In a highly significant judgment yesterday, (13 July), the High Court held that the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 which came into effect on 21 July 2022 are unlawful. The Regulations permit the supply of agency workers during strike action to replace striking workers but they have now been quashed by the High Court following judicial review proceedings.
What a difference a year makes. The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 came into effect on 21 July 2022 but yesterday, (13 July) were held to be unlawful by the High Court. This followed a judicial review challenge brought by 13 trade unions in the case ASLEF and others, Unison and the National Association for Schoolmasters/Union of Women Teachers v the Secretary of State for Business and Trade. In a comprehensive judgment, Mr Justice Linden of the High Court found that the then Secretary of State for Business, Energy and Industrial Strategy, Mr Kwasi Kwarteng failed in his statutory duty to consult before making the 2022 Regulations.
So, what’s the background to this high-profile dispute?
Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 prohibited employment businesses from supplying workers to an employer to carry out the work of employees who were taking part in official industrial action.
The 2003 Regulations were made pursuant to section 5 of the Employment Agencies Act 1973.
In 2015, the Government conducted a public consultation exercise about repealing regulation 7 of the 2003 Regulations. The majority of the responses were generally opposed to the repeal and in 2016, the Government decided not to go ahead. There were various reasons for this including wider trade union reform and the fact that there was little demand from business organisations for repeal.
In June 2022, however, with ongoing industrial action in the rail sector and anticipated industrial action in other sectors that summer, the Government decided that regulation 7 would be repealed without further public consultation.
Accordingly, the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 were made by the Secretary of State for Business and came into effect on 21 July 2022. Their effect was to repeal regulation 7.
Thirteen trade unions challenged the Secretary of State’s decision to make the 2022 Regulations.
On 14 December 2022, the High Court granted permission for a judicial review of the Regulations and the hearing took place on 3 and 4 May 2023. The trade unions’ challenge was on two grounds:
- First, that the Secretary of State failed to comply with his statutory duty, under section 12(2) of the 1973 Act, to consult before making the 2022 Regulations (“Ground 1”).
- Second, by making the 2022 Regulations, the Secretary of State breached his duty, under Article 11 of the European Convention on Human Rights (“ECHR”), to prevent unlawful interference with the rights of trade unions and their members (“Ground 2”).
In relation to Ground 1, the Secretary of State relied on the 2015 consultation as satisfying his duty to consult. Further, he argued that under section 31(2A) of the Senior Courts Act 1981 the trade unions’ application should be refused if it was “highly likely” that the outcome for them would not have been substantially different if the conduct complained of had not occurred. It was submitted that the majority of the trade unions involved in the current case had made their views known during the 2015 consultation and that they would put forward essentially the same arguments if there had been further consultation. In relation to Ground 2, the Secretary of State denied that revocation of regulation 7 amounted to an interference with the rights of trade unions and their members under Article 11 and in any event, any such interference was proportionate.
High Court decision
Given the Secretary of State’s reliance on the 2015 consultation, an important issue under Ground 1, was whether he was sufficiently informed about the responses to that consultation at the time of his decision and gave “conscientious consideration” to them.
The High Court’s view was that there was no evidence that the Secretary of State conscientiously considered the 2015 consultation which was necessary to discharge his obligation under section 12(2).
In addition, the proposal to repeal regulation 7 was to proceed at exceptional speed and without any further consultation at all. There was evidence available to the Secretary of State (from the Department of Transport) that the measure would have “a minimal impact on resilience of the rail sector in the short term and may inflame industrial relations (this is likely beyond the rail sector)”.
Another of the trade unions’ arguments was that the lapse of time since the 2015 consultation was a feature which, in itself rendered the Secretary of State’s approach unfair and contrary to the aims of section 12(2).
Section 12(2) aims
The High Court stated that, even if the 2015 consultation had been conscientiously considered, the Secretary of State's approach would still have been unfair and inconsistent with the aims of section 12(2) particularly to ensure informed decision making: he failed to seek updated views and evidence given the lapse of time, given the developments which there had been in the intervening period, given the reasons why the proposal had not been implemented in 2016 and given the reasons for wishing to implement it in 2022.
Circumstances had changed since 2015 and the Secretary of State cannot have been sufficiently aware of the trade unions’ views or of the sector more generally had there been consultation in 2022. The High Court rejected the argument that relief should be refused under section 31(2A) of the Senior Courts Act 1981.
The High Court held that the Secretary of State’s approach was contrary to section 12(2) of the 1973 Act, “so unfair as to be unlawful and, indeed irrational”.
It held that the 2022 Regulations were unlawful and quashed them.
The High Court did not express a view in relation to Ground 2 having decided the case on Ground 1.
Interestingly, one of the issues raised in the case by the Secretary of State was the administrative inconvenience and/or detrimental impact on third parties if the 2022 Regulations were quashed. The High Court disagreed and stated that on the evidence before it, that would not be the result. It went on to say that if the Government wished to pursue the proposal to repeal regulation 7 what would be required was a public consultation and further consideration by the Secretary of State/Parliament of whether to implement it.
The TUC says that the judgment is a “badge of shame” for the Government which “railroaded through this law change despite widespread opposition from agency employers and unions”.
Industrial action and legislative measures to tackle it will be an ongoing feature of 2023.
On 10 January 2023, the Government published the Strikes (Minimum Service Levels) Bill the aim of which is to ensure that public services maintain a basic function and deliver minimum safety levels during industrial action. That Bill is still going through the Parliamentary process and many key amendments have been proposed by the House of Lords but rejected by the House of Commons.
Both the Welsh and Scottish Governments have written to the UK Government setting out their opposition to the Bill.
The Welsh Government says that it is a threat to public services, democratic freedoms and devolution and the Scottish Government says that it is unnecessary, unwanted and ineffective.
The Bill may receive Royal Assent in the near future but it is almost inevitable that it too will be subject to legal challenge in due course.
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