Supreme Court confirms trade unions can enforce check-off arrangements
The Supreme Court has clarified the enforceability of collective agreement terms incorporated into individual employment contracts, delivering an important ruling on the rights of trade unions under employment law.
Background
In the consolidated cases of Secretary of State for the Department for Environment, Food and Rural Affairs v Public and Commercial Services Union and two related matters, the Supreme Court considered whether trade unions could enforce employee rights agreed in collective agreements but later unilaterally removed by employers.
The cases involved UK Government departments that had long operated 'check-off' arrangements for union membership fees. These arrangements allowed employers to deduct union subscriptions directly from employees’ wages and transfer them to the union. Initially negotiated through collective bargaining with the Public and Commercial Services Union (PCS) and other unions, the check-off terms were incorporated into employees’ individual contracts of employment.
In 2014, the government decided to discontinue check-off arrangements, citing cost-saving and administrative reasons. The unions objected, arguing that the removal of check-off breached employees’ contracts. The unions also claimed they could enforce the check-off terms themselves under the Contracts (Rights of Third Parties) Act 1999 (the 1999 Act). The government departments, however, contended that the collective agreements were non-binding and that the unions were not intended to have enforceable rights.
The dispute progressed through the courts, culminating in the Supreme Court ruling on whether the 1999 Act enabled the unions to enforce the check-off provisions.
Trade Unions can enforce check-off terms
The Supreme Court has now issued a judgment confirming that trade unions can rely on the 1999 Act to enforce check-off terms that confer a benefit on them, provided the contract does not explicitly exclude their enforceability. The Court emphasised that the 1999 Act establishes a presumption that third parties can enforce a contract term if it benefits them unless the contract specifies otherwise.
The government departments argued that the collective agreements were non-binding and that there was no intention to confer enforceable rights on the unions. However, the Supreme Court found no evidence that the individual contracts of employment demonstrated a joint intention to exclude the unions’ enforceability rights. The Court also highlighted that while collective agreements are typically unenforceable between employers and unions, the incorporation of collective agreement terms into individual employment contracts can create enforceable obligations.
The Court concluded that the statutory presumption in favour of enforceability had not been rebutted in this case, allowing the unions to enforce the check-off terms.
Learning points for employers
The Supreme Court's judgment reaffirms that where a term of an individual employment contract benefits a third party, such as a union, the 1999 Act enables that third party to enforce it unless the presumption of enforceability is clearly rebutted.
The Supreme Court’s decision underscores the importance of clarity in drafting and managing employment contracts and collective agreements. Employers should ensure that terms incorporated from collective agreements are explicitly drafted to reflect whether or not they are intended to confer enforceable rights on third parties, such as unions.