Guidance

Implementing the Remaining Provisions of the Trade Union Act 2016 - April 2022

Guidance on how the Certification Officer Intends to use these Powers

• From: Certification Officer
• Published: 1 April 2022

Applies to England, Scotland and Wales

Introduction

The remaining provisions of the Trade Union Act 2016 have been implemented from 1 April 2022. These give the Certification Officer powers to:

• Require trade unions and employers’ associations to pay a levy to fund the costs of some of her functions.

• Consider whether an organisation has breached statutory responsibilities set out in the Trade Union and Labour Relations (Consolidation) Act 1992, without having first received a complaint from a member of that organisation or another eligible party.

• Investigate allegations that an organisation has breached statutory responsibilities, by requiring the organisation to provide her with specific documentation and/or by appointing an inspector to investigate the matter on her behalf.

• Where she finds that an organisation has breached its statutory responsibilities and/or its rules, to impose a financial penalty order or conditional financial penalty order on that organisation.

• Enforce any order that she makes.

The Trade Union and Labour Relations (Consolidation) Act 1992, as amended by the Trade Union Act 2016, provides the definitive description of these powers. This guidance explains how the Certification Officer intends to apply these powers in practice.

Contact us

If you have any questions about these new powers or this guidance, please contact us. Telephone: 0330 109 3602 Email: info@certoffice.org  

Guidance on Implementing and Administering the Levy

Introduction

From 1 April 2022, trade unions and employers’ associations will be required to pay a levy to contribute to the costs of the Certification Officer incurred in the course of her duties.

The Trade Union Act 2016 enables the Certification Officer to collect the levy. There are safeguards which prevent the current, or a future Certification Officer, from using the levy to raise any additional revenue, over and above her costs. In particular, the Trade Union Act 2016 requires the Certification Officer to aim to ensure that over any period of three years, the levy does not exceed her total relevant costs for that period. All funds raised through the levy will be paid into the government’s consolidated fund; they will not be used to supplement the Certification Officer’s budget.

The government has prepared detailed regulations which set out how the Certification Officer must determine the levy amount, issue a levy notice and recover the levy. The regulations provide a definitive guide to those processes. This guidance explains how the Certification Officer intends to administer the levy.

Key Dates for Trade Unions and Employers’ Association

• The levy has come into force from 1 April 2022, and the first levy period began on that date; the first levy period ends on 31 March 2023.

• In November 2022, the Certification Officer will issue an estimate of the likely levy charge for the first levy period.

• In March 2023, the Certification Officer will formally determine the levy and issue levy notices to organisations.

• The levy charge for the first levy period will fall due for payment in May 2023; organisations will need to ensure that they have paid the levy by 31 May 2023.

Calculating Relevant Costs

The 2016 Act enables the Certification Officer to recover some of her costs through the levy and sets out which costs she can and cannot include when calculating the levy.

She may recover the following costs:

• Staff salaries and pensions, including the costs of the Certification Officer, any Assistant Certification Officers and her wider team.

• Costs incurred by Acas (the Advisory, Conciliation and Arbitration Service) in providing accommodation, equipment, including IT equipment, and facilities, including finance and human resources support.

• Any costs associated with delivering the statutory duties themselves, including the cost of holding formal hearings to determine complaints.

She may not recover costs associated with:

• External legal advice provided to the Certification Officer by the Government Legal Department, any other legal costs such as barristers’ fees, and legal costs of any other party.

• Appointing inspectors, who are not members of her staff, to investigate matters, including allegations of financial irregularities and breaches of statute.

• Processing applications to be added to the list of trade unions or employers’ associations and applications for certificates of independence made by trade unions. Fees for these services will be retained, payable by the relevant trade union or employers’ association.

Before the end of each levy period she will consult with trade unions and employers’ associations on her business plan for the following levy period. After the end of each levy period she will publish details of all her costs in her annual report, including an explanation of how they have been incurred and whether they have been recovered through the levy.

Determining the Levy Amount

The regulations provide detailed instructions about how the Certification Officer should calculate the levy, and she will follow these. In calculating the levy, she will take into account both that the majority of her costs are incurred in providing services to non-federated trade unions, and that no organisation will pay more than 2.5% of its income toward the levy.

