the CAC but which was not recognised "automatically" on the basis that more than 50% of the bargaining unit were union members. The derecognition of "automatically" recognised unions is dealt with in Part V. Part VI provides for workers to be able to invoke the statutory derecognition procedure where an employer has voluntarily recognised a union which does not have a certificate of independence. Part VII provides protection for workers against detriment arising from participation or non-participation in activities relating to recognition or derecognition. Part VIII contains general provisions and powers for the Secretary of State to issue guidance on or to amend certain procedures.

    The Central Arbitration Committee is established under sections 259-265 of the 1992 Act. Clauses 21-22 of the Bill amend the arrangements for the appointment of CAC members and for the proceedings of the CAC in respect of its functions under the new Schedule A1.

21.     In dealing with cases under the new Schedule A1, the CAC is required by paragraph 128 to have regard to the object of encouraging and promoting fair and efficient practices in the workplace (so far as is consistent with its other obligations under the Schedule).

22.     The Government stated in Fairness at Work that the statutory procedure, which would be invoked only when attempts to reach a voluntary agreement had failed, was intended to provide an additional incentive for the parties to reach voluntary agreement. Where the parties failed to agree voluntarily, then the procedure would provide a means of settling the dispute without industrial action.

 

Part I: Recognition

23.     Part I sets out procedures for the recognition of an independent trade union to conduct collective bargaining on behalf of a group of workers, referred to as the bargaining unit. It provides a method for agreeing the appropriate bargaining unit, whether the union should be recognised, and how collective bargaining should be conducted. The key steps in the recognition procedure are illustrated in Figure 1; similarly, the key steps in the process for establishing a method of collective bargaining are summarised in Figure 2.

Figure 1: Statutory recognition procedure

24.     Paragraph 1 provides that an application for recognition may be made by a single union or by two or more unions acting together. For simplicity these notes generally refer to applications by a single union but such references should be read as covering a union or unions.

25.     Paragraph 2 contains definitions for the purposes of the Schedule. Sub-paragraph (2) defines the bargaining unit, the group of workers on whose behalf a union (or unions) would conduct collective bargaining. Sub-paragraph (3) defines the proposed bargaining unit, the group of workers on whose behalf a union requests recognition. (If the employer does not agree that the unit is appropriate, it may be changed in negotiation. If the employer and union fail to agree, the Central Arbitration Committee (CAC) will rule under paragraphs 15 and 16.) Sub-paragraph (4) defines employer.

26.     Sub-paragraphs (6) and (7) define the scope of collective bargaining for the purposes of Part I. Collective bargaining covers pay, hours and holidays plus any matters which the union and employer agree should be included. However, if the CAC determines the method by which collective bargaining should take place under paragraph 27(3), that method will apply only to negotiations over pay, hours and holidays - it will not apply to any matters the parties agree under sub-paragraph 7. (If the CAC sets a bargaining method, the parties can agree to vary it to include other matters as well.)

27.     Paragraph 3 deals with requests for recognition. Sub-paragraph (1) has the effect that the recognition process is begun by a formal request from the union seeking recognition.

28.     Paragraphs 4-8 test whether an application is valid. Paragraph 14(2)(a) requires the CAC to reject any application which is not valid.

29.     Paragraph 5 provides that the union making an application must have a certificate of independence from the Certification Officer.

The functions of the Certification Officer, including in relation to certificates of independence, are dealt with in sections 2-9 of the 1992 Act.

    * A trade union is defined as independent by section 5 of the 1992 Act if it (a) is not under the domination or control of an employer or group of employers or one or more employers' associations, and (b) is not liable to interference by an employer or any such group or association (arising out of the provision of financial or material support or by any other means whatsoever) tending towards such control.

30.     Paragraph 6 provides that a request is not valid if an employer has fewer than 21 workers. The term "employer" includes associated employers, as defined below. The Secretary of State may vary the 21 worker threshold, or make other changes to the provisions of this paragraph, by statutory instrument subject to affirmative resolution.

