Industrial action: (1) The individual contract of employment
The law of industrial action remains a dynamic, complex and controversial area of industrial relations and employment law. In the first of a four-part guidance note series, we start with a review of the legal effect of industrial action on the individual contract of employment.
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There is an inescapable conclusion at law that strike action, no matter the duration, will constitute a repudiatory breach of contract.
A strike notice is generally treated as notice of an intended breach of contract, rather than notice of termination of employment.
A strike notice proposing strike action of indefinite duration, and that is expressed to be notice of lawful termination of the employees' contracts, is not, in principle, a breach of contract.
Notice of discontinuous strike action such as one-day strikes, or of a refusal to work on specified days or periods only, can never be construed as notice of termination of employment.
Where no strike notice is given, strike action results in a repudiatory breach of contract, entitling the employer to accept the breach and treat the contract as at an end.
Most forms of industrial action short of a strike will also constitute a breach of the employment contract. Whether or not the breach is a fundamental or repudiatory one depends on the extent of the legal obligations involved in performing the contract.
Where industrial action takes the form of a "work-to-rule", "withdrawal of goodwill" or "go-slow", certain broad implied contractual obligations of "good faith" or cooperation might be breached on the basis of the employees' disruptive purpose in taking such action.
Crucially, there will be no breach of contract merely because employees are involved in forms of industrial action short of a strike, if they are refusing to perform duties outside their contractual obligations.
The range of responses open to an employer facing strike or other industrial action does not include an order for specific performance of the contract.
An employer may lock-out the employees from the workplace. Whether this is characterised as a lawful response to industrial action by the employees or a repudiatory breach of contract by the employer will depend on the circumstances.
An employer may make deductions from an employee's pay, or refuse to make any payments whatsoever during a period of industrial action on the principle that no pay is due for no work done under the contract.
An employee must prove that he or she was ready and willing to work under the contract in order to succeed in an action for recovery of wages.
While an employer must generally be careful not to accept impartial or imperfect performance of the contract if it wants to make deductions from pay, an employee who gives such defective performance may still be treated as if they were refusing to work at all.
Where industrial action amounts to a repudiatory breach, an employer may summarily dismiss participating employees.
An employer may seek damages in the civil courts for losses flowing from the individual employee's breach of contract in participating in industrial action whether or not the breach is repudiatory. In practice, such actions are rare. |
The process of "step-by-step" reform of the law of industrial action pursued since 1979 by successive Conservative governments resulted in five major pieces of legislation circumscribing a comprehensive statutory framework, now mostly embodied in the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULR(C)A"). Subsequently, TULR(C)A has itself been substantially amended, more recently by the Employment Relations Acts of 1999 and 2004 ("the ERelA 1999" and "ERelA 2004" respectively), culminating in about 14 pieces of legislation altogether governing this area of the law. With few significant exceptions, including changes to the law on unfair dismissal of strikers, and to the balloting provisions contained in TULR(C)A, the Blair government has left largely undisturbed the Thatcherite disposition on industrial action that it inherited.
The main thrust of those reforms, as we shall see in forthcoming guidance notes in this series (see box 1), has been: to erode the immunities from tortious liability for industrial action available to trade unions and other organisers of industrial action; to restrict the purposes for which lawful industrial action may be organised; to subject trade unions to complex balloting and notice procedures before lawful industrial action can be taken; and, to extend union responsibility for the actions of their members, forcing them into a choice between supporting their members or protecting their funds from a claim for damages from the employer.
For the individual members, their union's choice of this latter option meant that they were left vulnerable to selective dismissal by the employer without any recourse to an unfair dismissal claim before the employment tribunals. The ERelA 1999 addressed this imbalance by outlawing dismissals within the first eight weeks of an industrial dispute, thus diminishing their use as an effective weapon in an industrial dispute in the range of responses open to the employer. Employers are also less likely now to resort to suing individual employees for breaches of their contracts of employment brought about by their involvement in industrial action, as a result of the more attractive option of pursuing a claim in tort against trade unions and their funds.
Nevertheless, the fundamental principles underpinning this consequence of industrial action on the individual contract of employment - the repudiatory breach of contract - remain crucial to any analysis of the highly complex legal minefield that is triggered by contemplating and taking collective industrial action. Not only so, but the breach of contract can also, in certain limited circumstances, constitute a criminal offence (see box 2) and, as we shall see elsewhere in this series, can form the basis for the potential civil legal liability of trade unions and other organisers of industrial action.
