Employment law

By Paul Smith, Keele University


INDUSTRIAL RELATIONS AND THE LAW: THE LEGACY

The system of industrial relations in the United Kingdom was described by Otto Kahn-Freund as 'collective laissez-fare', that is, autonomous regulation by the collective parties, facilitated by the state. (Sometimes the term 'voluntarism' is used). Collective laissez-faire required a particular type of law, which protected collective bargaining, trade unions and industrial action from common law torts and judicial intervention.

Torts are civil wrongs for which financial compensation can be claimed. Founded in property law, a tort occurs when an owner is denied the enjoyment of property by another's action. The remedy is financial compensation but, pending a hearing of the case, the person alleging the tort can apply to a court for an injunction requiring the activity to cease. The person alleging the tort has only to prove an arguable case for an injunction to be granted. A person defying an injunction may be fined or imprisoned.

In the nineteenth century, the tort of inducement of breach of contract was developed and in 1905 was extended to the inducement of breach of contract of employment by a trade union or person organising strike action. By this time, picketing and industrial action were vulnerable to other torts and trade unions' funds were liable for compensation as a result of the infamous Taff Vale case.

Building upon earlier legislation, the Trade Disputes Act (TDA) 1906, enacted by the Liberal government, neutralised a range of torts that occur in strike action.

1. The Act gave immunity from tort liability to those organising a strike (for example, inducing a breach of a contract of employment) when acting 'in contemplation or furtherance of a trade dispute'.
2. A trade dispute encompassed any dispute between workers and employers, and between workers and workers, relating to pay, terms and working conditions (hence 'secondary' or sympathetic action was lawful).
3. Pickets were also given immunity when seeking to provide information and to communicate.
4. Unions were given complete immunity from all tort liability, protecting their funds. This overrode the infamous Taff Vale case.
5. However, individual workers had no 'right' to strike, and could be dismissed or sued for breach of contract (the latter being an impracticable remedy).

The structure of collective bargaining had developed from the late nineteenth century, at first incrementally and then with growing clarity and consistency, with the support of the state. The first decades of the twentieth century saw bargaining emerge on a district basis (that is local collective agreements). Union membership grew from 2.0 million in 1905 (11.9% density) to 2.6 million (14.6%) in 1910. During the interwar years, as advocated by the Whitley Committee, industry-wide, sectoral collective agreements increased in importance. Some of the most important 'gaps' in the structure were filled by statutory wage boards, later wages councils, staffed by representatives of employers' associations and trade unions, plus independents.

This structure offered major advantages to employers; in particular, it established standard pay rates and terms across the relevant sector. There was no legal obligation to recognise trade unions but where they had gained sufficient strength then they were accepted. Bargaining was infrequent, minimal in the range of issues covered, and during the interwar depression was the occasion for pay reductions. Many sectors were untouched and, apart from controls imposed by craft workers, the managerial prerogative was wide. Moreover, it was little regulated by law. Dismissal could be for any reason (which did not have to be stipulated) and was subject only to notice; compensation was due only for the notice period (which for many workers was minimal). The Truck Acts had long stipulated that pay had to be in cash, but it was only with the growth of effective union organisation that abuses were eliminated. The employment in factories of women, young persons (aged from 14-18 years) and children was regulated. A growing body of law regulated health and safety (see separate entry).??

In the aftermath of the General Strike, May 1926, the Conservative government had amended the TDA by the Trade Disputes and Trade Unions Act 1927 (TDTUA): the instigation and organisation of general and sympathy strikes became liable to civil and criminal sanctions; and the right to picket was amended so that workers could be more easily charged and convicted for intimidation.


