As cost saving measures begin to tell on staff numbers and terms and conditions, the partnership working model between employers and the principal unions in the NHS looks set for testing times, write Beachcroft LLP partners Neil Bhan and Guy Bredenkamp.

There is increasing speculation about how much change the health unions will tolerate before raising the prospect of industrial action.

While efficiency savings, including those involving redundancies, have not yet provoked serious unrest, there has been some indication that a “line in the sand” will be drawn in front of staff pensions.

Last October’s Hutton Report (The Independent Public Service Pensions Commission’s Interim Report) noted the cost of public sector pension schemes and proposed a number of possible changes for further consideration.

In the short term, it suggested an increase in member contributions - raising employee contribution rates by 1 per cent across all the unfunded public sector pension schemes - could raise around £1bn per year.

Also in the short term, it suggested that public sector pension schemes should contract into the state second pension, which would provide a short-term saving as the extra National Insurance Contributions from employers and employees would be payable to the government.

In the longer term, it recommended changing benefit structures, with a possible change from the current final salary benefits to a career average re-valued earnings (CARE) scheme being a likely option for future accrual. However, other options, and some form of risk-sharing defined contribution arrangement, were also mentioned.

In addition, although less widely publicised, the report commented adversely on the impact of the Fair Deal for Staff Pensions policy, which protects public sector staff pension rights in outsourcing situations.

If the government decides to dilute or abolish the protection of Fair Deal, it is likely to be perceived by the unions as promoting privatisation of the NHS and a long-term erosion of staff pension benefits. The government is not expected to address this issue before the next budget, at the very earliest.

Few NHS bodies have recent experience of dealing with widespread industrial action and the prospect of facing a strike ballot will be a daunting one for most employers.

The recent high-profile dispute between British Airways and Unite has reignited the debate about the purpose and effect of the legislation which requires unions to follow very strict procedural steps before calling industrial action.

Errors in balloting for strike action and communicating the result can give employers the opportunity to prevent the industrial action by applying for a high court injunction. The courts can also restrain picketing if it is not carried out peacefully and by appropriate participants.

Most NHS employers work closely with their main unions and will rightly be reluctant to resort to the courts when faced with the prospect of industrial action. Tactically, a legal response to the threat of strike action should be a last resort. Effective staff engagement is the real key to success.

It is also important to bear in mind that an injunction is not a permanent bar on industrial action. Whilst it may buy time for an employer to prepare for the strike, it will not prevent the union from correcting any errors, re-balloting if necessary and calling the action afresh. The union may also appeal successfully against the injunction, as happened in the BA dispute.

Employers faced with industrial action will need to prepare carefully, act quickly, and make contingency plans. A priority for employers should be identifying key risk areas and assessing how they might be covered during strike action. These include the following:

  • Agency staff (including many agency bank staff) cannot lawfully be used to cover for striking staff. Internal bank staff can be called on, subject to their willingness to cross picket lines. Identify staff who can be redeployed into the key areas to maintain the service and assess their willingness to cover for striking colleagues. Managers may also need to be trained to carry out essential tasks.
  • Consider how quickly industrial action can be called. The first formal step a union must take is to send the employer a notice of ballot, followed by a sample ballot paper. From that point, protected industrial action can take place in less than three weeks.   
  • Taking urgent legal advice on receiving the notice of ballot could help you decide whether or not to use, or at least threaten to use, legal means to delay the strike. The legal and tactical issues are complex and you will need a clearly defined set of options for your board.
  • But first and foremost, decide a strategy. Is it necessary or sensible to prevent the strike by legal means? It may be better to engage directly with staff to encourage a ‘no’ vote in the ballot. Exceptional care has to be taken with staff and external communications, since emotions will be running high in view of the potential impact of strike action in the NHS.