Strike action constitutes a breach of contract
The common law principle that there is no "right to strike" still holds good today, although it is, perhaps, best understood in the sense only of the adverse contractual consequences that may result from embarking on strike or other industrial action. This is because modern society has long recognised that employees are free to organise themselves collectively to withdraw their labour in an attempt to bring pressure to bear upon their employer for one reason or another.
However, should they do so, the law is swift to remove from them some of their most important employment protection rights, leaving them exposed to a host of possible repercussions from the employer, ranging from deductions from their pay to their summary dismissal from employment. The employer can apply these sanctions because of the inescapable conclusion at law, where employees withdraw their labour without having given prior notice to terminate their contracts of employment, that such employees are in repudiatory breach of contract. This is the case regardless of whether strike action is official or unofficial, or whether or not it is constitutional (in that it fulfils all union procedural rules) and regardless also of the actual duration of the cessation of work.
The courts have not always been entirely convinced of the logic of this, given that strikers rarely perceive that their taking industrial action indicates any intention on their parts to terminate their employment. On the contrary, in most cases, they are pressing for employment to continue, but on different terms and conditions. It is even less likely to be the case that the employer is necessarily happy to receive notices of termination from its entire workforce or a part of it. As Lord Donovan put it in Rookes v Barnard: "The strikers do not want to give up their jobs; they simply want to be paid more for it or to secure some other advantage in connection with it. The employer does not want to lose his workforce; he simply wants to resist the claim."
If indefinite, strike action has been held to manifest a firm intention on the part of the employee not to perform the work which he or she was engaged to do under the contract, this being the whole purpose of the contract (Simmons v Hoover Ltd). On the other hand, even a short meeting held during working hours without the employer's consent can also amount to such repudiatory conduct (Rasool and others v Hep worth Pipe Co Ltd (No.1)).
This treatment is based on the courts' characterisation of strike action as a collective form of gross industrial misconduct, and employees who participate in such action are held to be in disregard of the fundamental purpose of their contracts. In Rasool, a strike was described as a collective act of wilful disobedience of the employer's lawful and reasonable orders.
The effect of a strike notice
Where the employer receives notice of strike action from the employees or from their representatives, the question whether or not the strike still constitutes a repudiatory breach of contract in all the circumstances of the case will be determined largely by the terms of the notice given and the nature of the strike action undertaken.
Occasionally, the strike notice will propose strike action of indefinite duration which is expressly intended to constitute notice of termination of the employees' contracts. This is not, in principle, a breach of contract. More commonly, a strike notice will stipulate a "withdrawal of labour" from a certain date, and this is treated generally as notice of the employees' intention to break their contracts of employment, rather than notice of termination of employment. This attitude of the courts is again demonstrated in Rookes v Barnard: "the object is to break the contract by withholding labour but keeping the contract alive for as long as the employer [will] tolerate the breach without exercising their right of recission [that is, the right to dismiss summarily]." And in Stratford (JT) and Son v Lindley, it was expressed more succinctly: "The strike notice is nothing more nor less than a notice that the men will not come to work. In short, they will break their contract." In those circumstances therefore, the employees have not resigned their employment, and unless and until the employer reacts to the strike notice by accepting the employees' repudiatory breach and terminating the contracts of employment, the contracts remain in existence.
Subsequently, however, the case of Boxfoldia Ltd v National Graphical Association (1982) cast doubt on the universal application of this treatment of the effect of a strike notice. The court took the view that it could not always be assumed that the party giving notice wished the contract to continue, as it might sometimes be the employees' consideration that actual termination of their contracts on due notice would exert more effective pressure on the employer. Therefore, in each case, the meaning and effect of the words used in the strike notice, in the context in which they were used, would determine whether the notice was one giving notice of termination under the terms of the contract or not.
