Trade unions’ involvement in pensions
It is not uncommon for trade unions to lobby for pension reform
and to support legal claims relating to pension provision. For
example:
- the Fire Brigades Union is supporting claims on age, race and
gender discrimination against the Government and also more
generally on public sector pension reforms; - various teaching unions have lobbied hard in relation to their
members’ rights to membership of the Teachers’ Pension
Scheme (TPS), and continue to support industrial action in cases
where employers such as independent schools have looked at their
options to leave the TPS; - the British Airline Pilots Association was one of the claimants
in a recent age discrimination legal challenge against the Pension
Protection Fund’s benefit cap; and - UNISON is supporting the BackTo60 legal challenge against the
Department for Work and Pensions (DWP) in terms of women’s
state pension age.
1. The basics – what is a trade union?
A trade union is an organisation that represents its members in
the workplace. The typical activities of trade unions are broad and
range from lobbying for better pay and conditions (including terms
relating to pension provision) to political campaigning and
bringing or supporting legal challenges.
The key piece of governing legislation is the Trade Union and
Labour Relations (Consolidation) Act 1992 (as amended by the Trade
Union Act 2016). This is often referred to as
“TULR(C)A”.
A trade union has most influence in a workplace when it is
formally recognised by an employer. A trade union will be
recognised for specific purposes. When we talk about recognition in
the context of the workplace, we normally mean recognition for
collective bargaining purposes. Broadly, ‘collective
bargaining’ means discussing and negotiating the matters set
out in a ‘collective agreement’ between the trade union and
employer(s). Where such a collective agreement is in place,
employers are under a duty to liaise with the trade union under the
terms of the collective agreement and reach an agreed position.
Only matters set out in TULR(C)A can be the subject of a
collective agreement. These matters do not extend to pension
provision, although an employer can make a voluntary agreement on
pensions.
Collective agreements are not normally legally enforceable, but
many of the terms negotiated under a collective agreement can be
incorporated into an employee’s contract of employment (this is
particularly the case for public sector employees) and rights under
a contract of employment are legally enforceable.
2. Why are trade unions important to pensions?
If a trade union cannot negotiate in relation to pension
matters, why do we need to consider and be aware of trade unions in
the context of pension schemes?
We set out some reasons below and these reasons are why we
recommend that whenever an employer is considering changing its
pension provision, it reviews the terms of any collective
agreement(s) that might be in place and considers its obligations
to consult with recognised trade unions. Employers should also
anticipate the likely reaction of a trade union where it is not
recognised, but has members at the workplace in question.
Amending pension provision that also impacts on employees’
terms and conditions of employment
Certain changes to pension provision can impact an
employee’s terms and conditions of employment. For example, the
introduction of a new defined contribution pension arrangement when
an employee’s existing defined benefit arrangement is
closed.
An employee’s terms and conditions of employment can be the
subject of a collective agreement (and public sector employment
contracts in particular frequently include collectively agreed
terms). If this is the case, the employer is required to engage
with the trade union in relation to this change. As noted above,
changes to terms and conditions that relate to pension provision
will not usually fall within a collective agreement and will not
strictly require negotiation with the trade unions, or trade union
engagement. BUT in practice trade unions can still influence an
employer’s approach to making a change (see below).
Requirements to consult with employees when pensions changes
are proposed
When certain amendments are being made to employees’ pension
provision, an employer is obliged to consult with the affected
employees and any relevant trade union representatives of the
affected employees. See section (3) below for further detail.
Specific rights under legislation
If a trade union is recognised, the trade union has a number of
specific rights under legislation. For example, they have:
- the right to be consulted in relation to certain changes to
pension provision (see section (3) below for further detail); - the right to certain information from the employer for the
purposes of collective bargaining; - the right to information and to be consulted under TUPE (TUPE can be relevant when pensions
changes are being made as a result of a TUPE transfer of
employees); and - the right to information and to be consulted under the
collective consultation legislation (most relevant in large scale
redundancy situations, but also when an employer proposes dismissal
and re-engagement exercises which can be relevant when pensions
changes are proposed).
Trade unions are influential – industrial disputes &
industrial action
Although a trade union usually has no express right to negotiate
pension provision with an employer, it can still cause difficulties
for an employer if the trade union is unhappy with an
employer’s pension provision/proposals by calling for
industrial action (as a workplace dispute); for example strikes,
‘work to rule’ and generally applying pressure on the
employer.
3. Collective bargaining is different to consultation
When certain changes are made to pension benefits, an employer
is obliged to undertake pensions consultation with the affected
employees. With a consultation, the ultimate
decision-making power remains with the employer. This is different
to collective bargaining where agreement between the employer and
the trade union is needed in order to make changes covered by the
collective bargaining terms.
There are two different types of consultation an employer needs
to consider. A minimum 60-day pensions
consultation is required if certain specified changes to
pension benefits are proposed. A minimum
30 or 45 day collective (redundancy) consultation
is also required if the employer might dismiss 20 or more employees
at the same workplace within any 90 day period (even if they
subsequently re-engage the same employees on different terms),
including in relation to pension changes. For both
types of consultation, where there are trade union representatives
who represent the affected employees, these trade union
representatives must be consulted with.
Although collective agreements do not usually cover pension
provision, they can include requirements relating to communicating
with employees or additional obligations and timescales in relation
to consulting with employees.
We would usually recommend engaging with trade union
representatives early on in any consultation process to ensure as
constructive dialogue as possible is facilitated, and any
requirements set out in collective agreements relating to
consultations are followed.
4. Engage with trade unions
Although, as explained above, a trade union cannot usually
negotiate directly with an employer in relation to pension matters,
employers should remain live to the role a trade union plays,
either through an existing recognition agreement, or simply by
virtue of certain employees being trade union members. Employers
should factor this into their project planning, in particular,
ensuring that whenever there is a proposed change to pension
provision, the employer considers involving and engaging the trade
union(s) at an early stage.
Footnotes
See section 178 TULR(C)A. The
position that pensions do not fall within the matters that can be
the subject of collective bargaining was clarified by section 20
Employment Relations Act 2004 following UNIFI v Bank of
Nigeria 2001 IRLR 712 which indicated that pensions could be
included.
Section 181 TULR(C)A.
The Transfer of Undertakings
(Protection of Employment) Regulations 2006.
Section 188 TULR(C)A.
The Occupational and Personal
Pension Schemes (Consultation by Employers and Miscellaneous
Amendment) Regulations 2006 (2006/349)
Regulation 8, The Occupational
and Personal Pension Schemes (Consultation by Employers and
Miscellaneous Amendment) Regulations 2006 (SI
2006/349).
Section 188 TULR(C)A.
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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