31.     Sub-paragraphs (3) and (4) exclude from the calculation of the number of workers people who work for associated employers incorporated outside Great Britain and who do not ordinarily work in Great Britain. The recognition procedure still applies, however, to employers incorporated outside Great Britain which employ more than 21 workers.

    * Two employers are associated employers under section 297 of the 1992 Act if one is a company of which the other (directly or indirectly) has control, or both are companies of which a third person (directly or indirectly) has control.

32.     Sub-paragraph (5) means that workers employed on board UK-registered ships by associated employers are also counted towards the 21 workers threshold, unless (a) the ship is registered at a port outside Great Britain, (b) the employment is wholly outside Great Britain, or (c) the worker is not ordinarily resident in Great Britain.

33.     Paragraphs 7 and 8 make provision for the form and content of requests for recognition, including a power for the Secretary of State to prescribe the form of requests by statutory instrument. Further general provisions on applications are made in paragraphs 28-36.

34.     Paragraph 9 provides that the statutory recognition procedure is to end if the parties agree within ten working days both the appropriate bargaining unit and that the union should be recognised to conduct collective bargaining on behalf of the workers who make up that unit. If the employer agrees to negotiate, then the parties have at least 28 days in addition to the initial ten working day period in which to conduct negotiations. They can extend the period for negotiation by mutual consent.

35.     Paragraph 10 provides that if the employer does not respond to the request or rejects it before the end of the first (ten working day) period, the union may apply to the CAC to decide the appropriate bargaining unit and whether a majority of workers in that bargaining unit support recognition.

36.     Paragraph 11 provides that if the employer and union fail to reach agreement in the second (28 day) period, the union may apply to the CAC to decide the appropriate bargaining unit and whether a majority of workers in the bargaining unit support recognition. If the parties agree a bargaining unit but cannot agree that the union should be recognised, the union may apply to the CAC to decide whether a majority of workers in the bargaining unit support recognition. However, in either case the union may not apply to the CAC if it rejected or failed to respond to a proposal by the employer (made within 10 working days of having indicated his willingness to negotiate) that the parties should seek the assistance of ACAS in the negotiations.

37.     If a union applies to the CAC under paragraph 10 or 11, before the application may proceed the CAC must be satisfied that it is valid and admissible.

38.     Paragraph 13 applies if two or more applications are received by the CAC, and the bargaining units proposed or agreed in respect of the applications overlap i.e. at least one worker is a member of all the bargaining units. In this case, each application is the subject of a "ten percent" test to see whether at least 10% of the bargaining unit are union members. If only one application passes the test, it may proceed; if both pass or neither passes, neither application will be accepted.

39.     Paragraph 14 requires any application under paragraph 10 or 11 to be valid in terms of paragraphs 4-8 and admissible in terms of paragraphs 28-36. The CAC has 10 working days (or longer, if it notifies the union and employer of its reason for extending the period) in which to decide whether the application is valid and admissible. In order to proceed, an application must therefore:

  • be received by the employer (paragraph 4)

  • be made by an independent union (paragraph 5)

  • apply to an employer with 21 or more workers (paragraph 6)

  • be made in the proper form (paragraphs 7, 8 and 28)

  • be copied to the employer, along with any supporting documents (paragraph 29)

  • not cover any workers in respect of whom a union is already recognised, unless that union has no certificate of independence, was previously recognised in respect of the same (or substantially the same) bargaining unit, and ceased to be recognised within the three years prior to the application (paragraph 30)

  • satisfy the CAC that at least 10% of the proposed bargaining unit are members of the union and a majority of the workers in the proposed bargaining unit would be likely to favour recognition (paragraph 31)

  • (if the application is made by more than one union) show that the unions will co-operate effectively in collective bargaining and, if the employer wishes, conduct single-table bargaining (paragraph 32)