The Certification Officer will use the ‘total income’ figure quoted on an organisation’s most recent annual return form when determining the 2.5% threshold described above. Where no annual return exists, the Certification Officer may ask the organisation to report its income to her. If an organisation fails to provide this information, she may estimate its income. As a result, it is essential that every organisation submits its annual return on time.

It is possible that the Certification Officer will need to estimate her costs for the purposes of charging the levy. Where she has overestimated her costs, she will take that into account when determining the next year’s levy, ensuring that the levy raised does not exceed her total costs in any three-year period.

Details of how the levy has been determined will be published. The Certification Officer will also explain how she has determined the levy in her annual report, including details of the rates at which each organisation has paid the levy. She will also explain to each organisation, in the levy notice, how the levy has been calculated for that organisation.

Issuing the Levy Notice

The Certification Officer will issue an estimate of the levy in November each year. This will give organisations notice of the charge they are likely to incur at the end of the levy period.

The Certification Officer will aim to determine the levy and issue levy notices in March of the year to which the levy relates. For the first levy period, from April 2022, the levy will be determined, and levy notices issued, in March 2023. This is to try and ensure that the total costs recovered through the levy are as close as possible to the actual costs incurred by the Certification Officer in each levy period.

The levy notice will include details of the amount an organisation must pay, the date by which that amount must be paid and how the levy must be paid. The Certification Officer will require organisations to pay the levy by the end of May in the year following the levy period. For the first levy period, from April 2022, the levy falls due by 31 May 2023. The Certification Officer requires each organisation to pay the total levy in a single instalment by this date.

On receipt of the levy notice, if an organisation wishes to dispute the amount it has been charged, it should contact the Certification Officer with an explanation as to why it believes it should not be paying that amount. The Certification Officer will review the amount and if she agrees with the organisation, she will withdraw the original notice and issue a new notice with the correct amount. If an organisation believes that it cannot pay the levy for any reason, it should contact the Certification Officer with an explanation as to why it cannot pay.

Recovering the Levy

If an organisation fails to pay the levy by the date specified in the levy notice, then the amount is recoverable by the Certification Officer as a debt. Acas will recover any debts on behalf of the Certification Officer. Where a debt recovery agency is engaged, the costs associated with recovery will be added to the levy charge for the organisation that is in default.

Guidance on the Power to Act without Application and Investigatory Powers

Introduction

From 1 April 2022, the Certification Officer will have powers to consider whether a union or employers’ association has breached certain parts of the Trade Union and Labour Relations (Consolidation) Act 1992, without having received a complaint from a union member or other eligible party. She will also have the power to appoint an inspector to investigate alleged breaches of the 1992 Act.

These powers are set out in schedules two and three the Trade Union Act 2016 which amends the Trade Union and Labour Relations (Consolidation) Act 1992. This guidance should be read in conjunction with the Act and is intended to explain how the Certification Officer will use those powers. There may be circumstances where she takes a different approach, but she will always explain why it is necessary to do so and will keep this guidance under review so that it remains up to date.

It is important to note that the Certification Officer will be able to use these powers only where the suspected breach occurred on or after 1 April 2022.

General Principles

The Certification Officer aims to deliver her statutory functions, including these powers, in a way that is fair, impartial and independent. In considering alleged breaches of statute she will give particular attention to:

Proportionality – considering whether the impact, including cost, of taking action exceeds the benefits that might be derived as a result of that action.

Accountability – explaining the reasons for her decisions and ensuring that decisions made following a hearing are available to the public.

Consistency – ensuring that there is a consistent approach to decision making.

Transparency – ensuring that all parties to a decision are fully informed of that decision and the reasons for it.

Targeting – ensuring that any action, including investigation and enforcement, is focused on the risk arising from the issue being considered.

Procedure where a Complaint has Been Made

Union members and other eligible parties, for instance, candidates in a statutory elections, retain the right to bring a complaint to the Certification Officer. She will continue to handle these complaints in line with her existing processes. This procedure will not apply where a complaint has been raised with the Certification Officer by a third party who is not eligible to do so under the 1992 Act; because the legislation does not allow them to make a complaint, the matter will be dealt with as though no complaint has been made under the alternative procedure described below.

