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These notes refer to the Employment Relations Bill EMPLOYMENT RELATIONS BILL
EXPLANATORY NOTES
INTRODUCTION1. These notes relate to the Employment Relations Bill as introduced in the House of Commons on 27 January 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 BACKGROUND3. 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:
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:
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. In Chapter 4 of Fairness at Work, the Government invited views on how to simplify the law and Code of Practice on industrial action ballots and notice. As announced on 17 December 1998, the Bill contains provisions to amend the law on industrial action ballots. At present, unless industrial action begins within 28 days of the end the ballot, the validity of the ballot lapses. This means a union is sometimes forced to decide whether to break off talks and start industrial action or see the ballot lapse, possibly leading to the need for the union to organise a new ballot. In order to enable talks to be pursued in these circumstances, the Bill will allow the 28 day period to be extended if both union and employer agree. This is intended to reduce the incidence of industrial action and promote more negotiated resolutions of disputes.
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:
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, including in relation to the charging of fees to people seeking work; 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. The Bill gives effect to these proposals.
COMMENTARY ON CLAUSESTrade unions
Clause 1 and Schedule 1: Collective bargaining: Recognition19. 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 recognition should be imposed, 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 this Part and Part V, voluntary recognition is otherwise very largely unaffected by the Bill. Part III deals with the derecognition of a union whose recognition involved 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 IV. Part V 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 VI provides protection for workers against detriment arising from participation or non-participation in activities relating to recognition or derecognition. Part VII contains general provisions and powers for the Secretary of State to issue guidance on or to amend certain procedures.
21. In dealing with cases under the new Schedule A1, the CAC is required by paragraph 87 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 have 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 11 and 12.) Sub-paragraph (4) defines employer.
26. Sub-paragraphs (6)-(8) define the scope of collective bargaining. Unless otherwise agreed between the employer and union, collective bargaining covers the matters set out in section 178(2) of the 1992 Act, ie terms and conditions of employment, hiring and firing, allocation of work, matters of discipline, membership or non-membership of a trade union, facilities for trade union officials, and the process by which collective bargaining takes place.
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. Paragraph 4 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.
29. Paragraph 5 provides that the recognition procedure is not to apply to an employer with fewer than 21 employees. The term "employer" includes associated employers, as defined below. The Secretary of State may vary the 21 employee threshold, or make other changes to the provisions of this paragraph, by statutory instrument subject to affirmative resolution.
30. Sub-paragraph (3) excludes from the calculation of the number of workers employees of associated employers incorporated outside the UK. The recognition procedure still applies however to employers incorporated outside the UK which employ more than 21 workers.
31. Paragraphs 6 and 7 make minimum provisions 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. The Government does not intend to use this power unless it becomes apparent that the absence of detailed provisions causes problems. Further general provisions on applications are made in paragraphs 23-32.
32. Paragraph 8 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. They can extend the period for negotiation by mutual consent.
33. Paragraph 9 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, whether a majority of workers in the bargaining unit support recognition, or both.
34. Paragraph 10 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, whether a majority of workers in the bargaining unit support recognition, or both. However, the union may not apply to the CAC if it rejected or failed to respond to a proposal by the employer (made within 14 days of having indicated his willingness to negotiate) that the parties should seek the assistance of ACAS in the negotiations.
35. Before the question whether a union should be recognised is resolved, it is necessary to determine which group of workers (or bargaining unit) should be represented by the union. (The union's application for recognition states the union's proposed bargaining unit.) If the union and employer cannot agree a bargaining unit, the procedure in paragraphs 11 and 12 applies, provided that the condition in paragraph 26 has been met.
36. Paragraph 26 provides that if the CAC is to decide an appropriate bargaining unit (see paragraphs 11 and 12 of the Schedule) and whether a union should be recognised for that unit, it must first be satisfied that the union is likely to have sufficient support in the proposed bargaining unit to make proceeding with the application worthwhile. The test for this is 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. The provisions of this paragraph are intended to deter frivolous or unfounded applications. Evidence of support could include a higher proportion of union membership or a petition of support for the union's recognition.
37. Paragraph 11 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.
38. Paragraph 12 provides that if no agreement on the bargaining unit is reached, the CAC must decide an 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 should have gathered enough information in the course of trying to help the parties to reach agreement to be able to decide quickly.
39. 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.
40. 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 13 provides that the CAC must satisfy itself that the union is likely to have majority support in the bargaining unit before continuing to process the application.
41. If the union making the application shows that its members constitute a majority of the workers in the bargaining unit, paragraph 14 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 15, the CAC must also call a secret ballot where the union does not show majority membership in the bargaining unit.
42. Paragraph 84 provides that, where the CAC represents to the Secretary of State that paragraph 14 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 85 provides that the Secretary of State may issue guidance to the CAC on the exercise of its functions under paragraph 14, and that such guidance shall be laid before Parliament and published.
43. Paragraph 16 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 28 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 28 days.
44. 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.
45. Paragraphs 17(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. The Government intends to ask 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. Sub-paragraph (8) makes clear that the existing powers to issue codes (in sections 199 and 203 of the 1992 Act) may be applied for this purpose. 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.
46. Paragraph 18 makes provision for action by the CAC in the event that the employer does not fulfil its duties under paragraph 17. The CAC may order the employer to take specific steps to remedy its failure or may declare the union recognised and cancel the ballot.
47. Paragraph 19 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:
Costs which are not shared include the cost of providing information to workers incurred by a union or the employer.
48. Paragraph 20 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, the union will not be recognised. The conditions for recognition under this paragraph may be altered by the Secretary of State by order subject to affirmative resolution procedure.
49. 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.
50. Paragraph 21 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.
51. Paragraph 22 provides that, if the employer and union are still unable 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.
52. 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.
53. Under paragraph 86, 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.
54. Paragraphs 23 and 24 contain general procedural requirements for applications to the CAC.
55. Paragraph 25 provides that the CAC is not to consider an application under paragraphs 9 or 10 (ie to determine the bargaining unit or to decide the level of support within the bargaining unit) if it is satisfied that a union (whether or not it has a certificate of independence) is already recognised (either voluntarily or as a result of the statutory procedure) on behalf of any of the workers in the proposed bargaining unit. This gives effect to the general principles that the CAC should not have to decide between claims of competing unions and that the introduction of the statutory recognition procedure should, as far as possible, avoid disruption of existing bargaining arrangements.
56. Paragraph 27 provides that if two or more unions apply jointly under paragraph 9 or 10 the CAC must be satisfied they will be able to cooperate effectively on collective bargaining in order to proceed with the application.
57. Paragraph 28 sets out the procedure for the CAC to follow when an employer claims to have fewer than 21 employees.
58. Paragraph 29 provides that where two or more unions make separate overlapping applications to the CAC for recognition, the CAC may decide not to proceed with one or more of them. This provision is intended to stop a union which has no real support from making a 'spoiling' application to stop another union with genuine support from gaining recognition. In practice, it is expected that if two or more unions have a measure of support in the bargaining unit they will be encouraged to resolve their differences and either make a joint application or allow a single application to go forward uncontested.
59. The purpose of paragraphs 30, 31 and 32 is to give effect to the principle that, in order to ensure stability in bargaining arrangements, once an application for recognition has been decided that decision should not be re-opened for at least three years.
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