Trade unions' involvement in pensions
It is not uncommon for trade unions to lobby for pension reform and to support legal claims relating to pension provision. For example:
- the Fire Brigades Union is supporting claims on age, race and gender discrimination against the Government and also more generally on public sector pension reforms;
- various teaching unions have lobbied hard in relation to their members' rights to membership of the Teachers' Pension Scheme (TPS), and continue to support industrial action in cases where employers such as independent schools have looked at their options to leave the TPS;
- the British Airline Pilots Association was one of the claimants in a recent age discrimination legal challenge against the Pension Protection Fund's benefit cap; and
- UNISON is supporting the BackTo60 legal challenge against the Department for Work and Pensions (DWP) in terms of women's state pension age.
1. The basics - what is a trade union?
A trade union is an organisation that represents its members in the workplace. The typical activities of trade unions are broad and range from lobbying for better pay and conditions (including terms relating to pension provision) to political campaigning and bringing or supporting legal challenges.
The key piece of governing legislation is the Trade Union and Labour Relations (Consolidation) Act 1992 (as amended by the Trade Union Act 2016). This is often referred to as "TULR(C)A".
A trade union has most influence in a workplace when it is formally recognised by an employer. A trade union will be recognised for specific purposes. When we talk about recognition in the context of the workplace, we normally mean recognition for collective bargaining purposes. Broadly, 'collective bargaining' means discussing and negotiating the matters set out in a 'collective agreement' between the trade union and employer(s). Where such a collective agreement is in place, employers are under a duty to liaise with the trade union under the terms of the collective agreement and reach an agreed position.
Only matters set out in TULR(C)A can be the subject of a collective agreement. These matters do not extend to pension provision, although an employer can make a voluntary agreement on pensions.
Collective agreements are not normally legally enforceable, but many of the terms negotiated under a collective agreement can be incorporated into an employee's contract of employment (this is particularly the case for public sector employees) and rights under a contract of employment are legally enforceable.
2. Why are trade unions important to pensions?
If a trade union cannot negotiate in relation to pension matters, why do we need to consider and be aware of trade unions in the context of pension schemes?
We set out some reasons below and these reasons are why we recommend that whenever an employer is considering changing its pension provision, it reviews the terms of any collective agreement(s) that might be in place and considers its obligations to consult with recognised trade unions. Employers should also anticipate the likely reaction of a trade union where it is not recognised, but has members at the workplace in question.
Amending pension provision that also impacts on employees' terms and conditions of employment
Certain changes to pension provision can impact an employee's terms and conditions of employment. For example, the introduction of a new defined contribution pension arrangement when an employee's existing defined benefit arrangement is closed.
An employee's terms and conditions of employment can be the subject of a collective agreement (and public sector employment contracts in particular frequently include collectively agreed terms). If this is the case, the employer is required to engage with the trade union in relation to this change. As noted above, changes to terms and conditions that relate to pension provision will not usually fall within a collective agreement and will not strictly require negotiation with the trade unions, or trade union engagement. BUT in practice trade unions can still influence an employer's approach to making a change (see below).
Requirements to consult with employees when pensions changes are proposed
When certain amendments are being made to employees' pension provision, an employer is obliged to consult with the affected employees and any relevant trade union representatives of the affected employees. See section (3) below for further detail.
Specific rights under legislation
If a trade union is recognised, the trade union has a number of specific rights under legislation. For example, they have:
- the right to be consulted in relation to certain changes to pension provision (see section (3) below for further detail);
- the right to certain information from the employer for the purposes of collective bargaining;
- the right to information and to be consulted under TUPE (TUPE can be relevant when pensions changes are being made as a result of a TUPE transfer of employees); and
- the right to information and to be consulted under the collective consultation legislation (most relevant in large scale redundancy situations, but also when an employer proposes dismissal and re-engagement exercises which can be relevant when pensions changes are proposed).
Trade unions are influential - industrial disputes & industrial action
Although a trade union usually has no express right to negotiate pension provision with an employer, it can still cause difficulties for an employer if the trade union is unhappy with an employer's pension provision/proposals by calling for industrial action (as a workplace dispute); for example strikes, 'work to rule' and generally applying pressure on the employer.
3. Collective bargaining is different to consultation
When certain changes are made to pension benefits, an employer is obliged to undertake pensions consultation with the affected employees. With a consultation, the ultimate decision-making power remains with the employer. This is different to collective bargaining where agreement between the employer and the trade union is needed in order to make changes covered by the collective bargaining terms.
There are two different types of consultation an employer needs to consider. A minimum 60-day pensions consultation is required if certain specified changes to pension benefits are proposed. A minimum 30 or 45 day collective (redundancy) consultation is also required if the employer might dismiss 20 or more employees at the same workplace within any 90 day period (even if they subsequently re-engage the same employees on different terms), including in relation to pension changes. For both types of consultation, where there are trade union representatives who represent the affected employees, these trade union representatives must be consulted with.
Although collective agreements do not usually cover pension provision, they can include requirements relating to communicating with employees or additional obligations and timescales in relation to consulting with employees.
We would usually recommend engaging with trade union representatives early on in any consultation process to ensure as constructive dialogue as possible is facilitated, and any requirements set out in collective agreements relating to consultations are followed.
4. Engage with trade unions
Although, as explained above, a trade union cannot usually negotiate directly with an employer in relation to pension matters, employers should remain live to the role a trade union plays, either through an existing recognition agreement, or simply by virtue of certain employees being trade union members. Employers should factor this into their project planning, in particular, ensuring that whenever there is a proposed change to pension provision, the employer considers involving and engaging the trade union(s) at an early stage.
 See section 178 TULR(C)A. The position that pensions do not fall within the matters that can be the subject of collective bargaining was clarified by section 20 Employment Relations Act 2004 following UNIFI v Bank of Nigeria  IRLR 712 which indicated that pensions could be included.
 Section 181 TULR(C)A.
 The Transfer of Undertakings (Protection of Employment) Regulations 2006.
 Section 188 TULR(C)A.
 The Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (2006/349)
 Regulation 8, The Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (SI 2006/349).
 Section 188 TULR(C)A.