THE SECOND WORLD WAR AND ITS AFTERMATH

During the Second World War, Order 1305 (1940) allowed for the extension of collectively-agreed terms and conditions to workers in comparable jobs and industries. Strikes were illegal but there was an ever-ready system of conciliation and arbitration to defuse and resolve disputes. Some workers were jailed but the refusal of miners to pay fines after the dispute in 1941at the Betteshanger colliery, Kent, was a reminder of the limits of the law.
In 1946 the 1945 Labour government repealed the TDTUA but Order 1305 remained. There were no prosecutions of unofficial strikers until the autumn of 1950, when ten gas fitters were sentenced to one month's imprisonment, pending appeal, at which the sentence was reduced to a fine. This was followed by a failed prosecution in an unofficial dock strike in February 1951. The Order was promptly revoked, returning the law to the TDA 1906.

Union membership and collective bargaining had expanded significantly during the war, and at its end sectoral collective bargaining and statutory wage boards embraced 15.5 million workers out of a total of 17.5 million. Trade unions were powerful and respected bodies. In 1952, in the context of the wartime consensus as to the role of trade unions, the Court of Appeal refused to find in favour of an employer in a case of 'secondary' action (nevertheless, the court explained how a union might be liable for secondary action).


CHALLENGES AND CONTROVERSY: 1951-1970

By the early 1950s, many trade unions were undergoing an important shift, as workplace union organisation, co-ordinated by shop stewards, emerged or was strengthened, especially in engineering. Secondary industrial action, although always problematic given the sectional and occupational structure of British trade unionism, became an option in a number of workplaces and sectors. Strike action began to increase from 1953. In the engineering sector, workers' bargaining power erupted onto the public arena in the form of strikes that were 'unofficial' (that is without the endorsement of the appropriate authoritative union committee) and 'unconstitutional' (that is outside the disputes procedure agreed between the employers' association and trade unions). In the new age of television, in the form of mass meetings, they were visible events too.

The wartime consensus began visibly to erode with the 1957 engineering dispute. The publication of A Giant's Strength by a group of Conservative lawyers in 1958 challenged the legal framework underpinning trade unionism. Three years later, judicial non-intervention in industrial disputes was rudely disrupted with the first decision in Rookes v Barnard; the subsequent decision in 1964 by the Judicial Committee of the House of Lords, with its extension of the tort of intimidation to trade disputes , decisively expanded tort liability, outflanking the immunities. Legislative proposals for the reform of the law on trade unions and industrial action were now publically touted and privately discussed in government. A year after, judicial restraint further dissolved in Stratford v Lindley, followed by other successful cases against secondary action. In that year too, now in opposition, the Conservative Party initiated a review of its industrial relations policy.

It was in this climate that the Labour government (elected in 1964) enacted a short Trade Disputes Act 1965, extending immunity in trade disputes to the tort of intimidation and established the Royal Commission on Trade Unions and Employers' Associations, with Lord Donovan as chair, and with broad terms of reference to investigate industrial relations. In the same year the Redundancy Payments Act gave employees the right to receive compensation for loss of employment. In 1963 the Contracts of Employment Act had established minimum terms for notice and disputes under both statutes were referred henceforth to industrial tribunals, composed of a legally qualified chair and two lay members representative of employers' and workers' interests.

With Hugh Clegg and Otto Kahn-Freund among its members, the Donovan commission's report, published in June 1968, offered an intellectual rationale and structure for a new 'system' of collective laissez-faire based primarily on collective bargaining at the workplace, company or other relevant organization. This was to be underpinned by a comprehensive legal framework that included redress for unfair dismissal (a dismissal for an invalid reason, for example, one not related to a worker's conduct, performance, qualification or redundancy), a statutory union-recognition procedure, and the continued exclusion of the courts from intervention in industrial disputes. The arguments of the Society of Conservative Lawyers, the Confederation of British Industry (CBI) and other employers' associations, plus numerous others, for legal sanctions were rejected.

The Donovan report in June 1968 was largely welcomed by the TUC, but the political climate had changed. In the context of a range of incomes policies, trade union power was now a major political issue, and a series of official and unofficial industrial disputes and a 'fragile' pound sterling intensified hostility. The report had been pre-empted by the Conservative Party which, in April 1968, had issued Fair Deal at Work - a reworking of the earlier Conservative evidence given to the Commission.