  • not cover any workers in respect of whom the CAC has already accepted an application i.e. the bargaining unit must not overlap with another unit in respect of which the CAC has accepted an application (paragraph 33)

  • not be substantially the same as an application which the CAC accepted within the previous 3 years (paragraph 34)

  • not be made within 3 years of a declaration by the CAC that the union (or the same group of unions) were not entitled to be recognised in respect of the same (or substantially the same) bargaining unit as in the current application (paragraph 35)

40.     If the employer and union have agreed the bargaining unit, then the application under paragraph 11(4) leads directly to a determination of support. Otherwise, for applications under paragraphs 10(2) or 11(2), the CAC must decide the appropriate bargaining unit before moving on to the question of whether the union has sufficient support for recognition.

41.     Paragraph 15 provides that if the CAC has been asked to decide on the appropriate bargaining unit it has 28 days to get the union and employer to agree an appropriate bargaining unit. The CAC may choose to extend this period.

42.     Paragraph 12 provides that if no agreement on the bargaining unit is reached, the CAC must determine the appropriate bargaining unit within ten working days, taking account of the need for the bargaining unit to be compatible with effective management and, so far as is consistent with this need, the factors listed in sub-paragraph (4). This period can be extended provided the CAC notifies the parties with its reasons for the extension, but in practice the CAC may have gathered enough information in the course of trying to help the parties to reach agreement to be able to decide quickly.

43.     Sub-paragraph (5) provides that the union may request the CAC to cease work on determining the appropriate bargaining unit. For example, it may become apparent to the union that its proposed unit is not appropriate. It may wish to withdraw its application and reformulate it, possibly in conjunction with another union.

44.     In order for a union to be awarded recognition, it must show sufficient support among the workers who make up the bargaining unit. Once the appropriate bargaining unit is established, paragraph 17 provides that, if it is different from the bargaining unit which the union initially proposed, the CAC must decide whether at least 10% of the bargaining unit are members of the union and a majority of the workers in the bargaining unit would be likely to favour recognition before continuing to process the application. Evidence of support could include a higher proportion of union membership or a petition of support for the union's recognition.

45.     If the CAC is satisfied that a majority of the workers in the bargaining unit are members of the union making the application, paragraph 19 provides that the CAC shall issue a declaration of recognition without a ballot, unless one of the conditions in sub-paragraph (4) is met, in which case the CAC must call a secret ballot of members in the bargaining unit. Under paragraph 20, the CAC must also call a secret ballot where the union does not show majority membership in the bargaining unit.

46.     Paragraph 125 provides that, where the CAC represents to the Secretary of State that paragraph 19 has an unsatisfactory effect and should be amended, the Secretary of State has power to make amendments by order subject to affirmative resolution procedure. Paragraph 126 provides that the Secretary of State may issue guidance to the CAC on the exercise of its functions under paragraph 19, and that such guidance shall be laid before Parliament and published.

47.     Paragraph 21 makes provision for the conduct of recognition ballots. They must be conducted by a qualified independent person appointed by the CAC. Sub-paragraphs (6) and (7) set out the conditions to be met by a qualified independent person, which include meeting criteria specified in - or being himself specified in - an order made by the Secretary of State subject to negative resolution procedure. (This is essentially the same arrangement as for independent scrutineers for trade union elections and industrial action ballots where solicitors and accountants and certain bodies such as the Electoral Reform Society are designated as qualified to act as scrutineers.) The ballot is to be conducted within 20 working days of the appointment of the independent person unless the CAC decides to extend the period. This is intended to ensure that the ballot takes place without undue delay, while recognising that organising a large, complex ballot may take longer than 20 working days.

48.     Sub-paragraph (4) provides that the ballot may be held at the workplace or by post at the CAC's discretion. Sub-paragraph (5) requires the CAC to consider the risk of interference in a workplace ballot, costs and practicality, and any other matters it considers relevant. Sub-paragraph (8) requires the CAC to inform the employer and union of the arrangements for the ballot as soon as reasonably practicable.