Where a complaint is made, her team will explore whether it falls within her jurisdiction, whether it has been made in time, and whether the relevant provision of the 1992 Act can have been breached in the way the complainant alleges. Where these three tests are met, the Certification Officer’s team will seek a response from the union before the Certification Officer considers whether a hearing is required to determine the complaint. Where she has determined the complaint, following a hearing, or on paper where the parties agree, she will issue a declaration and, where it is appropriate to do so, an enforcement order. Both parties have a right to appeal her final decision with the Employment Appeals Tribunal.

Throughout this process the party who has brought the complaint is responsible for preparing and presenting their case to the Certification Officer. They must provide arguments and evidence which demonstrate that it is more likely than not that the alleged breach has occurred.

The Certification Officer will not routinely appoint an inspector to investigate allegations that are brought to her by a complainant, even where she has the power to do so. In most cases, the complainant will continue to provide the evidence required to prove their complaint, as is currently the case.

Similarly, she will not routinely engage her powers to act without application where a complainant withdraws their complaint. There may be circumstances, however, where an alleged breach is so significant that she believes it necessary to act. She will always explain her reasons for doing so.

Powers to Act Without Application

From April 2022, the Certification Officer will be able to consider whether a trade union has breached sections 45B, 71, 79, 82, 103 and chapter IV of the 1992 Act even if she has not received a complaint.

These sections relate to the following statutory duties placed on trade unions:

• Section 45B requires that positions in unions are not held by certain offenders
• Section 71 places restrictions on use of union funds for political objects
• Section 79 relates to the requirement for unions to adhere to political fund ballot rules
• Section 82 requires unions to adhere to their political fund rules
• Section 103 dictates how ballots on amalgamations or transfers should be conducted
• Chapter IV relates to elections for certain positions within trade unions

Employers’ associations are also subject to the requirements of sections 71, 79, 82 and 103.

Procedure where No Complaint has been Made

Where no complaint has been received by the Certification Officer, but she is in receipt of information which suggests that an organisation may have breached one or more of the provisions set out above, she may consider whether a breach has occurred. In doing so, she will adopt a different procedure to that described above, where a complaint has been received. Most importantly, there will be no complainant and any party who brings relevant information to her attention has no rights in this process, and there will be no need for a tribunal-style hearing. The Certification Officer will, therefore, adopt a process which is closer to those used in regulatory proceedings.

In dealing with these matters, the Certification Officer’s team will first review the information, ensuring that it relates to a matter which falls within her jurisdiction and has occurred on or after 1 April 2022. They will also perform a simple analysis of the quality of the information, evaluating its credibility and ensuring that there are reasonable grounds to suspect that the relevant provision of the 1992 Act can have been breached in the manner that it suggests.

On completing this analysis, if the member of the team considers that there is no case to answer then they will take no further action. If they find that there is a case to answer they will put the matter to the union for their response. Once the union’s response has been received, an initial assessment of the case will be produced for the Certification Officer, including a recommendation on how she might decide to proceed.

In some cases, the Certification Officer will be able to conclude the matter at this point. Where she considers that there is no case to answer, she will write to the union and inform them of her opinion. If she believes that the union may have breached the relevant provision of the 1992 Act, she will offer to meet with them to explain her opinion and invite their response before coming to a decision in the matter. The union may bring legal representation to any meeting; however, this will not be a formal hearing. If she decides that there has been a breach, she may consider making an enforcement order, as described above.

Where the Certification Officer decides that there has been a breach, the union may choose to lodge an appeal with the EAT. No other party can appeal her decision.

Investigatory Powers

In other, more complex cases where the Certification Officer has not been able to form an opinion on the matter, based on the information presented to her, she may direct the union to provide her with specific documentation or to authorise another person to act in this way on her behalf. She will only do this where she has good reason to do so, and where she has reason to believe that the specific documentation exists. In deciding to request documents she will consider the fact that those documents will normally be confidential to the union and take into account the principles of better regulation, set out in the introduction to this guidance. She will always explain why she believes she needs to see those documents.

She may also consider appointing an inspector to investigate the matter. Before appointing an inspector, the Certification Officer must have reasonable grounds to suspect that a union has failed to comply with a relevant statutory obligation. She will also need to consider whether it is proportionate to do so; there is likely to be a significant cost associated with appointing an inspector and this cost needs to be balanced against the risk associated with a union having failed to comply with a statutory obligation.