By now Barbara Castle was the Secretary of State at the Department of Employment and Productivity. Her White Paper, In Place of Strife, while accepting much of the Donovan report, also marked a new departure. It proposed that the secretary of state:

1. be authorized to impose a 28-day conciliation pause prior to an unconstitutional strike (with the status quo maintained);
2. could require a ballot to be held prior to an official strike which had serious implication for the economy or the public interest;
3. could intervene in union-recognition disputes.

Any workers taking industrial action in defiance of a conciliation pause could be subject to a fine, collected from their pay but without any liability for imprisonment. Compensation for unfair dismissal was to be introduced.

After an angry dispute between the Labour government and the TUC, which spilled over into the Labour Party, these proposals were abandoned. The controversy did much to weaken the Labour government and in May 1970 it was defeated in the general election. At the same time, in response to the Ford women workers' strike in 1968, Castle pushed through the Equal Pay Act 1970, which despite its limitations reduced women's pay inequality.


CONSERVATIVE GOVERNMENT, 1970-4: A NEW FRAMEWORK

The new Conservative government (with Edward Heath as prime minister) combined a free-market economic policy and a comprehensive and interventionist statutory framework to regulate industrial relations (in practice this meant collective bargaining and trade unions). In Fair Deal at Work, it had a readymade policy, which was quickly implemented as the Industrial Relations Act (IR Act) 1971.It was angrily opposed by the TUC and unions but supported by the CBI.

The Act embodied conflicting themes: reforms to bring order into industrial relations, and others to promote individual rights (for example, to refuse or insist upon union membership). Unions were viewed as 'top-down', authoritative and responsible organisations which were granted tort immunity under defined conditions and in specific circumstances. Action outside these boundaries constituted unfair industrial practices and were liable to injunctive relief and damages awarded by a specialist body, the National Industrial Relations Court (NIRC). There was to be a presumption that collective agreements were to be legally binding. The Act also introduced the right not to be unfairly dismissed, with application to an industrial tribunal for remedies and compensation.

The twin themes of the IR Act 1971 left employers and the NIRC faced with enormous problems of managing disputes. Many senior managers did not support the Act from the outset and this view was strengthened once its complexity became apparent and union opposition understood. Moreover, large companies, especially those which were the result of recent mergers, were too embroiled, post-Donovan, in the detailed and lengthy process of renegotiating their procedural and substantive agreements to invite any further complexity that would inevitably result from recourse to the Act. Small companies were more tempted but few rushed to be first. Unofficial union organisations (e.g. shop steward committees) had no tort immunity, but the refusal of the overwhelming majority of TUC-affiliated unions to register ensured that almost all industrial action became liable to legal challenge. It was its very comprehensiveness in the context of the absence of tort immunity that made the IR Act 1971 so explosive in practice, where any dispute had the potential to end in constitutional confrontation. Its failure eroded confidence in the Conservative government and it lost the election of February 1974 (precipitated by the miners' strike).


LABOUR GOVERNMENTS 1974-9: THE DONOVAN PROGRAMME

The incoming Labour government of 1974 enacted the Donovan programme in five statutes:

1. Trade Union and Labour Relations Act (TULRA) 1974;
2. Trade Union and Labour Relations (Amendment) Act 1976;
3. Employment Protection Act 1975;
4. Sex Discrimination Act 1975;
5. Race Relations Act 1976.

The legislation restored and renewed collective laissez-fare as the motive underpinning the role of the state in the regulation of employment relations. Restoration entailed the re-enactment of unions' tort immunities (as previously defined by the TDA 1906) in wider language to take account of the common-law torts created by the courts in the 1960s, in particular inducement of breach of commercial contract (in secondary action). Renewal comprised a wide-ranging programme of employment protection (against unfair dismissal, discrimination on the basis of sex, race, marital status and pregnancy), a union-recognition procedure, and other collective rights (such as time off for union representatives). The Advisory, Conciliation and Arbitration Service (ACAS) was established as a statutory body outside the direct control of the government.

