Mergers between employers' associations
Amalgamations and transfer of engagements: how to merge two or more unincorporated employers' associations
This guide explains the statutory procedures which have to be followed in carrying out mergers between unincorporated Employers’ Associations (EAs). The contents of this guide should not be regarded as an authoritative statement of the law, and it is advisable for EAs to obtain independent legal advice.
1. Introduction
A merger between EAs will involve either a transfer of engagements or an amalgamation. It is up the EAs concerned to decide which is appropriate to their case. The differences between the two are explained below. Because of these differences this decision should be taken at an early stage in the negotiations.
Transfer of engagements
This involves the transfer of membership, property etc. from one EA (the “transferring EA”) to another (the “receiving EA”).
Amalgamation
This involves a simultaneous merging by two or more EA’s of all their membership, property etc. creating a new amalgamated association.
2. Statutory procedures
Transfers of engagements and amalgamations of unincorporated employers’ associations are governed by the Trade Union and Labour Relations (Consolidation) Act 1992 (as amended) (“the Act”) and the Trade Unions and Employers’ Associations (Amalgamations, etc.) Regulations 1975 (SI 1975 No. 536) (“the Regulations”). These provisions apply to EAs whether they are listed with the Certification Officer under the Act or not.
The merger provisions relating to trade unions contained in sections 97-108 of the Act are, with some important exceptions, applied to mergers of EAs by the terms of section 133 of the Act.
The Act and Regulations apply to all EAs in Great Britain, and all the supervisory functions set out in the Act and Regulations are ultimately vested in the Certification Officer. She is responsible for ensuring that the procedures are properly carried out.
You should inform the Certification Office as soon as the EAs are in a position to take practical steps towards a merger. You must allow sufficient time for the completion of the process. For EAs with political fund resolutions in force, a transfer of engagements or an amalgamation will have particular implications for the operation of the political fund. These should be considered in the preliminary stages of a merger. You can seek further clarification or information from the Certification Office.
3. Northern Ireland
The merger provisions of the Act do not extend to EAs headquartered in Northern Ireland, but the Act does apply with certain modifications to a transfer of engagements or amalgamation between a Northern Irish EA and an EA in Great Britain. Such a transfer or amalgamation will not be effective under the law of England and Wales or of Scotland unless the instrument has been registered with the Certification Officer under the Act. Registered or unregistered EAs headquartered in Northern Ireland who intend to enter into a merger should contact the Northern Ireland Certification Officer for guidance.
4. Transfer of engagements
This involves the transfer of membership, property, funds, etc from one EA (“the transferring EA”) to another (“the receiving EA”) on the terms set out in an instrument of transfer. When the transfer takes effect the transferring union ceases to exist. If it was listed under the Act its name will be removed from the list. The receiving EA, however, continues in being with its legal identity unchanged. A transfer needs a favourable vote by the members of the transferring EA only.
Process
The EAs should agree the terms of the transfer before beginning the formal transfer of engagements. Once those have been agreed, the EAs must undertake the following: -
i. Draft the Instrument of Transfer and a Notice to Members of the transferring EA.
ii. Seek informal approval from the Certification Officer of the Instrument of Transfer and Notice to Members.
iii. Once informal approval has been given apply for formal approval of the Instrument of Transfer and the Notice to Members, including the appropriate forms and the current rules of both EAs and the applicable statutory fees. Details of the statutory fee can be obtained from the Certification Officer’s website.
iv. Once approved by the Certification Officer, the transferring EA must issue the approved Notice to Members at least seven days before voting in the confirmatory ballot is due to begin.
v. If the vote is in favour, the receiving association should proceed with making any necessary rule changes to facilitate the transfer.
vi. The EA can then apply to register the Instrument of Transfer with the Certification Officer.
vii. The Certification Officer will register the Instrument of Transfer six weeks after she receives this application, provided that she has not received a complaint from a member of the transferring association. If a complaint is received the Certification Officer must determine the complaint before registering the instrument.
The Instrument of Transfer
The Instrument of Transfer sets out the terms of the transfer which have been agreed between the governing bodies of the merging EAs. Details of information that must be included in an Instrument of Transfer is included at Appendix A. It must be formally approved by the Certification Officer before members of the transferring association vote on it. It cannot take effect until a resolution approving it has been passed by the members of the transferring EA and the instrument has been registered with the Certification Officer.