If the Certification Officer decides to appoint an inspector, they must make a final report in writing to her. Once she receives this report, she will share it with the union and invite their comments before making a decision in the matter.

An inspector may be a member of the Certification Officer’s team or may be an external appointment. It is likely that an external inspector will be used where a specific area of expertise is required in delivering an investigation, or where the volume of work associated with undertaking an investigation would have a detrimental impact on the delivery of other work within her office.

Guidance on Financial Penalties

Introduction

From 1 April 2022, the Certification Officer will have the power to impose financial penalties or conditional financial penalties on trade unions and employers’ associations where she finds that they have breached, or have threatened to breach, certain parts of the Trade Union and Labour Relations (Consolidation) Act 1992 and/or their rules. Each breach that she identifies may attract a penalty. This guidance sets out the process the Certification Officer intends to use in determining whether to impose a financial penalty.

Imposing a Financial Penalty

Once the Certification Officer has established that a relevant breach has occurred, she will normally follow a series of steps to determine whether to impose a financial penalty and the level of the penalty. The Certification Officer will impose a financial penalty only where she considers that it is proportionate to do so and will explain her reasons for doing so. Where she deviates from these steps, she will explain why she has done so.

Step 1 – Where the Certification Officer proposes to make a financial penalty order she will send this proposal to both parties with the decision on the breach, including the grounds for making the order.

Step 2 – The trade union or employers’ association will be invited to make written representations. In certain circumstances the Certification Officer may also invite the complainant (where there is one) an opportunity to make representations to her.

Step 3 – Once received, the written representations will be considered by the Certification Officer along with any request made by the trade union or employers’ association to make oral representations. It is important to note that the union, or EA, does not have a right to make oral representation; however, the Certification Officer will normally accept any request made for oral representation.

Step 4 – Having considered relevant representations, the Certification Officer will decide whether to make a penalty and set the size of the penalty. The financial penalty order will identify the amount to be paid, how the organisation should pay the penalty and specify the date by which the penalty must be paid.

Conditional Penalty Orders

In some circumstances, the Certification Officer may choose to make a conditional penalty order. This requires an organisation to pay a penalty unless they take action to remedy the effect of a breach. A conditional penalty order will set out the actions which must be taken and specify the time period for completing these actions. Examples of situations where the Certification Officer decides to make a conditional penalty order may include:

• Where she has ordered a union to hold a new ballot by a given date for positions covered by Chapter IV of the 1992 Act.

• Where the Certification Officer has made an order to ensure that a trade union member is allowed to inspect accounting records requested under section 30 of the 1992 Act.

Before imposing the penalty, the Certification Officer will make enquiries to ascertain whether, or to what extent, the conditional order has been complied with. If the prescribed actions have not been taken, or have not been fully taken, and a decision is taken to impose the penalty, the Certification Officer will set out her reasons for doing so. The amount of the penalty may be reduced where it appears that the actions specified in the original order have been taken to some extent, or where the actions have been taken but not by the date specified.

Aggravating and mitigating factors

Where the Certification Officer decides to impose a financial penalty, she will set the level of the penalty subject to prescribed limits (see ‘maximum penalty’, below). In reaching her decision she will also take into account any aggravating or mitigating factors. An aggravating factor is any fact or circumstance that may be considered to increase the severity of, or culpability for the breach that led to the financial penalty. A mitigating factor is a fact or circumstance that may be considered to lessen that severity or culpability. A list of possible aggravating and mitigating factors is included below:

Aggravating factors

• Evidence that the breach had a significant impact on an individual or the organisation.
• Evidence that the Union has committed similar breaches or non-compliance in the past.
• Evidence of wilful non-compliance.
• Evidence of deliberate malpractice or deliberate mal-administration.
• Evidence that a member’s complaint on the matter had not been dealt with appropriately.

Mitigating factors

• Evidence of genuine administrative error or oversight and prompt acknowledgement of this.
• Evidence of early admissions of the breach and a prompt attempt to rectify it.
• Evidence that this is the first instance of such a breach.
• Evidence of steps taken to reduce any impact/damage resulting from the breach.
• Evidence of steps taken to reduce the likelihood of a recurrence of breach.
• Evidence that an organisation has promptly and effectively addressed a member’s complaint.