From the very beginning the extension of unions' tort immunity to include inducement of breach of commercial contract was contentious: it was restricted by Lord Denning in the Court of Appeal although his rulings were eventually overturned in 1980 by the Judicial Committee of the House of Lords (the final court). The theme of union power was now a constant complaint, which erupted onto the public agenda during the road haulage dispute, January to February 1979, part of the so-called 'Winter of Discontent'. Demands were made by the CBI and Conservative MPs to limit the number of pickets and to restrict them to their place of work, and to end 'secondary' action by ending immunity for inducement of commercial contract. In this atmosphere, the High Court almost inevitably ruled against the strikers' picketing.

By the late 1970s the Donovan programme for the reform of collective bargaining was all but complete. For the CBI, what was needed was a shift in power to employers, facilitated by new legislation, so as to allow them to negotiate or impose changes in the terms of the pay-effort bargain within the new collective-bargaining structures based on separate organizations, including subordinate business units. Official constitutional strikes were now also an issue, especially in the public sector, where incomes policies since the 1960s had acted as catalysts for pay demands and industrial action.

CONSERVATIVE GOVERNMENTS, 1979-97

Within the Conservative Party, after the election of Margaret Thatcher as leader in 1975, 'neoliberal' values, analyses and policies had found a new hearing. Much had been learned from the debacle of the IR Act 1971. There was to be no single comprehensive statute and the tension in that Act (see above) was resolved: unions were to be weakened.

Neoliberalism is a unitary perspective, in which a central role is accorded to the state and law in the construction and defence of the free market, whose outcomes represent a dynamic optimisation of personal choices and an efficient allocation of social resources. Trade unions and state regulation are subversive of the market and individuals' liberty. Unions are conceived as privileged institutions for which, because of tort immunity, the general rules of law do not apply. Thus neoliberalism provides a readymade rhetoric for employers and governments wishing to implement a radical restructuring of industrial relations. The issue was how to develop a practical strategy to dilute workers' collective power by circumscribing its use.

Elected in May 1979, the new Conservative government was determined, in the aftermath of the Winter of Discontent, to re-establish 'law and order' at work. However, the Employment Act 1980, initiated by James Prior as Secretary of State for Employment, reflected the coalition within the government of the new neoliberal right and 'traditional' Conservatives, with Prior adhering to the latter.

The Act maintained a wide liberty to strike but union immunity:

1. for 'secondary action' was restricted to the first customer or supplier;
2. confined to picketing at the worker's own place of work (and a Code introduced)
3. withdrawn for industrial action to enforce the closed shop (compulsory union membership).

In addition, public funds for union ballots were made available; and the statutory procedures for union recognition and for unilateral arbitration (schedule 11 Employment Protection Act 1975) were repealed. Separately, the Fair Wages Resolution of 1946 was also rescinded, and the qualifying period for unfair dismissal was extended.

Prior was replaced in September 1981 by Norman Tebbit. The pace visibly quickened. In December, Tebbit's statement to the Commons articulated a neoliberal agenda:

our aim has been twofold: first, to safe-guard the liberty of the individual from abuse of industrial power; and secondly, to improve the operation of the labour market by providing a balanced framework of industrial relations law.

The attitude to trade union immunities signalled a clear shift in the government's rhetoric, challenging the immunity granted by the TDA 1906:

The Government do not accept that the breadth of the immunity is any longer necessary in modern conditions to enable trade unions to represent their members effectively. It is unfair and anomalous that while trade union officials may be sued or organising unlawful industrial action on behalf of a trade union, the union itself cane scape liability altogether.

Furthermore, 'the present statutory definition of trade dispute … is unacceptably wide'.
Thus the Employment Act 1982 narrowed the definition of a trade dispute:

1. unions' tort immunity was confined to disputes 'wholly or mainly' connected to industrial issues
2. and between employers and their workers;
3. excluded from immunity were disputes between workers and workers, any action to enforce union membership or collective terms, and disputes outside the UK (unless they affected workers in the UK).

The narrowing of tort immunity was intended to expose unions to the common law - injunctions, tort action and compensation. By these measures, trade unions' capacity to intervene in the employment relationship, labour market and society was to be weakened; it was a policy of union exclusion.