In Boxfoldia itself, the court held that the notice given by the union to the employer of 14 days' "notice of withdrawal of all NGA [National Graphical Associations'] members' labour from the company" was ambiguous. It could not be said that the union was acting as the employees' agent when it wrote that letter; nor that the letter was communicating any decision by the employees to terminate their employment. The appropriate contractual notice of termination had not been given; and, in the particular circumstances of the case, the phrase "withdrawal of labour" could not sensibly bear that meaning. Moreover, the union had no authority in its rules to give contractual notice of termination on behalf of, or as an agent for, its members and, in the absence of such express authority, there could be no authority implied from the union's general power under its rules to instruct members to take strike or other industrial action.
It is worth noting in relation to the giving of strike notice that notice of discontinuous strike action involving short periods of a withdrawal of labour (such as one-day strikes) can never be construed as notice of termination of employment; nor can a notice that indicates an intention to refuse to work on specified days only or for specific periods only. At best, these may only constitute notices of intended breaches of contract.
Where no strike notice is given at all, as already stated, the strike action results in a repudiatory breach of contract, entitling the employer, if it wants, to accept the breach and treat the contract as at an end. Arguably, the only situation where this may be held not to be the case is where the strike is itself the employees' response to (or acceptance of) the employer's own repudiatory breach of contract (Simmons v Hoover Ltd).
Simmons is also authority for saying that a strike notice cannot operate automatically to suspend the contract of employment for the duration of industrial action. In the absence of any contractual term (for example, by means of incorporation of a "no strike" agreement, via a collective agreement, into the employees' contracts) giving employees such a right of suspension of their contracts in such circumstances, it was held that there could be no implied right along these lines.
"Strike" action defined
Despite its potentially severe consequences on the individual contract of employment, there is no clear definition of what constitutes "strike" action. The 1979 contract law case of Tramp Shipping Corp v Greenwich Marine Inc described a strike in general terms as "a concerted stoppage of work by men done with a view to improving their wages or conditions or giving vent to a grievance or making a protest about something or other or sympathising with other workmen in such endeavours". Moreover, on the basis that strike action must be intended to achieve or call attention to something, a strike would also include stoppages called in relation to political issues, almost certainly those relating to employment terms and conditions.
However, it is unlikely that the intention in Tramp Shipping was that any concerted stoppage of work whatsoever should constitute a strike, as this would embrace stoppages for external reasons, including those beyond the control of the employer and employees and completely unrelated to employment terms and conditions, such as bomb scares. Moreover, the requirement of a "concerted" element to the action also appeared to exclude individual protests (Bowater Containers Ltd v Blake), although, in Lewis and Britton v E Mason & Sons Ltd the EAT allowed that it was sufficient to constitute industrial action where an individual employee refused to drive from Wales to Edinburgh without an overnight heater in the vehicle on the basis that this was conduct designed to force the employer to improve employment terms.
In fact, the Court of Appeal in Connex South Eastern Ltd v National Union of Rail, Maritime and Transport Workers explained the phrase "any concerted stoppage of work" in the widest of terms possible. Upholding the EAT which, in delivering that decision, had said that if work was available to be done and men did not do it, that amounted to a concerted stoppage of work and therefore a strike, the court said that "concerted" meant "mutually planned", and "stoppage of work" was wide enough to encompass any stoppage of work. In fact, in that case, an overtime ban and rest-day ban were held to be strike action, rather than industrial action short of a strike, on the basis that the former amounted to a refusal to work certain periods of work at times the work was contractually required to be worked, and the latter was a refusal to work on days that would normally be worked. (Note that in respect of the balloting provisions only, specifically, the wording of the ballot voting paper, an overtime ban and a call-out ban are now to be treated as industrial action short of a strike, by virtue of s.229(2A) of TULR(C)A, which was passed with the sole aim of reversing the effect of the Connex decision.)
The Tramp Shipping definition has been imported into the balloting provisions contained in s.246 of TULR(C)A 1992. On the other hand, a more narrowly drawn definition is set out for the purposes of the continuity of employment provisions in the Employment Rights Act 1996, where s.235 describes a strike as: (a) the cessation of work by a body of employed persons acting in combination, or (b) a concerted refusal, or a refusal under a common understanding of any number of employed persons to continue to work for an employer in consequence of a dispute, done as a means of compelling their employer or any employed person or body of employed persons, or to aid other employees in compelling their employer or any employed person or body of employed persons, to accept or not to accept, terms and conditions of or affecting employment.
