HM Revenue and Customs (HMRC) have for years been in breach of thousands of its employees’ contracts by failing to deduct their trade union subscriptions directly from their pay. The High Court’s ruling to that effect is bound to send shockwaves to the heart of government.
The practice of automatically checking off union dues from employees’ pay packets pre-dated the 2005 merger of the Inland Revenue and HM Customs and Excise to form HMRC. The two predecessor bodies employed well over 100,000 civil servants at the time. In 2015, however, HMRC removed the checking-off facility.
Upholding claims brought by four long-serving HMRC employees, the Court declared that they had a contractual right to have sums deducted from their earnings and paid to their trade union, the Public and Commercial Services Union (PCSU). That conclusion arose from the historical context of relevant industrial relations and a natural reading of HMRC’s employment handbooks and policies.
There was no basis for implying a term into the employees’ contracts that would have entitled HMRC to remove the checking-off facility on giving reasonable notice. There was also no basis for asserting that the employees had, by their conduct since 2015, agreed to a variation of their contracts or that they had waived their contractual right to checking off.
In a further blow to HMRC, the Court also found that the PCSU was entitled, by virtue of the Contracts (Rights of Third Parties) Act 1999, to enforce the terms of its members’ contracts notwithstanding that it was not a party to them. That ruling opened the way for the PCSU to seek compensation for damage it sustained arising from the cancellation of checking off.