On various dates in 2014 and 2015, a number of government departments ended their system of check-off for PCS union members’ subscriptions. In Secretary of State for the Home Department and ors v Cox and ors, the Court of Appeal held that the right was contractual and could not, therefore, be withdrawn unilaterally by the government.
Thompsons were instructed by the PCS to act on behalf of its members.
Basic facts
This appeal concerned civil servants employed by the Home Office (HO), the Department for Environment Food and Rural Affairs (DEFRA) and Commissioners for HM Revenue and Customs (HMRC), all of whom were PCS members.
Historically, their union subscriptions had been collected by means of “check-off” arrangements allowing deductions to be made from their salaries and paid directly to PCS. At various dates in 2014 and 2015, these arrangements were withdrawn by the HO, DEFRA and HMRC after which the union encouraged members to set up direct debits to maintain the flow of subscriptions.
The claimants argued that they had a contractual entitlement to check-off and had not accepted a variation of their contracts to exclude it or had not waived the breach of contract when it was removed. PCS argued that it had an entitlement to bring a third-party claim against the three bodies under the Contracts (Rights of Third Parties) Act 1999 in respect of the subscriptions payable by check-off.
High Court decision
In each of the three cases, the High Court held that the check-off arrangements constituted a term of the individual employees' contracts of employment and there was no implied term that the facility could be removed on reasonable notice. It also held that the individual claimants had not accepted any variation of their contracts of employment by continuing to work after the change had been introduced and had not waived any prior breaches of their contractual rights. Finally, it held that PCS was entitled to enforce the contractual provision in the individual claimants' contracts of employment under section 1 of the Contracts (Rights of Third Parties) Act 1999.
The three departments all appealed, arguing firstly that by continuing to work after the check-off arrangements were withdrawn and by setting up direct debits, the claimants had accepted the variation to their contracts, thereby waiving the right to claim a breach. Secondly, it argued that none of the parties to the contracts intended the terms relating to check-off to be enforceable by PCS.
Court of Appeal decision
The Court of Appeal agreed with the High Court that the employees had not accepted the variation to their contracts, not least because PCS (which was acting on their behalf) had written to the various departments indicating that check-off was a contractual right, it had initiated litigation and it had also taken out a collective grievance. Not only did these actions indicate non-acceptance, but the employing departments had also not presented the change as a contractual variation to which the agreement of the individual employees was needed or sought.
However, a majority of the court allowed the second part of the appeal. Noting that the check-off arrangements originated in collective agreements reached between the government and the relevant trade unions in the 1960s, it held that as the terms were only intended to give rise to rights that were to be enforceable by individual employees, it follows that they would need to be incorporated into their individual contracts. The context, therefore, was not a situation where the parties to the contract were seeking to confer a benefit on a third party.