Industrial action short of a strike
It is necessary also to consider the variety of methods other than strike action that may be employed by workers to bring industrial pressure to bear on the employer. These actions commonly involve: a refusal by the employees, usually on the instruction of their union, to perform specific tasks or duties; a refusal to handle certain goods (known as "blacking"); a ban on working overtime; the imposition of a "work-to-rule" or of a "go-slow"; and the withdrawal of goodwill, among others.
Most of these forms of action will also constitute a breach of contract by the employee in the same way as strike action. This will be the case particularly where there are express or implied contractual obligations involved in the performance of the specific tasks or duties that are central to the dispute. Therefore, the objective of the tribunals and the courts in considering the impact of action short of a strike on the individual contract of employment is, first, to establish the extent of the legal obligations in question; second, to differentiate true contractual obligations from what really amount only to voluntary and non-contractual aspects of the employment relationship; third, to determine whether or not there is a repudiatory breach of contract and, if so, whether or not the employer is entitled to apply the sanction of deductions from wages, non-payment of wages or even summary dismissal for the imperfect service or the non-performance of those duties.
Refusal to perform specific tasks or duties
In this form of action, employees remain ready and willing to perform their contractual duties, except for the particular duty or duties they refuse to perform, and which are usually the subject of the dispute. The crucial issue for the tribunal or court, as stated, is whether or not the employee is under a contractual obligation to carry out the particular duty or duties in question.
Sim v Rotherham Metropolitan Borough Council demonstrates the preparedness of the courts, in appropriate circumstances, to imply into contracts of employment the requisite legal obligation necessary, no matter how wide-ranging it may seem. In the specific circumstances of this case, an extensive professional obligation, founded on the professional status of the employees as teachers, was implied into their contracts of employment to require teachers who had been prepared to teach normally, but had refused an instruction to provide cover for absent teachers, to comply with those cover arrangements.
The High Court ruled that a term could be implied on the basis that a teacher's duties went beyond those set out in his or her contract of employment to encompass a professional obligation towards the pupils and their school, which meant that they had to cooperate in running the school during school hours in accordance with the timetable and other administrative regulations or directions from time to time made or given. Thus, in the Court's view, teachers had always accepted such a professional obligation, and so the employer was entitled to deduct monies from their salaries for their refusal to cover. While this was the case in respect of cover arrangements for absent colleagues, however, it was accepted that those professional obligations did not extend to supervising school dinners.
A refusal to cooperate with the introduction of new working methods in the workplace, such as when new technology is introduced, will also amount to a breach of contract by the employee if the employer was contractually entitled to introduce those changes. This is on the basis that employees are generally expected to be flexible enough to adapt to new ways of working introduced in the course of their employment so long as these fall within their existing job descriptions, and given any necessary training is provided. (Creswell v Board of Inland Revenue). A prudent employer will thus always ensure that a contract of employment contains a carefully drawn variations clause that is wide enough to incorporate any changes to contractual terms that need to be made in the future.
Overtime ban
An overtime ban will constitute a clear breach of contract if overtime is compulsory, that is, there is a contractual requirement that overtime should be worked if required. It is not sufficient to render overtime contractual that it has been offered and has been accepted and worked regularly over a period of time. There must exist an express or implied term to this effect. Thus, the Court of Appeal held in Secretary of State for Employment v Aslef (No.2) that while a ban on rest-day and Sunday working was not in breach of contract, as such working was purely voluntary, a ban on rostered overtime, whereby employees worked a nine-hour shift, with eight hours paid at basic rates and one hour at overtime rates, breached an express contractual obligation.
Where there is no such contractual obligation, it is arguable that an overtime ban does not have this effect of breaking the employment contract. So held the Privy Council in Burgess v Stevedoring Services Ltd when faced with the issue of whether a ban on voluntary overtime was in breach of the employees' contracts (see below).
"Work-to-rule" and "go-slow"
In a "work-to-rule" or "go-slow", employees do not refuse to perform particular tasks or duties, but rather work at a slow and painstaking rate, following long-ignored work rules to the letter to such an extent that the rate of work is slowed down to an unacceptable level as far as the employer is concerned. This is a form of action used heavily in the railway industry, where employees working to rule become over-zealous about form-filling, and exact adherence to safety rules and provisions assumes an extraordinary significance. The employees' argument is that since they are continuing to perform all of their specific contractual duties there can be no breach of contract. The courts have, however, shown their willingness to imply broad duties of good faith or cooperation into the contract of employment so that in most cases a work-to-rule will amount to a breach of contract. In so finding, the courts have concentrated on the employee's purpose in taking such concerted action.
