The High Court has quashed the controversial regulations introduced in 2022 that allowed employment businesses to supply agency workers to replace those on strike.
Here, Simon Whitehead — Partner and lead of our recruitment and workforce solutions team — outlines what employment businesses need to know.
Challenging the Secretary of State
Against a backdrop of growing industrial unrest, the Government introduced the new law in July 2022, which caused significant concern among unions and recruitment businesses.
A number of trade unions (including ASLEF) applied for a judicial review to challenge the decision, putting forward two grounds:
- That the Secretary of State failed to comply with the statutory duty set out under the Employment Agencies Act 1973 (the Act) to consult before making the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (the 2022 Regulations).
- That the Secretary of State breached the duty under Article 11 of the European Convention of Human Rights (ECHR) to prevent unlawful interference with rights of trade unions and their members.
The Secretary of State disputed those grounds, arguing that:
- He relied on consultation which occurred in 2015 and that relief should be refused as it was "highly likely" that the outcome would not have been substantially different had there been further consultation.
- The revocation of regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the 2003 Regulations) was not an interference with the rights of trade unions and their members under Article 11 ECHR and that — in any event — any such interference was proportionate.
The High Court’s judgment
Statutory duty to consult under the Act
The High Court ruled that the Secretary of State had not complied with the duty set out under the Act to consult before making the 2022 Regulations (that revoked Regulation 7 of the 2003 Regulations).
The judge’s view was that:
“Parliament cannot have intended that the section is satisfied provided there was consultation at some point before the making of any regulations, regardless of how long before the decision or any other issues as to the quality of the consultation relied on or as to its relevance at the time of the decision… Parliament can be taken not to have required a higher standard of consultation than would be required by the common law. I therefore accept that, in considering whether consultation which is said to satisfy section 12(2) was fair, the court should ask whether the Secretary of State’s approach to the consultation was so unfair as to be unlawful…”
The judge then turned to consider the Secretary of State’s two arguments on consultation.
The first of these was that he had relied on the consultation that took place in 2015. The judge decided that even if it had been sufficient to comply with the statutory duty for the Secretary of State to rely on that consultation (rather than conduct more recent consultation), he “did not in fact do so in the relevant sense”. The judge found that there was “no evidence” that he “conscientiously” considered the responses before deciding to repeal Regulation 7 of the 2003 Regulations.
The judge stated that this was “… indicative of [the Secretary of State’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… about the effect on Parliamentary scrutiny, and without any further consultation at all.”
The judge indicated that there was “no sign” that even a “shortened consultation” had been considered. As a result, the High Court decided that the Secretary of State had not complied with his statutory duty to consult contained in the Act.
Notwithstanding that decision, the judge went on to consider the Secretary of State’s second argument — that even if there had been more consultation, it was “highly likely” that the outcome would not have been substantially different and consequently, that no relief should be granted.
The judge did not agree with this argument. He decided that the Secretary of State’s approach was not in-line with the Act, calling his approach “so unfair as to be unlawful and indeed, irrational”. He went on to find that he would have reached that decision “even if [the Secretary of State] had conscientiously considered the responses to the 2015 Consultation” before he decided to repeal Regulation 7 of the 2003 Regulations.
The judge further stated that “it would still have been unfair and inconsistent with the aims of [the statutory duty], particularly to ensure informed decision making, to fail at least to seek updated views and evidence given the lapse of time, given the developments which there had been in the intervening period, given the reasons why the proposal had not been implemented in 2016 and given the professed reasons for wishing to implement it in 2022.”
Should the High Court grant relief?
The judge was “not persuaded that it is highly likely that a rational and open-minded Secretary of State, conscientiously considering responses to a consultation held in 2022 pursuant to section 12(2) of the 1973 Act, would be highly likely to have come to substantially the same decision”.
The judge referred to matters including:
- “There was virtually nil consultation prior to the decision on 13 June 2022 because the Secretary of State did not even consider the information available as to the responses of the 2015 Consultation.” This meant that it was “not a case in which there was substantial compliance with the obligations to consult but the court has been persuaded that there was a flaw in the process.”
- The Secretary of State “commit[ted] to the revocation of regulation 7 at a time when the advice to him was that it would be of negligible short-term benefit and probably counterproductive, without reference to the views of those who operate in the recruitment sector…”
- “The case for the [revocation of regulation 7 of the 2003 Regulations was on any view less than overwhelming. The advice he had been given was that it would have negligible short term beneficial effects and might be harmful and the 2022 Impact Assessment was merely estimating a net benefit in the long term.”
- “One cannot predict with accuracy what all of the responses to further consultation would have said.”
As a result, the High Court ordered that the 2022 Regulations be quashed.
The High Court decided not to express an opinion on the Article 11 ECHR ground, given that the judicial review had been successful on the consultation point.
What does this judgment mean for employers and employment businesses?
It is open to the government to appeal this decision. According to the BBC, the government is “considering its next steps”. Alternatively, the Government may decide to consult in respect of the changes and change the law in such a way that it can’t be challenged. Both approaches will take time — in the interim, the 2022 Regulations were quashed with effect from 10 August 2023.
This means that with effect from that date, the law has reverted to its position prior to 21 July 2022 — meaning that employment businesses will not be able to supply workers to clients to cover for those involved in strike action.
Employment businesses and those that use them need to be aware of the change in the law and ensure that from 10 August, agency workers are not supplied and/or used to cover employees that take strike action.
How we can help
If you need legal support in relation to agency workers or any issues in the recruitment and workforce solutions sector, talk to us by completing our contact form below.
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