House of Lords - Explanatory Note
House of Lords
Session 2003 - 04
Publications on the internet
Other Bills before Parliament
Arrangement of Clauses (Contents)

Employment Relations Bill


These notes refer to the Employment Relations Bill
as brought from the House of Commons on 30th March 2004 [HL Bill 54]




1.     These explanatory notes relate to the Employment Relations Bill, as brought from the House of Commons on 30th March 2004. They have been prepared by the Department of Trade and Industry (DTI) in order to assist the reader and 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.

3.     Because this Bill contains a number of parts, covering several subject areas, each of the main areas is introduced and described separately in the commentary (although a short explanation of the background is given in paragraph 4). Paragraph 6 gives a brief overview of the Bill's structure. Certain overarching issues (for example, the Bill's financial effects and its impact on public sector manpower) are grouped at the back of the document.


4.     In July 2002, the Secretary of State for Trade and Industry announced a review of the Employment Relations Act 1999 (the "1999 Act"). In line with commitments made in the White Paper "Fairness at Work" (1998), the Government reviewed the operation of the statutory procedures for the recognition and derecognition of trade unions by employers. The Review also looked at the operation of the other provisions of the Act.

5.     The 1999 Act:

1.     ?     introduced a new statutory procedure for the recognition and derecognition of trade unions by employers;

  • prevented employers from discriminating by omission on the grounds of trade union membership, and introduced a power to make regulations prohibiting blacklisting on grounds of union membership;

  • made changes to the law on industrial action (ballot and notice requirements and the right for dismissed strikers to complain of unfair dismissal);

  • introduced new rights and changes in family-related employment rights;

  • introduced new rights for workers to be accompanied in certain disciplinary and grievance hearings;

  • made other changes to individual employment rights.

A public consultation on the operation of the 1999 Act opened in February 2003, and closed in May 2003. The review concludes that the Act is generally working well, but that some changes are required to improve and streamline procedures. The Government's response to the consultation can be found at The Employment Relations Bill implements the findings of the Review.


6.     The main areas covered by the Bill are:

  • the trade union recognition (and derecognition) procedure (Part 1);

  • industrial action law (Part 2);

  • rights of trade union members, workers and employees, exclusion and expulsion from trade unions and general rights of workers and employees (including a power to implement EU requirements on information and consultation in the workplace), (Part 3);

  • changes to the enforcement procedures relating to the national minimum wage and the agricultural minimum wage (Part 4);

  • the powers of the Certification Officer (CO) (Part 5);

  • the law on the administration of trade unions and a power for the Secretary of State to make funds available for trade union modernisation (Part 6);

  • supplementary provisions on commencement, Northern Ireland and minor and technical amendments (Part 7).

7.     In most cases the Bill amends current legislation. More specifically it amends:

  • the Trade Union and Labour Relations (Consolidation) Act 1992 (the "1992 Act") to clarify and improve the statutory recognition procedure and some industrial action law provisions. The provisions in the Employment Relations Act 1999 relating to trade union law mainly amended and added to the 1992 Act - it is therefore the 1992 Act which is amended by this Bill.

  • the Employment Tribunals Act 1996 to make provision relating to appeals to the Employment Appeal Tribunal (EAT) against employment tribunal decisions relating to failure to comply with certain provisions of the 1992 Act, the 1999 Act;

  • the Employment Relations Act 1999 to clarify the role of the companion when accompanying a worker in disciplinary and grievance hearings;

  • the National Minimum Wage Act 1998 (and the Agricultural Wages Act 1948 and the Agricultural Wages (Regulation) (Northern Ireland) Order 1977), to improve enforcement procedures.

8.     Clauses 39 and 40, which provide for the implementation of the Information and Consultation Directive (2002/14/EC) in Great Britain and Northern Ireland, and clause 50, which makes provision about means of voting in ballots and elections, are the only substantive free-standing provisions in the Bill.