Until Burgess, the Court of Appeal decision in Aslef (No.2) held sway as authority for the proposition that a "work-to-rule" constitutes a breach of contract in circumstances where the action was embarked on with a view to wilfully disrupting the employer's business. The court took the view that the rule book to which the employees had been ordered to work by the rail unions amounted to a set of instructions collateral to, rather than forming part of, the contract of employment. The "work-to-rule" - involved employees following detailed instructions as to how to perform their work, in particular instructions regarding safety matters, so that train drivers took much longer than usual to check their engines in order to ensure they were in "proper order" before use, thus causing a serious dislocation of rail services. This so stripped the general work obligation of its meaning that it breached an implied term of the contract, namely, to work in accordance with lawful instructions so as not to disrupt the employer's undertaking.
The rationale for this decision was explained by the three judges variously as: (a) there being an implied duty not to obstruct the employer wilfully by engaging with others to take steps wilfully to disrupt the undertaking in order to produce chaos so that it does not run as it should; (b) there being a duty to serve the employer faithfully with a view to promoting the commercial interests for which the employee is employed; and (c) the existence of a duty to obey the employer's lawful instructions and not to do so in a wholly unreasonable way so as to disrupt the system. While the employees were not bound to do more for their employer than was required under their contracts, and while they could withdraw their goodwill at any time, the Court said, they could not wilfully obstruct the employer going about its business, nor frustrate the employer's commercial objective without falling in serious breach of contract.
Subsequently, in Drew v St Edmundsbury Borough Council, the EAT implied a term into the contract of employment that an employee should work at a reasonable speed in so far as he or she is capable of so doing, and concluded that a deliberate slowing down of such work would be in breach of this term. And in Miles v Wakefield Metropolitan District Council and Wiluszynski v Tower Hamlets London Borough Council it was confirmed that a work-to-rule may breach an implied term to give faithful service and/or the implied trust and confidence term.
However, in Burgess, the Privy Council considered the Aslef position afresh and decided that it did not hold true where there was no contractual duty on an employee, for example, to work overtime. In those circumstances it could not be said that there was a breach of contract because the failure to work overtime was done wilfully to disrupt the employer's business. Indeed, Lord Hoffman took the view that employees may quite "legitimately perform their duties in a way which does not suit the employer if they have a bona fide reason but not if their purpose is to be wilfully obstructive. But that does not mean that they are in breach for refusing to do things altogether outside their contractual obligations merely because they do not have a bona fide reason for refusal. They do not have to have any reason at all."
Withdrawal of goodwill
In Ticehurst and Thompson v British Telecommunications plc, a trade union organised a withdrawal of goodwill that involved the participation of a manager in charge of 40 staff. As part of that action, the employees worked strictly to conditioned hours, and refused to accept new work procedures or practices without the union's agreement. The union also instructed that employees should consider, when asked to perform duties within their job description, how much choice they had in carrying out the task and which option would cause BT the most inconvenience.
The Court of Appeal held, applying Aslef, that a term could be implied into the contract of the manager to the effect that a manager must necessarily be entrusted to exercise judgment and discretion in giving instructions to others, which discretion must be exercised faithfully in the employer's interests. This implied term of faithful service was breached when the manager acted or omitted to act, not by an honest exercise of choice or discretion for the faithful performance of his or her work, but in order to disrupt the employer's business or to cause the most inconvenience possible. In such circumstances, the employer was entitled to treat the breach of the implied term as grounds for dismissal. However, it had other options available to it, such as to lock-out the employee who would not work normally, by refusing to allow him or her to return to work, and not paying the employee. Thus, following Aslef, the courts have consistently treated a "work-to-rule" and "withdrawal of goodwill" as breaches of the employment contract, where the purpose of such action is wilfully to disrupt the employer's business. However, in the light of Burgess, all these decisions must now be qualified, and the principle taken to be that, provided an employee performs what he or she can be required to perform under the contract, he or she does not have to perform all the employer's wishes.
