Posted: 25/05/2023
The Court of Appeal has this week given its decision in the case of Secretary of State for the Home Department v Cox and ors and two other conjoined cases. These cases, which were joined on appeal from the High Court, concern the practice of ‘check-off’ whereby employers deduct trade union membership subscriptions from their employees’ wages via the payroll and pay them directly to the union.
The three employers in these cases, the Home Office, the Department for Environment, Food and Rural Affairs, and HM Revenue and Customs, all operated check-off arrangements which originated in collective agreements negotiated in the 1960s and which were incorporated into the Civil Service Pay and Conditions of Service Code.
From 2014 onwards, the three government departments began to withdraw the check-off arrangements. The affected employees sought a declaration that their employers were in breach of contract. The recognised union, the Public and Commercial Services Union (PCS), also sought a declaration that it was entitled to enforce the contract itself, as the Contracts (Rights of Third Parties) Act 1999 purported to confer a benefit directly on the union.
The High Court upheld the employees’ claims, finding that the check off arrangements were incorporated into their contracts of employment by means of the collective agreement, and the fact that employees continued to carry out their duties did not amount to a waiver of the employers’ breach. The High Court also made a declaration in the PCS’s favour. Although the collective agreements themselves were not directly enforceable by the union, once the terms were incorporated into individual employment contracts, this was no longer relevant. There was nothing in the collective agreements that could be construed as disapplying the provisions of the Act and therefore the union could enforce the term directly.
The employers appealed to the Court of Appeal on both counts.
In relation to the employees’ claims, the Court of Appeal upheld the High Court’s decision. The High Court had been entitled to find that the employees had not unequivocally accepted the variation of their contractual terms, nor had they waived any past breaches. The union had protested on behalf of its members, and the government departments had not presented the withdrawal of the check-off arrangements as a contractual change requiring the employees’ consent.
The Court of Appeal overturned the High Court’s decision in relation to the union’s claim, however, and upheld the employers’ appeal. Section 1(2) of the Act provides that the third party provisions do not apply if ‘on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party’. Here, the fact that the collective agreement was not legally enforceable, unless its terms were incorporated into individual employment contracts, was a relevant factor. The wording of the contractual term suggested that it was intended to offer a facility to the employee, rather than to benefit a third party. Finally, the Court of Appeal held that it was unlikely that the parties to the collective agreement had intended its term to be enforceable by all possible recipients of the check-off deductions. Therefore, the union’s claim failed.
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