9.     The majority of the provisions in the Bill extend to Great Britain (England, Wales and Scotland) only. However, the Bill contains a clause (clause 54) enabling corresponding changes to be made to legislation in Northern Ireland by Order in Council, using the negative resolution procedure.

10.     Part 4 of the Bill makes provision for changes to the national minimum wage and agricultural minimum wage enforcement regimes. The changes to the national minimum wage enforcement regime do extend to Northern Ireland since the National Minimum Wage Act 1998 itself applies to Northern Ireland. However, the changes relating to enforcing the agricultural minimum wage do not extend to Scotland since agriculture, and agricultural wages are devolved matters in Scotland.



11.     Schedule A1 of the 1992 Act (inserted by section 1 of, and Schedule 1 to the Employment Relations Act 1999) established a statutory procedure for the recognition and derecognition of trade unions for the purposes of collective bargaining on behalf of a particular group of workers.

12.     The Government's approach was to create a mechanism which enabled recognition of the union(s) by the employer where the majority of the relevant workforce wanted this. The aim of the mechanism is to encourage the voluntary settlement of claims wherever possible, the statutory procedure therefore acting as a fallback system.

13.     All the changes made by Part 1 of this Bill are to Schedule A1 (unless otherwise stated). The following paragraphs briefly describe the Schedule.

14.     Part I of Schedule A1 provides that in certain circumstances a trade union (or trade unions) may make an application to the Central Arbitration Committee (CAC) for a declaration that it should be recognised for the purpose of conducting collective bargaining on behalf of a group or groups of workers employed by an employer in a particular bargaining unit.

15.     Part II of the Schedule provides that where a voluntary agreement for recognition is made between the parties, after a request for recognition has been made under the Schedule, the employer has to maintain that agreement for three years unless the union ends it before that time. This is known as semi-voluntary recognition. If, following the conclusion of an agreement for recognition, the parties are unable to agree a bargaining procedure, an application may be made to the CAC for it to determine one. Part II is designed to afford protection to unions which withdraw from the statutory process to agree a voluntary deal, and therefore to encourage the voluntary settlement of claims.

16.     Part III sets out a procedure to be followed by the parties and the CAC where a union has been recognised through the statutory procedures and, as a result of a change in the employer's business, either the union or the employer believes the bargaining unit has changed or has ceased to exist.

17.     Parts IV and V of the Schedule provide that where recognition results from an earlier declaration by the CAC, it may in certain circumstances, on application from the employer or workers in the bargaining unit, declare a union to be derecognised.

18.     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.

19.     Many of the changes made by Part 1 of the Bill relate to Part I of Schedule A1. There are a number of stages in the process contained in Part I of the Schedule, usually with a specific timetable for each.

The procedure for recognition: Part I of Schedule A1

20.     Stage I - Trade union writes to the employer seeking recognition. The process is triggered by the union(s) writing to the employer, requesting recognition, and identifying the bargaining unit of the workers concerned. For a request to be valid, the employer (together with associated employers) must employ 21 or more workers.

21.     The employer has a time period in which to respond. If the employer agrees voluntarily to recognise the union (or unions), the statutory recognition procedure is regarded as closed. However, the parties can have such an agreement declared an agreement for recognition by the CAC under Part II of the Schedule. This applies to a voluntary agreement at whichever stage in the process it is agreed.

22.     Alternatively, if the employer agrees to negotiate, the parties have a time period to conclude discussions. The parties may call on Acas to assist. If the employer refuses to negotiate or does not respond to the union's letter or, if negotiations fail to reach an agreement, the union(s) may make an application to the CAC.

23.     Stage 2 - Application by trade union to the CAC. The CAC has a time period to decide, against a number of criteria, whether to accept the application. These criteria include a requirement for at least 10% of the workers in the proposed bargaining unit to be members of the union(s), and for the CAC to be satisfied that a majority of the workers in the bargaining unit would be likely to favour recognition.

