The UK is experiencing an increase in industrial action in many sectors, often, ironically, because unions are now objecting to various techniques used by employers earlier in the recession to try to avoid dismissals for redundancy – techniques such as varying outmoded and expensive employment packages/works practices or simple pay restraint.
It is not unknown for unions to state that they would rather see redundancies in the short term than agree to wider, longer term changes in working practices or employment terms – if you like, short term pain for some members in return for the union remaining in control of the pay agenda.
With the busy Christmas trading period soon to begin, some employers, particularly those vulnerable to seasonal business fluctuation, may be considering contingency plans that can be put in place if a union calls industrial action. Some will consider hiring agency workers, while others will look to recruit employees on a temporary contract. Employers should be aware of the differences in the law relating to employees and agency workers as these could have an effect on what strategy they choose to pursue.
The law relating to the recruitment of agency workers during a strike was introduced only in 2004 and remains largely untested. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (‘the Regulations’) came into force on 6 April 2004. There is no helpful case law to provide guidance on their interpretation.
Trade unions usually put forward a very wide interpretation of this law in the media, but the actual limitations on business are fairly narrow.
It is also important to note that the regulations prohibit employment businesses from doing certain things. Therefore, the offence would be committed by the ‘agency’. The employer (‘end user’) would be guilty of ‘only’ aiding or abetting the agency’s offence.
A key distinction in the Regulations is between an employment agency (EA) and an employment business (EB). An EA does not itself employ the workers whose services it supplies to the end user, which then employs them itself; by contrast, an EB does employ the workers whose services are supplied to the end user, which then uses these workers – confusingly usually referred to as ‘Agency Workers’ – but does not employ them direct. It is this latter situation which is affected by the regulations.
What an employer cannot do
- Use an employment business to supply its own employees (‘agency workers’) if this is to replace employees who are taking part in either a strike or industrial action short of a strike.
- Regulation 7 of the regulations states that it would be an offence for an employment business to supply an agency worker specifically to carry out:
- the duties normally performed by an employee who is actually taking part in a strike or other industrial action; or
- the duties normally performed by an employee who is covering the work of a worker who is taking part in a strike or other industrial action
…unless the employment business does not know, and has no reasonable grounds for knowing that the employees being replaced are taking part in a strike or other industrial action.
- If the employment business is guilty of an offence under reg. 7, the end user can be guilty of aiding and abetting that offence.
What an employer can do
- Use an employment agency to supply workers and employ them directly.
- An employment agency can lawfully supply workers for the employer to employ directly at any time. The employment agency could even do the pre-recruitment screening. It follows that the end user can make use of the services of such an agency without aiding and abetting any criminal offence by the agency, since none would exist.
- An end user can move existing employees from other parts of the business (or group) to cover for striking employees – this might be inflammatory but is not unlawful. These employees might be workers recruited via an employment agency but employed directly by the business, but they must not be agency workers provided by an employment business for that purpose.
- Employers can continue to use any agency workers already supplied on a ‘business as usual basis’ for the original purposes for which they were engaged. They should not, however, be specifically re-allocated to the duties normally performed by colleagues taking part in industrial action.
- Any agency worker already supplied who leaves can be replaced by another agency worker who should only perform the work for which their predecessor was engaged.
- Agency workers can be used for duties relating to the business, even if indirectly relating to the industrial action, as long as they are not actually covering for employees who are taking part in the industrial action.
The real purpose for which the agency workers are used in is a question of fact/evidence in all of these cases.
What happens if you get it wrong
The penalties for a breach of the regulations – remember initially falling on the employment business but indirectly on the end user for aiding or abetting – can be any or all of:
- damages which can be shown to have resulted from the breach;
- unenforceable contract: any terms of the contract between the EB and the end user, which offend the regulations, will be unenforceable (e.g. for payment!);
- criminal prosecution, with a maximum penalty of a £5,000 fine;
- personal liability: if the offence was committed with the consent or connivance or neglect of a director or manager then he or she can be convicted and fined personally; and
- prohibition orders: any guilty agency can be restricted or even banned from carrying out business for as long as 10 years, with another max £5,000 fine for failing to follow any such order.
These possible penalties have sometimes led to tactics for the union which focus on trying to target the agencies, as well as or even instead of threatening action against the end user, in order to put off the agencies from doing business with the end user.
An application for an injunction against the end user sounds effective but is very difficult to win, mainly because of a combination of the following factors:
- An injunction is a discretionary remedy, involving a balance of interests of the parties.
- The regulations create a criminal offence against the employment business, with the end user’s risk being one of aiding/abetting, which could involve the civil court, in the injunction application, having a criminal ‘trial within a trial’, in order to judge the likelihood of the end user being culpable; given that the EB has the lack of knowledge defence, if it is not a party to the injunction application – which would be unlikely – the court would have real difficulty judging the possible criminal liability of the end user.
- As indicated above, as long as the end user is not using agency workers to cover for striking employees, there would be no offence; if it states that it is not and gives a clear indication of how it intends to use the agency workers, the union would have a difficult evidential burden to overcome.
- This could lead to a judge simply not wanting to become embroiled in an industrial dispute, in the absence of a very clear need to do so.
- On balance, therefore, an injunction application is, rightly, rare, and difficult to win.
No third party scabs
Whilst the issue of the use by the end user of agency workers during industrial action is being raised more frequently by the unions, as long as the employment business does not supply agency Workers for the purpose of, and the end user does not use them to, cover the duties of employees actually taking part in industrial action, there should be no offence committed by anyone. Usually, by the time this becomes an – often very public – issue, the parties are moving further apart. It’s easy to say but the real solution to industrial disputes lies not in highly technical legal disputes of this sort but rather in finding ways to bridge that gap.