Introduction

The case of Secretary of State for the Home Department v Cox & Ors ([2023] EWCA Civ 551) addresses the enforceability of trade union check-off arrangements by third parties under the Contracts (Rights of Third Parties) Act 1999 ("the 1999 Act"). This appellate case involves three government departments—the Home Office, DEFRA, and HMRC—and their former employees who are members of the Public and Commercial Services Union ("PCS"). The core issue revolves around the termination of check-off arrangements, which previously allowed automatic deduction of union subscriptions from employees' wages.

Summary of the Judgment

The High Court initially held that the check-off arrangements were terms of the individual employees' contracts of employment. It further concluded that PCS was entitled to enforce these contractual provisions under section 1 of the 1999 Act. The government departments appealed these decisions on two main grounds:

• Employees had implicitly accepted contract variations by continuing to work post-termination of check-off arrangements.
• The contractual terms were not intended to be enforceable by PCS.

The Court of Appeal affirmed the High Court's findings on the first ground but diverged on the second. It concluded that the contractual terms were not intended to be enforceable by PCS, thereby overturning the High Court's decision on this matter.

Analysis

Precedents Cited

The Judgment extensively referenced prior cases to shape its reasoning, notably:

• Abrahall v Nottingham City Council [2018]: Established that continued employment does not unequivocally signify acceptance of contract variations.
• Jones v Associated Tunnelling Co Ltd [1981] and Solectron Scotland Ltd v Roper [2004]: Highlighted that employees' conduct might indicate acceptance of contractual changes, but such inferences are not automatic.
• Hooper v BRB [1988] and Farnsworth Ltd v Lacy [2012]: Emphasized the distinction between collective and individual contract intentions.

These precedents collectively underscored the importance of clear intention regarding contract modifications and third-party enforceability.

Legal Reasoning

The court delved into the interpretation of section 1 of the 1999 Act, which allows third parties to enforce contractual terms if the contract purports to confer a benefit on them, unless it appears that the parties did not intend such enforceability. The key points in the legal reasoning include:

• Intention of the Parties: The Court emphasized that the primary question is whether the parties to the contract intended for the term to be enforceable by the third party, PCS.
• Contextual Interpretation: Considering the check-off arrangements originated from non-binding collective agreements, the Court found no evidence that the individual contracts intended these terms to be enforceable by PCS.
• Nature of the Contractual Term: The term concerned offering a facility to employees to deduct union dues, not directly conferring rights on PCS as a benefit.

The Court concluded that, given the historical context and the nature of the contractual terms, there was no joint intention to make the check-off arrangements enforceable by PCS.

Impact

This Judgment sets a significant precedent concerning the enforceability of trade union arrangements under the 1999 Act. It clarifies that:

• Third-party enforceability requires clear intention within the contract, beyond the mere provision of a beneficial term.
• Historical origins of contractual terms (e.g., from collective agreements) do not automatically confer enforceable rights on third parties.
• The conduct of parties post-variation attempts (e.g., continued employment) does not inherently signify acceptance of contractual changes.

Future cases involving third-party rights under the 1999 Act will reference this Judgment to assess the intended enforceability of contractual terms.

Complex Concepts Simplified

Conclusion

The Court of Appeal's decision in Secretary of State for the Home Department v Cox & Ors reinforces the necessity for clear contractual intent when it comes to third-party enforceability under the Contracts (Rights of Third Parties) Act 1999. By determining that the check-off arrangements were not intended to be enforceable by PCS, the Judgment underscores the importance of explicitly addressing third-party rights within contractual agreements. This outcome not only impacts the involved government departments and PCS but also serves as a guiding framework for future disputes involving union-conferred benefits and third-party rights.