Notice to Members
The transferring EA must prepare a Notice, explaining to the proposed transfer to its members, which must also be approved by the Certification Officer. This notice must either set out the instrument of transfer in full or “give a sufficient account of it to enable those receiving the notice to form a reasonable judgement of the main effects of the proposed transfer”. In practice it is almost always simpler if the first option is followed and the full text of the instrument is attached to and forms part of the notice. If the notice does not set out the instrument in full, it must state where a copy of the full instrument may be inspected by those receiving the notice.
The Notice must state when voting will begin and end. There is no minimum period voting, but the law does require that every member of the transferring association must be equally entitled to vote. The period will, therefore, to some extent depend on the arrangements made for the return of voting papers and the geographical location of members. A model “Notice to Members” for use in a transfer of engagements is reproduced at Appendix B. The “Notice to Members” may contain additional information but must not contain any statement which makes a recommendation or expresses an opinion about the proposed transfer.
Applying to the Certification Officer for Approval of a Transfer
The transferring association should send a draft Instrument of Transfer, draft Notice to Members and the current rules of the union to the Certification Officer at least nine weeks before the proposed date on which voting is to commence for Informal Approval. The Certification Officer will give informal approval of these documents once she is satisfied that the legal requirements have been met. She will also provide the EA with the necessary forms for applying for formal approval.
The transferring association should send two original copies of the Instrument of Transfer and Notice to Members for Formal Approval by the Certification Officer along with the completed forms and payment of the relevant statutory fees. The Certification Officer will return one copy of the Instrument of Transfer and Notice endorsed ‘Approved’.
It is essential that formal approval is obtained well in advance of the proposed voting period because the approved notice must reach members not less than seven days before voting is to begin.
Voting
A resolution approving an Instrument of Transfer must be passed on a ballot of the members of the association, and every person who is entitled to vote in the ballot must be allowed to vote without interference or constraint. Voting must be in accordance with Section 100(2), 100B and 100C(1) and (3)(a) of the 1992 Act. Every person who is entitled to vote in the ballot must, as far as is reasonably possible, be given a fair opportunity to vote; and be allowed to vote without interference or constraint.
Altering the rules of the receiving employers’ association
The receiving EA may need to alter its rules in order to give effect to the terms of the instrument. For example, the instrument may provide that the existing contributions and benefits of members of the transferring association, or some of them, are to be preserved after the transfer, or that the members of the transferring association are to have special rights of representation within the receiving EA.
Section 102 of the Act enables the governing body of the receiving EA to alter its rules by memorandum in writing so far as is necessary to give effect to the provisions in the Instrument of Transfer. This rule-making power applies in all circumstances notwithstanding anything in the receiving association’s rules, unless the EA’s rules expressly provide that section 102 is not to apply. An alteration of rules made under section 102 will not take effect unless or until the Instrument of Transfer takes effect. The effect of proposed alterations must be explained in the Instrument of Transfer. The Certification Officer must also be satisfied that the receiving EA’s rules conform with the terms of the Instrument of Transfer.
Registration of the Instrument of Transfer
When the resolution approving the Instrument of Transfer has been passed by a ballot of the members of the transferring EA, an application must be made for the registration of the instrument with the Certification Officer. The application should be made on form CO 10 which must be signed by three members of the executive and the general secretary of both the receiving and transferring EAs, accompanied by:
i. Two copies of the Instrument of Transfer, one of which must be the original copy endorsed as approved by the Certification Officer;
ii. Two copies of any amendments to the rules of the receiving EA adopted since the date of application for approval of the instrument;
iii. Evidence that such amendments have been properly made (e.g. a minute of the relevant rules revision meeting/conference or a copy of the written memorandum made in accordance with section 102(1) of the 1992 Act);
iv. A statutory declaration on form CO 11 by the Secretary of the transferring EA;
v. A statutory declaration on form CO 12 by the Secretary of the receiving EA.
The Certification Office will supply copies of forms CO 10, 11 and 12, at the time the Notice to Members is approved.
The Certification Officer cannot register the Instrument of Transfer earlier than six weeks after the application for registration is sent to her. Before or during those six weeks a member of the transferring EA may submit a complaint that sections 99, 100(2), 100B and 100C(3)(a), or any rules regarding the passing of the resolution have not been complied with. If the Certification Officer receives such a complaint the instrument cannot be registered until the complaint process has concluded.
