The trade union and employers’ association levy
Information from the Certification Officer on levy eligibility, how to pay and how the levy is calculated.
Applies to England, Scotland and Wales
Eligibility
All trade unions and employers’ associations must pay an annual levy to the CO.
The levy should be no more than 2.5% of an organisation’s annual income.
Definition of a trade union
An organisation is a trade union if:
- most of the members are workers (in most cases this means that they have a UK contract of employment)
- one of the organisation’s main purposes is the collective regulation of relations between those workers and their employers
You are also a trade union if:
- most of your members are trade unions
- your organisation’s main purposes include the collective regulation of relations between workers and their employers or employers’ associations or the regulation of relations between the constituent organisations
Definition of an employers’ association
An organisation is an employers’ association if:
- most of your members are employers
- your organisation’s main purpose includes the collective regulation of relations with workers or trade unions
You are also an employers’ association if:
- most of your members are affiliated organisations
- your organisation’s main purpose includes the collective regulation of relations with workers or trade unions, or the regulation of relations between the affiliated organisations
How to pay the levy
In November each year, the CO issues an estimate of the likely levy for the current year, so that trade unions and employers’ associations know how much they are likely to have to pay.
In April the following year, the CO finalises the levy amount and issues levy notices to all eligible organisations. The notice for each organisation also includes:
- an explanation of how the CO calculated the levy for the organisation
- instructions on how and when to pay the levy
The levy must be paid by the end of May in the year the notice is issued.
Disputing the levy amount
If an organisation believes it should not have to pay the amount in the levy notice, it should contact the CO, explaining why it believes the amount is incorrect.
The CO will review the amount.
If she agrees with the organisation, she will withdraw the initial notice and issue a new one with the correct amount.
Failure to pay the levy
Any organisation that believes it is unable to pay the levy for any reason should contact the CO with an explanation.
The CO will respond to such organisations on a case-by-case basis.
Organisations that are eligible for the levy must pay it by the end of May in the year the levy was issued. If they do not, the amount becomes a debt.
The Advice, Conciliation and Abritration Service (Acas) will then recover the debt on behalf of the CO. If Acas uses a debt recovery agency, the cost will be added to the amount owed by the organisation that has failed to pay.
What the levy pays for
The levy contributes to the cost of the CO in carrying out her duties.
The CO has the legal power to recover some of her costs through the levy. She may recover:
- staff salaries and pensions, including the costs of the CO, assistant COs and other members of the team
- costs incurred by Acas in providing accommodation, equipment (including IT) and facilities such as finance and human resources support
- costs incurred by delivering the CO’s statutory duties, including holding formal hearings to deal with complaints
The CO cannot use the levy to recover the following costs:
- external legal advice provided by the Government Legal Department
- other legal costs such as barrister fees or the legal costs of any other party
- appointing external inspectors to investigate matters such as financial irregularities or breaches of statutes by trade unions or employers’ associations
- processing applications to be added to the list of trade unions or the list of employers’ associations, or for a Certificate of Independence (fees for these services are paid for by the organisation making the application)
For transparency purposes, before the end of each levy period, the CO will consult with trade unions and employers’ associations over her business plans for the next levy period. She will then publish her costs for the following period in her annual report, with an explanation of how they were incurred and whether they were recovered by the levy.
How the CO calculates the levy
Trade unions and employers’ associations must submit an annual return to the CO.
The CO uses the latest annual return to determine the 2.5% threshold for the levy, using the total income from the general fund figure provided on page 3 of the annual return. For those trade unions with a political fund, the levy is determined by adding the general fund figure to the total political fund income figure.
If an organisation has not yet submitted an annual return, the CO will ask it to report its income. If the organisation fails to provide a figure, the CO can estimate the income.
The CO has a legal obligation to ensure that over any 3 years the levy does not exceed any relevant costs. Therefore, if the CO overestimates her costs for any year, she will take that into consideration when calculating the next year’s levy.
Funds raised by the levy are paid into the government’s consolidated fund. They are not used to supplement the CO’s budget.