Union activity on the rise as Sainsbury's faces take-over threat

News that the trade union Unite is urging Sainsbury's shareholders to vote against the £10.6bn take over by private equity group Delta Two is just the latest example of unions protesting and threatening action against business decisions made by companies and, arguably, shows a return to power for trade unions which were virtually destroyed by the last Conservative government.

In just two examples from recent weeks, postal workers went on strike over pensions and pilots at Aer Lingus have threatened action over plans for a new airport hub in Belfast.

Lisa Patmore, an employment lawyer at Pinsent Masons comments:

"We have seen a distinct increase in union activity, the number of challenges made by unions to business decisions and the applications made by unions for recognition. The number of companies which recognise unions are much more widespread than generally acknowledged.

"The increase in activity means businesses really do need to factor in union reaction to major decisions they make. A negative relationship with a union can result in even more challenges and difficulties for businesses, such as strikes. The cost to a business as a result of strike action or as a result of a failure to comply with legislation introduced to protect unions and their members, can be substantial."

Union membership in the 1970s was estimated at 60% of the workforce, but this declined significantly over the next two decades and by the 1990s stood at 30%, while union recognition was restricted to less than 50% of workplaces. In contrast, Unite now has over 1 million members.

Since the Labour government was elected in 1997, several pieces of new legislation have opened the door to increased union membership in the past decade.

These include:

• Employment Relations Act 1999 - promoted partnerships at work and gave an independent trade union a new right to demand recognition by an employer, leading to an increase in the number of employees whose terms and conditions are covered by collective bargaining;
• Employment Relations Act 2004 - introduced a union modernisation fund which provides substantial grants to individual trade unions to assist them in adapting to the changed circumstances of the modern industrial relations world. Also introduced changes to conduct required of employers and unions where they are told there is to be a ballot for recognition or de-recognition - S. 10, unfair practices in relation to recognition ballots;
• Information and Consultation of Employees Regulations 2004 - established general framework for information and consultation;
• Occupational and Personal Pension Scheme (Consultation by Employers) Regulations 2006 - require employers to consult the workforce before changes to pension schemes take effect; and
• Section 226A TULRCA - union must provide specific list of information to employer if it is to be granted statutory immunity (information on ballot for industrial action).

So what steps should employers and managers take when making major decisions to keep unions on their side? Lisa Patmore had this advice for Workplace Law:

"Comply, as far as possible, with any collective agreement. Whilst the collective agreement may not be legally binding, it establishes the framework for the relationship with the union and a breach of it is likely to damage that relationship.

"Engage with the union as soon as possible. Whilst there may be no legal obligation to do this, briefing the union of the proposals at any early stage may make them feel more involved and may mean they work with the company rather than against it.

"Comply with legal and good practice requirements. Whilst complying with legal requirements will reduce the risk of any claim being brought, and succeeding, employers often find that trade unions and/or employees are less likely to make a claim, in the first place, if they believe they have been treated fairly. It's often listening to, clarifying and trying to allay any concerns that helps to create that feeling of fairness.

"Be realistic. Whenever business decisions are made that affect employees, the union, overall, will be looking to protect its members and to demonstrate this to them. A business which is looking to make changes should bear this in mind and try to draw advantages from it.

"Communicate with the employees. It is better for an employer to keep its employees informed of what is proposed rather than risk them believing unfounded rumours."