After registering the instrument, the Certification Officer will return one copy endorsed ‘Registered’ to the receiving association.
Action after registration
If the name of the transferring EA is on the list of EAs maintained by the Certification Officer, then, as soon as the transfer takes effect, the Certification Officer will remove it from the list.
A final annual return detailing the EA’s finances and other resources will be required to be submitted on behalf of the transferring EA covering the period up to the date on which the transfer took effect. Membership and funds will subsequently be accounted for within the annual return of the receiving EA.
5. Amalgamation
This involves the simultaneous merging by two or more EAs of all their membership, property, funds etc. on the terms set out in an instrument of amalgamation creating a new EA with new rules. When the amalgamation taking effect, all the amalgamating EAs cease to exist. If any of them were listed under the Act, their names will be removed from the list. If all of the EAs were listed, the name of the new EA will automatically be added to the list. An amalgamation needs a favourable vote by the members of each of the amalgamating EAs.
Process
The EAs should agree the terms of the transfer before beginning the formal transfer of engagements. Once those have been agreed, the EAs must undertake the following: -
i. Draft the Instrument of Amalgamation and Notice to Members for all of the EAs entering into the amalgamation.
ii. Seek informal approval from the Certification Officer of the Instrument of Amalgamation and the Notice to Members.
iii. Once informal approval has been granted, apply for formal approval of the Instrument of Amalgamation and the Notice to Members, including the appropriate forms and the current rules of the associations and the applicable statutory fees. Details of the statutory fees can be obtained from the Certification Officer’s website.
iv. Once approved by the Certification Officer, all of the relevant EAs must issue the approved Notice of Amalgamation to their members at least seven days before voting in the confirmatory ballot is due to begin.
v. If the vote is in favour of amalgamation, then all the relevant EAs should make any necessary rule changes to facilitate the amalgamation.
vi. The new EA can then apply to register the Instrument of Amalgamation with the Certification Officer.
vii. The Certification Officer will register the Instrument of Amalgamation six weeks after she receives the application to register, provided that she has not received a complaint from a member of any of the relevant EAs. If a complaint is received, then the Certification Officer must determine the complaint before registering the instrument.
The Instrument of Amalgamation
The Instrument of Amalgamation sets out the terms of the amalgamation which have been agreed between the governing bodies of the amalgamating EAs. The Instrument cannot take effect until a resolution approving it has been passed by the members of the amalgamating EAs and the Instrument has been registered by the Certification Officer. If the amalgamation takes place, it will be governed by the Instrument and the rights of the amalgamating EAs’ members will depend on those terms.
The Certification Officer cannot approve the draft Instrument unless it complies with the 1975 Regulations. The Instrument may cover other matters which have been agreed between the amalgamating EAs. Appendix C sets out what the law requires to be included in an Instrument of Amalgamation.
The proposed name of the new EA must comply with sections 98(3) and 98(4) of the Act. The name of the new EA may be the same as the name of one of the amalgamating EAs.
The instrument must be formally approved by the Certification Officer before members vote on it. Details of the relevant statutory fee, to be paid upon application for formal approval of the Instrument is published on the Certification Officer website.
Notice to Members
Each EA must prepare a Notice to Members, explaining the amalgamation proposals to its members, which must also be formally approved by the Certification Officer. This Notice must either set out the Instrument of Amalgamation in full or “give a sufficient account of it to enable those receiving the notice to form a reasonable judgement of the main effects of the proposed amalgamation”. In practice it is almost always simpler if the first option is followed and the full text of the Instrument is attached to and forms part of the notice. If the notice does not set out the Instrument in full, it must state where a copy of the full Instrument may be inspected by those receiving the notice.
The Notice must state when voting will begin and end. There is no minimum period for voting, but the law does require that every member must be equally entitled to vote. The period will, therefore, to some extent depend on the arrangements made for the return of voting papers and the geographical location of members. A model “Notice to Members” for use in an amalgamation is reproduced at Appendix E. The Notice to Members may contain additional information but must not contain any statement making a recommendation or expressing an opinion about the proposed amalgamation.