24.     Stage 3 - Agreement or determination of a bargaining unit. If the union's application is accepted, the parties have a period to agree a bargaining unit if they have not already done so. If the parties fail to agree a unit, then the CAC will determine it. In doing so, the CAC must take a number of matters into account, in particular the need for the unit to be compatible with effective management. If a bargaining unit agreed between the union and employer or determined by the CAC is different from the unit originally proposed by the union when making its application, then the CAC must re-apply the acceptance criteria in respect of the new bargaining unit.

25.     Stage 4 - Determining whether to award recognition. Once the bargaining unit is established, the CAC must decide whether to declare the union(s) to be automatically recognised, or to hold a ballot. If the CAC is satisfied that a majority of the workers in the bargaining unit are union members, it must make a declaration of recognition, unless it decides that a ballot should be held due to any of the conditions listed in paragraph 22(4) of the Schedule.

26.     Stage 5 - Recognition ballot. A ballot is held if the union(s) does not have majority membership in the bargaining unit, or if the CAC decides that despite majority membership, a ballot should still be held. Unless during this period the union, or the parties jointly, inform the CAC that they do not wish the ballot to be held, the CAC will appoint a Qualified Independent Person (QIP) to conduct the ballot. The CAC must also determine the form of the ballot: workplace, postal, or a combination of these methods. During the ballot the employer has a general duty to co-operate with the ballot.

27.     In addition, the employer must allow the union(s) to communicate with the workers in the bargaining unit during the balloting period. A statutory Code of Practice applies. The employer must also supply to the CAC the names and addresses of the workers in the bargaining unit. The costs of the ballot are borne equally by the parties. If the result of the ballot is that the union's application is supported by a majority of all those voting, and at least 40% of those entitled to vote, the CAC must issue a declaration that the union is (or unions are) recognised for the purposes of collective bargaining on behalf of the bargaining unit. Otherwise the union is not recognised.

28.     Stage 6 - Method of collective bargaining. Following a CAC declaration of recognition, the parties have a period to reach an agreement on the method for conducting their collective bargaining. If the parties do not agree a method, they can apply to the CAC for assistance. If there is still no agreement, the CAC specifies a bargaining method.

29.     A CAC specified method is enforceable as though it were a contract between the parties. If either party believes the other is subsequently not following such a method, it may seek an order of specific performance from the courts.

Determination of appropriate bargaining unit

30.     Clauses 1 and 4 clarify how an appropriate bargaining unit is to be determined by the CAC. Clause 2 provides a power for the CAC to reduce the 20-day negotiation period for the parties to agree a bargaining unit. Clause 3 imposes a duty on the employer to supply information to the union(s) to assist with this process.

31.     Clause 1 amends paragraphs 11(2) and 12(2) of Schedule A1, under which a union may make an application to the CAC where the employer refuses or fails to respond to a request for recognition (11(2)), or where negotiations with the employer fail (12(2)).

32.     The union(s) may currently ask the CAC to decide whether the union's proposed bargaining unit or some other bargaining unit is appropriate, and whether the union(s) have the support of a majority of the workers in the appropriate bargaining unit. Clause 1 clarifies that unions may apply to the CAC to decide only whether the union's proposed bargaining unit is appropriate and whether the union(s) have the support of a majority of the workers in the appropriate bargaining unit.

33.     Clauses 2 to 4 apply where the CAC accepts a union's application for recognition (under paragraph 11(2) or 12(2)). The next stage is for the parties to try to agree a bargaining unit. Paragraph 18(2) of Schedule A1 provides that the parties, with the CAC's assistance, will have 20 days (or some other longer period specified by the CAC) to try to reach agreement. This is called the "appropriate period".

34.     Clause 2 amends paragraph 18.

35.     Subsection (3) of clause 2 inserts new sub-paragraphs (3) to (7) into paragraph 18. New sub-paragraphs (3) and (4) permit the CAC, where it sees no reasonable prospect of the parties reaching an agreement, or on the request of both parties, to shorten the appropriate period.