The same principle should be applicable in the case of a "go-slow", as this form of action also involves poor or imperfect performance of the contract, such that there could be said to be a breach of the contract. However, in another Privy Council decision - General Engineering Services v Kingston and St Andrew Corporation - firefighters were held to have breached their contracts when, because they were operating a go-slow, they took so long to reach a fire - 17 minutes, rather than the three and a half minutes it should normally have taken them - that a building and its contents were entirely destroyed.
This was on the basis that the firefighters had not acted in the course of their employment at all when they progressed slowly to the fire in a series of stopping and starting and then stopping again, but had acted in an unauthorised and wrongful manner wholly unconnected with the authorised act of driving to a fire. Lord Ackner put it this way: "the unauthorised and wrongful act by the firemen was a wrongful repudiation of an essential obligation of their contract of employment, namely the decision and its implementation not to arrive at the scene of the fire in time to save the building and its content. This decision was not in furtherance of their employers' business. It was in furtherance of their industrial dispute, designed to bring pressure on their employers to satisfy their demands, by not extinguishing fires until it was too late to save the property. Such conduct was the very negation of carrying out some act authorised by the employer, albeit in a wrongful and unauthorised mode."
The employer's response
An employer against whom strike or other industrial action is taken involving alleged repudiatory breaches of contract has a number of options open to it:
The employer may itself operate a "lock-out" by taking action to prevent the employees from entering its premises to perform any work at all where, for example, the industrial action involves disruptive working or imperfect performance of their contractual obligations.
The employer may decide to make deductions from employees' wages for work not done at all or for partial or imperfect performance for the duration of the industrial action.
The employer may accept what it considers to be the employees' repudiatory breach of contract by their conduct and summarily dismiss them.
The employer who sustains losses as a result of the industrial action may sue employees for damages for breach in the civil courts.
It is worth noting that it is not open to an employer to seek a court order to require employees to resume normal working. Section 236 of TULR(C)A stipulates that a court cannot force an employee to do any work or attend at any place for work by ordering specific performance of an employment contract or by granting an injunction to restrain a breach or threatened breach of such a contract.
Employer "lock-out"
A "lock-out" is defined in employment legislation only for continuity of employment purposes. This definition is now to be found in s.235(4) of the Employment Relations Act 1996, which describes a lock-out as occurring where there is: (a) "the closing of a place of employment; (b) the suspension of work; or (c) the refusal by an employer to continue to employ any number of persons employed by him in consequence of a dispute, done with a view to compelling persons employed by the employer, or to aid another employer in compelling persons employed by him, to accept terms or conditions of or affecting employment." Despite this, it is accepted that an employer's objective in operating a lock-out sometimes transcends merely putting pressure on employees to accept employment terms and conditions; there are times when an employer will adopt this approach with the settled intention of terminating the employment contracts altogether without any possibility of re-engaging the dismissed employees.
Express & Star Ltd v Bunday involved a dispute over the introduction of new technology employing "single-keying" in a newspaper production process, during which period the employees arrived at work one day to find the premises locked. Those who refused to work with the new technology were then suspended without pay and some were subsequently dismissed.
An employment tribunal decided that this was not lock-out, but rather industrial action by the employees who refused to work with the new technology, having taken the view that the employer's own conduct was not in breach of the employment contracts. In overruling the tribunal, the EAT held that there was indeed a lock-out, as the employer had initiated the situation by stating: "if you're unwilling to do what you've never done before, you will be suspended". On the other hand, the same set of circumstances would have amounted to industrial action, had it been the workforce saying: "if you are forcing us to work in this way we're taking industrial action".
The Court of Appeal disagreed with the EAT's reading of the situation and reinstated the tribunal decision. The Court had regard to the above definition, and also to a dictionary definition of a lock-out, namely: "an act of locking-out a body of operatives; ie a refusal on the part of an employer or employers acting in concert, to furnish work to their operatives except on conditions to be accepted by the latter collectively". Thus, the important elements to look out for in a lock-out included a refusal to provide work, an element of compulsion, and the reason for the refusal.
Not always would a lock-out involve a breach of contract of employment by the employer, the Court continued and, in this case, the tribunal was entitled to consider whether or not the introduction of "single-keying" amounted to a change in the employee's terms and conditions of employment, and then to conclude that the employer was not in breach of contract. Thus, it may be a question of pure fact or one of mixed law and fact for the employment tribunal whether or not there is a lock-out or industrial action in any given situation.