There may be cases where the Certification Officer finds a breach to be particularly serious. In those cases, she may maximise the deterrent effect of the penalty to others by setting a penalty near to the highest level appropriate for the breach. An example of this would be circumstances similar to those arising in Amicus v MacMillan Publishers Ltd (UKEAT/0185/07/RN) and the approach adopted by the Employment Appeal Tribunal in that case.

Maximum Penalties

The relevant regulations prescribe the maximum penalty that the Certification Officer can impose for each type of offence. The minimum penalty, in all cases, is £200. The penalty maxima are reduced by 50% where a Union has less than 100,000 members.

Level 1 - £20,000 maximum for the breach of: * Section 45C (5A) failure by to secure positions not held by certain offenders * Section 55 (5A) failure to comply with requirements about elections for certain positions * Section 72A (5) failure to comply with restrictions on applying union’s funds in the furtherance of political objects * Section 80 (5A) failure to comply with rules as to ballots on political resolutions * Section 82 (3) failure to comply with rules as to political fund * Section 84A (5) failure to provide required information to members about contributing to political fund

Level 2 - £10,000 maximum penalty for breach of: * Section 24B (6) or 25 (5A) failure to comply with duties regarding the register of members

Level 3 - £5,000 maximum penalty for breach of: * Section 31 (2B) failure to comply with a member’s request for access to accounting records * Section 32ZC (6) failure to provide details of industrial action etc, or political expenditure, in its annual return * Section 108B (3) breach or threatened breach by a union of its rules on certain matters * Paragraph 5 (1) of Schedule A3, failure by Union or other person to comply with investigatory requirements

Where an individual has not complied with directions made under the Certification Officer’s investigatory powers there is a maximum fine of £1,000. This maximum is irrespective of the membership size of the union to which the individual belongs.

The Certification Officer has been afforded some flexibility in determining the precise penalty to be imposed. This reflects the fact that each breach will be the product of a particular set of circumstances and ensures that any penalty is proportionate within that context. Where an organisation believes that a penalty is not appropriate, it may engage the appeal process described, below.

Appeals

There is a right of appeal from the decision of the Certification Officer on financial penalties to the Employment Appeal Tribunal (EAT). Where an appeal is made, the penalty would not be payable until the date when the appeal is finally determined.

Recovery of financial penalties and enforcement

The Certification Officer has the power to recover penalties on the order of a court in England and Wales and in Scotland, as a civil debt. In the case of an appeal, no amount of penalty is recoverable until the appeal has been withdrawn or finally determined. Enforcement for non-payment of penalties will be by court action, if necessary. All funds raised through the application of financial penalties will be paid into the government’s consolidated fund; they will not be used to supplement the Certification Officer’s budget.

Guidance on Enforcement Powers

Overview

After the implementation of the new powers in April 2022, the Certification Officer will have the power to enforce any orders she makes in relation to the production of specific documentation or in response to a breach of statute and/or the rules of a trade union. She will seek to ensure that every relevant order she makes has been complied with in a timely manner, making enquiries with the relevant organisation and asking them to provide evidence of compliance. It will still be open to an applicant or any other person named in the relevant section of the 1992 Act to enforce orders as well.

Any organisation that has not complied with an order will need to provide an explanation as to why they have not complied. If their explanation is not satisfactory, or no explanation is forthcoming, then the Certification Officer may seek to enforce the order through the courts, where she deems it reasonable and proportionate to do so. Should the Court uphold the Certification Officer’s enforcement order, the union or employers’ association will be liable for the Certification Officer’s costs.

Scope of Enforcement Powers

The Certification Officer will have the power to enforce orders relating to:

• Section 24B and 25, enforcement orders relating to sections 24, 24ZA, 24ZB, 24ZC and 24A duties relating to trade union administration.

• Section 31, enforcement orders relating to section 30, the duty to provide access to accounting records.
• Section 45C, enforcement orders relating to the duty to secure positions not held by certain offenders.
• Section 55, enforcement orders relating to the duty to hold elections for certain positions.
• Section 72A, enforcement orders relating to restrictions on the use of funds for certain political objects.
• Section 80, enforcement orders relating to the duty to comply with ballot rules.
• Section 82, enforcement orders relating to the duty to comply with political fund rules.
• Section 108B, enforcement orders relating to the breach of certain trade union rules.
• Section 256D, financial penalty orders.

Published 1 April 2022