49.     Paragraphs 22(1)-(4) deal with the duties of the employer to cooperate with the ballot, to provide necessary information and to allow the union reasonable access to the workers to campaign for recognition. Sub-paragraphs (6) and (7) provide a mechanism for the union to send information to workers via the person conducting the ballot, at the union's expense, without the workers' names and addresses being disclosed to the union. Sub-paragraph (8) gives a power for the Secretary of State or ACAS to draw up a statutory code of practice to give practical guidance on 'reasonable access'. Such guidance will need to take account of the different circumstances of different employers' premises and businesses.

50.     Paragraph 23 makes provision for action by the CAC in the event that the employer does not fulfil his duties under paragraph 22. The CAC may order the employer to take specific steps to remedy his failure to cooperate. If the employer does not comply, the CAC may declare the union recognised and cancel the ballot.

51.     Paragraph 24 provides for half the costs of recognition ballots to be borne by the employer and half by the union or unions making the application. These costs include:

  • the full cost of running the ballot incurred by the scrutineer (including any fee the scrutineer may charge for his services); and

  • any other costs which the employer and union agree should be shared

Costs which are not shared include the cost of providing information to workers incurred by a union or the employer.

52.     Paragraph 25 requires the CAC to inform the employer and union of the result as soon as possible after the ballot. If recognition is supported by a majority of those who vote and at least 40% of the workers constituting the bargaining unit, the CAC must declare the union to be recognised; otherwise, it must declare that the union is not recognised. The conditions for recognition under this paragraph may be altered by the Secretary of State by order subject to affirmative resolution procedure.

53.     The Bill provides that, if a union is recognised but cannot agree with the employer a method for conducting collective bargaining either party can ask the CAC for assistance. This process is illustrated in Figure 2.

54.     Paragraph 26 provides that, if a union is recognised by means of a declaration of the CAC, and the employer and unions cannot agree a method for conducting collective bargaining, either party can ask the CAC for assistance. As elsewhere, the Bill provides for a period of negotiation, in this instance of 42 days, for the employer and union to try to reach a voluntary agreement before the CAC intervenes.

55.     Paragraph 27 provides that, if the employer and union are still unable after the 42 day negotiation period to agree on the method for conducting collective bargaining, the CAC will actively try to help them reach an agreement. The period allowed for this stage is 28 days, or longer if all involved agree. If that attempt is unsuccessful then the CAC must specify the method for collective bargaining unless the parties jointly request it not to do so. The imposed method will have effect as if it were a legally binding contract between the employer and union. If one party believes the other is failing to respect the method, the first party may apply to the court for an order for specific performance, ordering the other party to comply with the method. Failure to comply with such an order could constitute contempt of court.

56.     Sub-paragraph (5) has the effect that, once the CAC has imposed a method, the parties can vary it, including the fact that it is legally binding, by agreement provided that they do so in writing.

57.     Under paragraph 127, the Secretary of State may, after consulting ACAS and by order subject to the negative resolution procedure, specify a model method for collective bargaining which the CAC must take into account but may vary if necessary in particular circumstances.

58.     Paragraph 32 provides that if two or more unions apply jointly under paragraph 10 or 11 the CAC must be satisfied they will be able to cooperate effectively on collective bargaining in order to proceed with the application.

59.     The purpose of paragraphs 34, 35 and 36 is to give effect to the principle that once an application for recognition has been decided that decision should not be re-opened for at least three years.

60.     Paragraph 37 applies if, once an application is accepted, another application is made for recognition in a bargaining unit which includes at least one worker in the original application's bargaining unit. Paragraph 33 means that the new application will always be rejected. Paragraph 37 means that, if the union making the new application has at least 10% membership in the relevant bargaining unit and no bargaining unit has been decided for the original application, then the CAC must cancel the original application and treat it as if it had never been admissible.

 
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