Where there is held to be a lock-out, this may impact on the employment contracts in a number of ways, with much hinging on what the employer did or said in all the circumstances of the case.
Acceptance of the employees' repudiatory breach of contract, resulting in summary dismissal. Generally, a lock-out that is a response to strike or other industrial action that is alleged to constitute a repudiatory breach of contract on the part of the employees may be considered to be an acceptance of the breach, thus leading to their lawful summary dismissal.
Refusal to accept imperfect or partial performance, coupled with deductions from pay. Alternatively, the lock-out may amount to a refusal by the employer to accept imperfect or partial performance by the employees of their contracts, choosing instead to lock them out and send them home without pay, without this amounting to a suspension.
An express contractual right to suspend without pay. An employer will sometimes argue for a contractual right to suspend employees without pay by way of lock-out. Where this is the case, an express, rather than implied, right will be necessary. However, where no such right exists or can be implied into the contract, the suspension without pay might itself be rendered a repudiatory breach of contract, in which case the employee has the option of accepting the breach and terminating the contract, or keeping the contract alive. If they accept the repudiatory breach they can bring a claim for wrongful dismissal, with damages limited to the proper notice period and any accrued benefits. Where, instead, the employee keeps the contract alive, they will be able to sue for loss of wages and other benefits for the period of the lock-out, provided they can show that they were at all times ready and willing to work.
Termination of contracts on giving proper notice. The lock-out may also take the form of a lawful termination of the employees' contracts with proper contractual or statutory notice being given to each individual employee.
Deductions from pay
While industrial action persists, the employer may adopt the strategy of making deductions from employees' pay or withdrawing pay altogether. It is then for the employee to seek to challenge the legality of this action and to recover the amount deducted by way of a county court or High Court action or by means of a wages claim in an employment tribunal.
Defective performance as non-performance
In Miles v Wakefield MDC, a registrar of births, marriages and deaths working a 37-hour week, including three hours on Saturday mornings, refused to perform marriages on Saturday mornings following the instructions of his union. The employer withheld 3/37ths of his pay, effectively not paying him for Saturday mornings at all, although he attended on that day and on other days to perform all other functions. The employer also made clear that registrars who refused to undertake the full range of their duties on Saturdays would not be required to attend for work at all and would not be paid. It was entirely a matter for them, in those circumstances, if they chose to attend their offices on Saturdays.
When the employee sought to recover the deducted sums, the House of Lords took the view that during any period of defective performance the employee was to be treated as if he or she was refusing to work at all or was voluntarily absent from work. An employer was entitled to refuse any particular performance of a contract from an employee who refused to perform the full range of duties that could be required under their contract, and, if an employee had indicated that he or she was not ready and willing to perform their contract, they were not entitled to sue for and recover wages from the employer.
The employer may refuse to pay the employee where no work is done
That no pay is due where no work is done under the employment contract is a principle that is applicable to a complete refusal to perform duties under the contract, as well as a refusal to carry out those duties in the manner required by the employer. Therefore, in Creswell v Board of Inland Revenue, where employees refused to operate a new computerised system for administering PAYE, and the employer made clear that it would not accept manual performance of the work and would not pay them so long as they maintained their position, the High Court held that the employer was entitled to adopt that stance.
Similarly, in Royle v Trafford Borough Council, when a teacher refused to accept five additional pupils into his class following instructions from his union, but continued to teach his class of 31 pupils during that time, the court held that he was not entitled to full payment, and that a deduction of 5/6ths of his pay was reasonable in the circumstances.
The employer may refuse to accept or pay for partial performance
Taking the principle in Miles a step further, the Court of Appeal in Wiluszynski v London Borough of Tower Hamlets held that an employer did not have to pay an employee who, throughout a five-week industrial action, had maintained a refusal to perform only one small part of his contractual duties as instructed by his union, namely, to answer housing enquiries from council members, in circumstances where the employer had allowed him to attend work every day in order to continue to perform the rest of his duties. The employer had clearly indicated that employees should only attend work if they were prepared to resume normal working, otherwise any work done would be regarded as unauthorised and voluntary. In those circumstances, although the employee had worked so diligently that it took him only three hours after the end of the industrial action to clear the backlog of housing enquiries, the court took the view that he was still in significant breach of contract.
