Unions win High Court battle over government’s ‘unlawful and irrational’ decision to implement agency worker regulations

In the High Court judgment, Mr Justice Linden found that the decision by the then-business secretary Kwasi Kwarteng not to consult unions, as required by the Employment Agencies Act 1973, was “… so unfair as to be unlawful and, indeed, irrational.”

The High Court legal challenge was brought by eleven trade unions, ASLEF, BFAWU, FDA, GMB, NEU, NUJ, POA, PCS, RMT, Unite and Usdaw, coordinated by the TUC and represented by Thompsons Solicitors LLP.

From 1976 until 2022, it was illegal under UK law for an employment business to help an employer break a strike by knowingly providing workers it engaged (often known as agency workers) to a company to replace employees participating in official industrial action.

Most recently, this was set out in Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003, made under Section 5 of the Employment Agencies Act 1973. It is also a criminal offence for an employment business to supply workers for this purpose.

Crucially section 12 of the Employment Agencies Act 1973 provides that the Secretary of State shall not make any regulations under the Act until after consultation has ensued.

In 2015, the government initiated a public consultation on its proposal to revoke regulation 7. Most respondents opposed the proposal, and the government did not implement it. However, in June 2022, the government repealed the regulation seven years later without further consultation.

The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 were presented before Parliament on 27 June 2022. They were approved by the Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, on 20 July 2022.

The 2022 Regulations took effect the following day, overturning the decades-long ban on agency workers replacing striking workers.

In bringing a Judicial review challenge against the introduction of the 2022 Regulations, the unions argued that the decision to repeal regulation 7 was unlawful because:

1. The then Secretary of State for business failed to consult unions, as required by the Employment Agencies Act 1973.
2. It undermined the human right to strike, protected by Article 11 of the European Convention on Human Rights.

In today’s judgment, Mr Justice Linden found that the government had acted unlawfully in not consulting with the unions. In doing so, he rejected the government’s argument that it could rely on the public consultation on regulation 7 from 2015 and did not need to conduct a fresh consultation to consider views and fresh evidence of the labour market post-Brexit, seven years after the 2015 public consultation.

Mr Justice Linden said: “It is also indicative of Mr Kwarteng’s lack of interest in evidence or views about the impact and desirability of the proposal to revoke regulation 7 that the decision was to proceed at exceptional speed, despite the concerns of Mr Stevens about the effect on Parliamentary scrutiny, and without any further consultation at all.” (Para 175).

Since July 2021, Mr James Stevens has been the Deputy Director for Employment Rights and Enforcement in Labour Markets. In that capacity, he is responsible for the legal framework relating to industrial action and agency worker policy.

Mr Justice Linden continued in today’s judgment: “Mr Kwarteng has not given evidence about why he did not want to consult further, although it appears from the contemporaneous documents that a key reason was that this would stand in the way of the objective of the 2022 Regulations being laid and/or coming into effect before the summer recess. Such a reason would be inconsistent with section 12(2), unfair and irrational given that it frustrated the aim of informed decision-making and given that, as Mr Stevens advised, there was no compelling reason for the degree of haste with which the Government proceeded and good reasons not to.” (Para 180).

Mr Justice Linden concluded: “All of these reasons led me to conclude 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.” (Para 191)

Based on his ruling in relation to Ground 1 of the arguments against the Government’s decision, Mr Justice Linden did not make a finding in relation to Ground 2.

Richard Arthur, head of the union law team at Thompsons Solicitors who represented the TUC and the unions, said: “This is a significant victory for the entire trade union movement and preserves a vital safeguard in ensuring the right to participate in industrial action is effective.

“The judgment makes clear that the then Secretary of State had a staggering disregard to his legal obligations when introducing legislation that enabled employers to engage agency workers to cover the duties of striking workers. He was driven solely by a political ideology to meet a self-imposed deadline to implement the regulations in the face of mounting industrial action across the country.

“He took this decision notwithstanding advice he received that it was likely to be counter-productive to the problem he wanted to address and was being rushed through without regard for the duty to consult, which was a fundamental legal requirement. This is bad law-making made 'on the hoof' and the Court has rightly held the Government to account”.

TUC General Secretary Paul Nowak said: “This defeat is a badge of shame for the Conservatives, who have been found guilty of breaching the law.

“Bringing in less-qualified agency staff to deliver important services risks endangering public safety, worsening disputes and poisoning industrial relations.

“The government railroaded through this law change despite widespread opposition from agency employers and unions. The courts even found ministers ignored evidence that the measure would be counterproductive.

“This is the same reckless approach behind the anti-strike bill, which has faced a barrage of criticism from employers, rights groups and international bodies, and which has been amended by the House of Lords on three separate occasions during parliamentary ping-pong.

“Ministers should spare themselves further embarrassment.

“These cynical strike-breaking agency worker laws must be scrapped once and for all – and the draconian anti-strike bill must be junked for good too.”