Trade Union (Levy Payable to the Certification Officer) Regulations 2022 — House of Lords, 2022-03-07
Topic: Labor
Martin Callanan (Conservative, Centre-right): My Lords, these regulations enact the reforms made by the Trade Union Act 2016 to the powers of the Certification Officer, the regulator of trade unions and employers’ associations. These regulations have been commented on by the Secondary Legislation Scrutiny Committee in its 25th report on grounds of policy interest Before I explain the contents of the regulations, it is important to provide the context to these reforms. Trade unions have an important role in effective industrial relations and in wider society. There is a legitimate public interest that trade unions run their affairs according to what is required of them, so it is necessary that they have a responsible and diligent regulator. The reforms in the Trade Union Act are about proportionate and effective regulation. We are bringing the powers of the Certification Officer up to date with those of comparable regulators in other sectors The Trade Union Act brings three reforms to the role. The first enhances the Certification Officer’s investigatory powers. These reforms were implemented in commencement regulations made in December 2021 and will commence in April. They are not the subject of these regulations, so I will give only a brief overview. Currently, union members may bring complaints to the Certification Officer—for example, on the conduct of elections. The Trade Union Act gives the Certification Officer the same powers to investigate all breaches that she currently has for financial matters and the register of members. This will enable her to act without having to rely on a complaint from a member. This is a wholly reasonable power for a regulator These regulations bring into effect the second and third reforms introduced under the Trade Union Act: financial penalties and a levy. We consulted separately on these reforms in 2017 and conducted a further engagement exercise on the levy last year. Unsurprisingly, trade unions made up the majority of the responses to these consultations and the further engagement exercise. I will go on to explain the measures that we have put in place to address the concerns raised The Trade Union (Power of the Certification Officer to Impose Financial Penalties) Regulations 2022 strengthen the Certification Officer’s enforcement powers by allowing her to impose financial penalties against organisations that breach their statutory obligations. Penalties will be banded into three groups, according to the severity of the obligation breached. This approach was supported during consultation. For breaches of the most important statutory obligations, including the proper conduct of union elections and political funding, the Certification Officer will be able to impose a maximum penalty of £20,000. This is in line with penalties imposed by other bodies, such as the Electoral Commission For other breaches of statutory governance requirements, including keeping the membership register up to date, the Certification Officer will be able to impose a maximum penalty of £10,000. For breaches relating to requirements to provide information or comply with investigatory requirements, or breaches of internal union rules, the maximum penalty will be £5,000. The regulations provide for a 50% reduction in the maxima for unions whose membership is under 100,000 people. In response to concerns raised in the consultation regarding the impact on small unions, we will not be charging interest for late payment of penalties. The Trade Union (Levy Payable to the Certification Officer) Regulations provide for a levy on unions and employers’ associations to fund the Certification Officer’s work. In this time of financial constraint, it is right that organisations should contribute towards a levy. This is a widely used way to fund such regulators The regulations establish a levy framework that is equitable, affordable, predictable and simple. To ensure that the levy is equitable, the Certification Officer will be able to broadly apportion the levy between the different categories of regulated organisations—that is, non-federated trade unions, federated trade unions, non-federated employers’ associations and federated employers’ associations—based on how much time she spends on each of them. To ensure the levy is affordable for all, lower-income organisations will be exempt from the levy entirely. No organisation will pay more than 2.5% of their annual income, as set out in their annual return to the Certification Officer To ensure that the levy is predictable each year, the Government will continue to fund the cost of any external inspectors, as the use and cost of these is variable. This was discussed at the time that we debated the Trade Union Bill. For the same reason, the Government will also fund the cost of any external legal advice that the Certification Officer may seek. This was not identified during the passage of the Act, but we believe it will allow for a fairer levy. Finally, to ensure the levy is simple and transparent, the Certification Officer will need to aim to ensure that income from the levy matches her expenditure over a three-year period. She will also need to explain how she calculates the amount of levy that each organisation is charged Separate regulations will abolish the majority of the Certification Officer’s existing fees, which will be subsumed into the levy. These will be made under the negative procedure, and we intend that they come into force at the same time as the levy. In response to requests by trade unions during consultation, two fees will be preserved: the fee for listing as an organisation, and the fee for a union to be granted a certificate of independence. We recognise that these are significant changes for the organisations involved, albeit that they are a clear and required implementation of the Trade Union Act 2016. That is why we announced these reforms in June last year, to allow trade unions and employers’ associations time to prepare before they are implemented in April 2022. This also allowed the Certification Officer time to put the systems in place to determine and charge the levy In conclusion, these reforms are not about constraining the ability of unions and employers’ associations to do their valuable work. These regulations will give the Certification Officer the tools that she needs to do her job as effectively as possible, and ensure that the taxpayer no longer foots the whole of a bill that unions and employers’ associations can well afford to pay in part. I commend both these regulations to the House Amendment to the Motion