36.     New sub-paragraph (5) allows the CAC to extend the period, where it has previously reduced it at the parties' request under sub-paragraph (4). This allows the parties more time to try to reach an agreement if needed.

37.     New sub-paragraphs (6) and (7) oblige the CAC to state the reason(s) respectively why it considers that the parties have no reasonable prospect of reaching an agreement on the bargaining unit and for extending the period under sub-paragraph (5).

38.     Clause 3 inserts a new paragraph 18A into Schedule A1. It requires the employer to supply information to the union about the workers in the union's proposed bargaining unit.

39.     New paragraph 18A(2) provides that the information must be supplied to the union and CAC, within 5 working days of the day after the CAC gives notice of its acceptance of the union's application. It makes clear that the information to be supplied by the employer is:

  • A list of the categories of worker in the proposed bargaining unit;

  • A list of the workplaces in the proposed bargaining unit; and

  • The number of workers the employer reasonably believes to be in each category at each workplace in the proposed bargaining unit.

40.     New paragraph 18A(3) obliges the employer to ensure that the information supplied is as accurate as reasonably practicable, given the information he possesses at the time. New paragraph 18A(4) requires that the lists supplied to the union(s) and the CAC are the same.

41.     Clause 4 replaces paragraph 19 of Schedule A1, which sets out the way in which the CAC will determine the appropriate bargaining unit where the parties have failed to reach agreement. It clarifies that the CAC, when deciding the bargaining unit, must first consider the bargaining unit proposed by the union (the "proposed" bargaining unit). If the CAC does not consider the unit proposed by the union to be appropriate, it must decide a unit which is appropriate. The CAC has 10 days (or an extended period) to make this determination.

42.     The new paragraph 19, as inserted by clause 4, applies if:

  • the CAC has accepted a union's application,

  • the parties have not yet agreed an appropriate bargaining unit, and

  • either no request has been made under paragraph 19A by the union or, if that request has been made, the CAC is not of the opinion that the employer has failed to comply with the duty imposed by paragraph 18A.

43.     Paragraph 18A, as explained above, requires the employer to supply the CAC and the union with information about the workers in the union's proposed bargaining unit. If the new paragraph 19 applies, then the CAC must decide, within the decision period, whether the union's proposed bargaining unit is appropriate. In deciding whether the proposed bargaining unit is appropriate, the CAC must take into account the factors listed in new paragraphs 19B(2), (3) and (4). New paragraphs 19B(3)(a) and 19B(4) make clear that the views of the employer must be considered and set out how these views will be taken into account. It provides that the CAC, in deciding whether the union's proposed bargaining unit is appropriate, must take into account any view the employer expresses about an alternative unit(s).

44.     Additionally, new paragraph 19A permits the CAC, where so requested by the union(s), to move to decide the bargaining unit before the expiration of the 20-day negotiation period, if the employer fails to provide the information required under the new paragraph 18A inserted by clause 3. Thus, where an employer fails to provide information that may assist agreement on the bargaining unit, the union(s) may request a move to the determination of the bargaining unit and prevent unnecessary delay to the process. New sub-paragraphs 19A(2) to (4) mirror the provisions of paragraph 19 setting out the order of the CAC's decision-making and the period within which it must decide.

Union communications with workers after acceptance of application

45.     Clause 5 inserts new paragraphs 19C to 19F after paragraph 19B (which is inserted by clause 4). At present, a union(s) may only formally communicate with workers during the period for a CAC ordered ballot. Clause 5 provides a right for the union(s) to communicate with the workers in the bargaining unit from the point of the CAC's acceptance of the union's application. This communication takes place via a suitable independent person.

46.     New paragraphs 19C(1) and (2) provide that, following the acceptance of its application by the CAC, the union(s) may request the CAC to appoint an independent person for the purpose of communicating with the relevant workers.

47.     New paragraph 19C(3) makes clear that if the information is to be sent before the bargaining unit is agreed by the parties or determined by the CAC, the relevant workers are the workers in the union's proposed bargaining unit. If the information is to be sent after the bargaining unit has been agreed by the parties or determined by the CAC, the relevant workers are the workers in the unit that has been agreed or determined.