It is likely that a "work-to rule" would attract similar treatment. At least, this was the court's view in Miles, where Lord Templeton commented that where employees refused to work effectively with the intention of damaging the employer's business, the employees were no more entitled to their wages under the contract than if they refused to work at all.
Note that industrial action is one of the exceptions allowed by statute where an employee cannot complain of deductions from wages. Section 14(5) of the Employment Rights Act 1970 states: "Section 13 (right not to suffer unauthorised deductions) does not apply to a deduction from a worker's wages made by his employer where the worker has taken part in a strike or other industrial action and the deduction is made by the employer on account of the worker's having taken part in that strike or other action."
Summary dismissal
Where a strike or other industrial action amounts to a repudiatory breach of contract, the usual contractual principles apply as already stated, and an employer is entitled to accept that breach and lawfully dismiss participating employees without notice, or without proper contractual notice. We have seen that strikes and much industrial action short of a strike easily fall within such categorisation. Conversely, if the strike or industrial action is not sufficiently serious to amount to a repudiatory breach, the employer can dismiss only by giving contractual notice to each employee in order to overcome claims for wrongful dismissal.
The question arises whether a strike or other industrial action that is carried out in opposition to demands or conduct by an employer that are themselves repudiatory breaches of contract can be so regarded, or whether in such circumstances, in fact, the strike or other industrial action constitutes the employees' acceptance of the employer's breach. If this is the case, then the strike or industrial action brings about the lawful termination of the contract by the employees, rather than by the employer, in the form of "mass constructive dismissals". The implications are obvious: the dismissed employees can then bring an unfair dismissal claim before the tribunals, as well as pursue their claim in the civil courts for damages for wrongful dismissal.
This proposition has been rejected by the courts, on the basis that employees undertake strike or other industrial action in order to compel the employer to agree to their demands. They do not do so with a view to terminating their contracts. (See, for example, Wilkins and others v Cantrell and Cochrane (GB) Ltd.) However, this was not the view of the court in the Boxfoldia case (see above), which allowed for the possibility that employees taking strike action might indeed wish to terminate their contracts. If this is the employees' intention, then it is suggested that each employee would have to individually indicate their acceptance of the employer's breach, or authorise their union or other representative to accept the breach on their behalf.
Suing for damages
An employer that suffers loss from an employee's breach of contract while the employee is participating in industrial action may sue for damages. In this case it is irrelevant whether or not the breach is repudiatory, so long as loss ensues from the industrial action. This remedy is arguably only of academic significance as it is underutilised by employers.
In quantifying damages, the aim of any award should be to put the employer back into the position it would have been in had the contract been properly performed. However, difficulties in identifying the specific loss caused by the individual employee's own breach have led the courts to employ the following as measures of damages:
A calculation based on the net value to the employer of the work that an individual employee would have performed if he or she had worked normally. Where employees make a direct contribution to an end product, this figure can be obtained by identifying the total value of the output lost as a result of the individual's breach of contract, and deducting the expense which the employer would have incurred in obtaining that output (National Coal Board v Galley). This calculation will not work for those who are only indirectly involved in such processes or who work in service industries.
A calculation based on the cost to the employer of providing a replacement or substitute to cover for the employee who is in breach of contract, if this has been necessary.
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Trade Union and Labour Relations (Consolidation) Act 1992 180 Effect of provisions restricting right to take industrial action (1) Any terms of a collective agreement which prohibit or restrict the right of workers to engage in a strike or other industrial action, or have the effect of prohibiting or restricting that right, shall not form part of any contract between a worker and the person for whom he works unless the following conditions are met. (2) The conditions are that the collective agreement - (a) is in writing, (b) contains a provision expressly stating that those terms shall or may be incorporated in such a contract, (c) is reasonably accessible at his place of work to the worker to whom it applies and is available for him to consult during working hours, and (d) is one where each trade union which is a party to the agreement is an independent trade union; and that the contract with the worker expressly or impliedly incorporates those terms in the contract. (3) The
above provisions have effect notwithstanding anything in section 179 and
notwithstanding any provision to the contrary in any agreement (including
a collective agreement or a contract with any
worker). |
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Bowater Containers Ltd v
Blake EAT 522/81 |