Applying to the Certification Officer for Approval of an Amalgamation
The amalgamating EAs should send a draft Instrument of Amalgamation, a draft Notice to Members, and copies of the current rules of each EA to the Certification Office at least nine weeks before the proposed date on which voting is to commence for Informal Approval. The Certification Officer will give informal approval of these documents once she is satisfied that the legal requirements have been met. She will provide the necessary forms for the EAs to apply for formal approval.
Once informal approval has been obtained, the EAs should send two original copies of both the Instrument of Amalgamation and Notice to Members for Formal Approval by the Certification Officer along with the relevant completed forms and payment of the statutory fee. The Certification Officer will return one copy of both the Instrument of Amalgamation and Notice endorsed as ‘Approved’. The Notice cannot be approved before the Instrument is approved because the Instrument will either form part of the Notice or at least be summarised in it.
It is essential that formal approval is obtained well in advance of the proposed voting period because each EA is required to ensure that a copy of its approved Notice to Members reaches all members not less than seven days before voting is to begin.
Voting
A resolution approving an Instrument of Amalgamation must be passed on a ballot of the members of the all the amalgamating EAs, and every person who is entitled to vote in the ballot must be allowed to vote without interference or constraint. Voting must be in accordance with 100(2), 100B and 100C(3)(a) of the 1992 Act. Every person who is entitled to vote in the ballot must as far as reasonably be possible, be given a fair opportunity to vote; and be allowed to vote without interference or constraint.
Completion of the rules of the amalgamated employers’ association
If the resolution approving the instrument is passed by all the EAs concerned, a set of rules for the amalgamated EA must be produced. Two copies of these rules should accompany the Application for Registration of the Instrument of Amalgamation (see below) but, as the Certification Officer cannot complete this process unless the proposed rules are in conformity with the Instrument of Amalgamation, it is advisable to send any proposed rules for the examination by the Certification Office before making a formal Application for Registration of the Instrument.
Registration of the Instrument of Amalgamation
When the resolution approving the Instrument of Amalgamation has been passed by a ballot of the members of all the amalgamating EAs, an application must be made to the Certification Officer to register the Amalgamation. The application must be made on form CO 13 and must be signed by three members of the executive and the general secretary of all the associations, accompanied by:
i. A statutory declaration on form CO 14 by the Secretary of each of the EAs.
ii. Two copies of the Instrument of Amalgamation.
iii. Two copies of the proposed rules, signed by the Secretaries of each of the amalgamating EAs, one which must be the original copy endorsed as “Approved” by the Certification Officer.
The Certification Office will supply copies of forms CO 13 and 14 at the time the Notices to Members are approved.
The Certification Officer cannot register the Instrument of Amalgamation earlier than six weeks after the application for registration is sent to her. Before or during those six weeks a member of any of the EAs concerned may submit a complaint that a relevant EA has failed to comply with section 99, 100(2), 100B, 100C(1) and 100C3(a), or any rules regarding to the passing of the resolution. If the Certification Officer receives such a complaint the instrument cannot be registered until the complaint process has concluded.
After registering the Instrument, the Certification Officer will return one copy of the Instrument endorsed ‘Registered’.
Action after Registration
If the name of any of the amalgamating EAs were on the Certification Officer’s list of EAs maintained by the Certification Officer, then, as soon as the amalgamation takes effect, the Certification Officer will remove those names from the list.
A final annual return will be required to be submitted on behalf of each amalgamating EA covering the period up to the date on which the amalgamation took effect.
If each of the relevant EAs was on the list of EAs prior to the amalgamation taking place, the Certification Officer will automatically add the name of the new EA to the list. To facilitate this process the new EA must supply the Certification Officer with a copy of its rules, a list of its officers and the address of its head office, together with the statutory fee, within six weeks of the Instrument of Amalgamation taking effect.
If one or more of the relevant EAs were not on the Certification Officer’s list of EAs, then the amalgamated EA may apply for its name to be entered on the list after the Instrument of Amalgamation has been registered in the normal way.
An Annual Return for the amalgamated EA will not be due until it has been in existence for at least 12 months. The normal Annual Return cycle will then apply, with submission of a return required by 1 June each year, containing details of the previous calendar year. Detailed guidance on the submission of Annual Returns will be sent out by Certification Office.
6. Appendices and Checklist