48.     New paragraph 19C(4) provides that where an application has been made under paragraph 12(4) (where the parties have already agreed a bargaining unit before the union's application to the CAC) then the relevant workers are the workers in the agreed unit.

49.     New paragraph 19C(5) provides that the union's right of communication starts from the day on which the CAC informs the parties of the name of the independent person and ends when the first of the following occurs:

  • the union's application is withdrawn;

  • the CAC declares the application invalid following the agreement or determination of a new bargaining unit which is different from the union's proposed unit;

  • the CAC issues a declaration that the union(s) are recognised without a ballot; or

  • the CAC gives notice to the parties of the appointment of a suitable independent person to conduct the ballot (the union's right of communication continues throughout the ballot period by virtue of the existing provision in paragraph 26(6) of Schedule A1).

50.     New paragraph 19C(6) defines the suitable independent person as someone who either satisfies the conditions specified by order for Qualified Independent Persons to conduct statutory recognition and derecognition ballots or is actually named in that order. To qualify as a suitable independent person, there must also be no reason to doubt that the person in question will conduct their functions competently and independently.

51.     New paragraphs 19D(1) and (2) set out duties of the employer which apply from the time he is informed by the CAC of the appointment of the suitable independent person. These are to give to the CAC, within ten working days, the names and home addresses of all the relevant workers and to update this information if the relevant workers change as the result of agreement or decision on the bargaining unit, or if workers join or leave the bargaining unit.

52.     Under new paragraph 19D(4) the CAC must pass this information to the suitable independent person as soon as possible.

53.     New paragraph 19E provides that the suitable independent person must, on the request of the union(s), send to any worker whose name and home address has been passed to him and who is still a relevant worker, any information supplied to him by the union. The suitable independent person's costs (defined in new paragraph 19E(7)) are to be paid by the union(s) on receipt of a demand.

54.     Under new paragraph 19E(5) if that demand is not paid within 15 working days then in England and Wales it is to be recoverable by execution issued from a county court. New paragraph 19E(6) sets out that execution may be carried out as though the union were a body corporate against any property held in trust for the union which is not protected property. Protected property is defined by section 23 of the 1992 Act as property that:

  • belongs to the trustees in a capacity other than their capacity as trustees of the union;

  • belongs to a member of the union, unless it is jointly owned with the other members of that union;

  • belongs to an official of the union who is neither a member nor a trustee;

  • is part of a lawfully constituted political fund; or

  • is part of a beneficial fund.

55.     New paragraph 19F sets out the sanction for a failure by the employer to comply with his duties under the new paragraph 19D(2). If the CAC is satisfied that the employer has failed to comply and the union's right of communication has not yet ended, the CAC may order the employer to remedy that failure within a specified time period. If the CAC is satisfied that the employer has failed to comply with that order, it must notify the union(s) and the employer of that failure, drawing their attention to its discretion to award recognition without a ballot if certain conditions hold. These are:

  • that the CAC is satisfied that the employer has failed to comply with an order under paragraph 19F(1);

  • that the parties have agreed or the CAC has decided a bargaining unit;

  • that if the validity tests have been applied under paragraph 20 these have been passed; and

  • that the union's right of communication has not ended.

56.     Subsection (2) of clause 5 makes consequential amendments to certain cross-references. Subsections (3) to (5) provide that where the CAC decides that there must be a ballot, the employer is not required to provide the names and addresses of the relevant workers where he has already done so under the paragraphs inserted by subsection (1) of the clause, and that if the Qualified Independent Person appointed to conduct the ballot is not the same person as was appointed under the paragraphs inserted by the clause, the CAC must pass the relevant information to the new Qualified Independent Person as soon as possible.

contents continue
House of Commons home page Houses of Parliament home page House of Lords home page search Page enquiries index

© Parliamentary copyright 2004
Prepared: 5 April 2004