This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice.

On Thursday 13 July 2023, the High Court quashed regulations which allowed for workers on strike to be replaced by agency staff.

Background

On 21 July 2022, in light of industrial action in the rail industry and other planned strikes across a number of sectors, Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (‘Regulation 7’) was revoked and replaced through the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (‘2022 Regulations’).

The 2022 Regulations allowed businesses to replace striking workers with agency staff.

This was a hugely significant shift away from the position under Regulation 7. Regulation 7 had prohibited an employment business from supplying employers with temporary workers to undertake and perform the duties which would ordinarily be performed by the workers taking part in official industrial action or workers who had been assigned to cover the role of such a worker.

The Challenge

Following the Government’s decision to revoke Regulation 7 and introduce the 2022 Regulations, together, thirteen trade unions brought a judicial review challenge through the High Court.

The grounds of the challenge stated that the Secretary of State had failed to comply with his statutory duty under the Employment Agencies Act 1973 to consult with the necessary bodies before making the 2022 Regulations and, that in introducing the same, the Secretary of State had breached his duty under Article 11 of the European Convention of Human Rights (‘ECHR’) to prevent unlawful interference with the rights of trade unions and their members.

The Secretary of State’s position was that in relation to consultation, his duty had been met during a Government consultation which had taken place in 2015 and, further, that even if an additional consultation was to take place the outcome would not have been substantially different.

Regarding Article 11 ECHR, the Secretary of State’s argument was two-fold. Firstly, that the steps the Government had taken did not amount to an interference with trade union and their members’ rights and secondly, that even if the High Court considered that it was, that any such interference was proportionate.

The High Court Decision

On 13 July 2023, the High Court confirmed that the challenge had succeeded and quashed the 2022 Regulations on the basis of the Secretary of State’s failure to adequately consult with the relevant bodies. Moreover, the High Court confirmed that the Secretary of State could not rely on a consultation which had taken place in 2015 and, in any event, he had not done so.

In the High Court’s judgment, Mr Justice Linden stated that the approach taken by minsters to implement the 2022 Regulations that took effect was so “so unfair as to be unlawful, and, indeed, irrational.”

The Government has indicated that it was “disappointed” with the ruling and would consider the judgment and next steps carefully.

Moving forward

The High Court’s decision has seen the 2022 Regulations quashed meaning that the law reverts to its previous position, and it is once again an offence to supply agency workers to cover the duties of workers on strike. Should the Government wish to alter the Conduct Regulations further they would have to follow the appropriate steps. This would include holding a public consultation and considering any responses received before making a decision as to whether to implement any further proposal – steps the High Court held the Secretary of State had failed to follow in this instance.

In light of the High Court’s ruling and the judgment’s subsequent impact, it is imperative to stress the importance of an adherence to the Conduct Regulations.  

Where there is non-compliance with the Conduct Regulations this can be reported and then investigated by the Employment Agency Standards Inspectorate. Any such inspection has the potential to lead to a Labour Enforcement undertaking order or a consideration of prohibition/prosecution proceedings. Specifically, the potential consequences of non-compliance include: 

• under section 3A Employment Agencies Act 1973 (‘EAA 1973’), an employment tribunal may, on an application by the Secretary of State, make an order prohibiting a person (including a company) from carrying on, or being concerned with the carrying on of, an employment agency or employment business for up to ten years on the grounds that the person concerned is unsuitable because of misconduct or any other sufficient reason; or
• under section 5 EAA 1973, any breach of the Regulations may result in an unlimited fine (if convicted on indictment) or a fine not exceeding the statutory maximum on summary conviction. It is to be further noted that where an offence is committed by a corporate entity "with the consent or connivance of" an officer of that entity, the officer may also be prosecuted personally under section 11 EAA 1973.

In light of the above, it will be important for those who supply agency staff to exercise extreme caution following the High Court’s judgment.