From then on legislation followed at regular intervals, casting unions further into the mire of the common law. From this point too, Conservative governments opposed, delayed and then diluted many European Community (EC) legislative initiatives, and unfair dismissal legislation was successively weakened (including the failure to index-link compensation). Nevertheless, legislation on employment protection, originating in the EC and the UK, began to expand and industrial tribunals grew in importance.

A new Green Paper, Democracy in Unions, argued that failures in democracy and the abuse of members' rights required legislation to impose ballots for the election of unions' principal executives committee and political funds, and for industrial action. With respect to the last, workers' collective power was to be diluted by regulating unions' residual tort immunity.

Thus the Trade Union Act 1984 required any industrial action initiated by a union to have the support of a majority of union members in the relevant bargaining unit, in a ballot, in order for a union to retain its immunity. The statutory rules for the balloting process and the employer's right to challenge a ballot's validity in court and seek an injunction restraining the action indicated the statute's intent. After the extensive litigation on members' rights during the miners' strike, 1984-5, the Employment Act 1988 extended a statutory right to any union member to challenge industrial action which did not have the support of a valid ballot (assisted by the newly created post of the Commissioner for the Rights of Trade Union Members).

Legislation returned to focus on unions' tort immunity in the Employment Acts of 1988 and 1990: in summary, all industrial action to enforce union membership and all secondary action were no longer protected, and unions were liable for all industrial action called by any union official (of whatever status) unless it was expressly repudiated (according to a statutory procedure).

But the integration of ballots into unions' strategies of mobilization, as part of the bargaining process, led the Conservative government, in the Trade Union Reform and Employment Rights Act (TURERA) 1993, to impose further stringent procedural requirements with which unions must conform in order to retain tort immunity. The rationale expressly switched from articulating workers' consent to industrial action, measured by and conforming to statutory requirements, to delaying the action and giving employers extensive grounds with which mount legal challenges based on procedural irregularities.

Under the Act a union was required:

1. to employ a body approved by the Department of Trade and Industry to supervise a postal ballot of members called upon to take industrial action;
2. to use a specified ballot paper and form of questions;
3. to notify the employer of the ballot, give details of the ballot paper and the workers to be balloted, and the result;
4. to give the employer seven days' notice of the industrial action and categories of worker called upon to take it.
5. Employers, union members, and citizens were entitled to go to court to seek an injunction against any union that did not fully comply with this complex procedure.

In a move replete with symbolism in its rejection of the Donovan report and the legacy of collective laissez-faire, the 1993 Act also abolished ACAS's duty to promote collective bargaining.

The 1993 Act's requirement for a union to specify those workers whom the unions intended to ballot for, and to take, industrial action was quickly interpreted to mean that, where an employer could not readily identify the relevant members, then a union must provide their names to the employer. In many cases, this would occur where union membership was low or dispersed, and therefore easily open to employers' counter-measures.


CONCLUSION

The history of the period can be summarised as one in which attempts to 'modernise' collective laissez-faire - to construct a formal legal framework to facilitate collective bargaining and to build a structure of individual legal rights - were replaced by a determination to reduce unions' power and to minimise the impact of individual rights.

The upshot of the legal changes introduced, since 1980, by Conservative governments, in the context of a hostile economic environment, was the marginalisation and domestication of unions, not least at the workplace. Unions became heavily regulated and industrial action fraught with pitfalls.

Although the managerial prerogative was strengthened, its exercise became regulated by a growing body of statutory individual employment rights. Having been denied access to grievance resolution through collective organization, workers more and more (both individually and in test cases fought by unions) turned to employment tribunals for redress. The scope and complexity of the law required managers to hand issues to lawyers. This was widely perceived by them as burdensome; hence the demands to restrict access to employment tribunals.

By the time the Conservative government left office in 1997, the incoming 'New Labour' administration had adopted, with minor changes, Conservative legislation on trade unions and industrial action as its own. Statutory individual employment rights have, however, continued to expand, mainly as a result of the UK's membership of the EC.