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I
I
Certification I
Office
for Trade Unions
& Employers’
Mr G Thomson Associations
General Secretary
National Federation of Sub-Postmasters
Evelyn House
22 Windlesham Gardens Your ref: GT/lw
Shoreham-by Sea Our ref: CO/353T/1
BN43 5AZ Date: 13 January 2014
By post and email ie
Dear Mr Thomson
Trade Union and Labour Relations (Consolidation) Act 1992
Removal of National Federation of Sub-Postmasters from the list of trade
unions
Thank you for your letter of 17 December 2013 in which you make representations to
the Certification Officer in response to my letter to you dated 21 August.
The Certification Office has now considered your representations together with all the
information before him in respect of this matter. He has determined that the National
Federation of Sub-Postmasters does not meet the definition of a trade union provided
in section 1 of the Trade Union and Labour Relations (Consolidation) Act 1992.
Accordingly, I must inform you that, pursuant to section 4(1) of the 1992 Act the
National Federation of Sub-Postmasters was removed from the list of trade unions
today, 13 January 2014.
I enclose a copy of the written decision of the Certification Officer. A copy of the
decision will appear on the Certification Officer's website in due course.
There is a right of appeal against a decision of the Certification Officer to the
Employment Appeal Tribunal (EAT), on a question of law. Any such appeal must be
lodged within 42 days of the date the written record of the Certification Officer's
decision is sent to the parties. The EAT's address is:
2-6 Salisbury Square, London EC4 BJX (telephone:
information about the EAT can be
www. justice.gov.ukitribunals/employment-appeals.
website:
Yours sincerely
! Floor, Euston Tower
tuston Road,
NWI 3I}
“GRO.
In the matter of: CO/L/1/13-14
The National Federation of Sub-Postmasters
Removal from the List of Trade Unions
Date of Decision/Removal 13 January 2014
DECISION
Pursuant to section 4 of the Trade Union Labour Relations (Consolidation) Act
1992 (“the 1992 Act’) I remove the National Federation of Sub-Postmasters
from the list of trade unions on the grounds that it does not meet the definition
of a trade union in Section 1.
REASONS
1. I take the background to this matter from the judgment of the
Employment Appeal Tribunal (EAT) in Commissioners of Inland Revenue v.
Post Office Limited (2003) IRLR 199, which I will refer to as “the Inland
Revenue case”. In that case the EAT explained that the network of post
offices in this country comprises Crown Offices, sub-post offices and
franchised post offices, which are each manned in different ways. Crown
Offices are staffed by employees of Post Office Limited while franchised
offices are operated under agreement with larger retailers, for example,
supermarkets, which provide the facility within their larger stores. Sub-post
offices, however, are operated by sub-postmasters and sub-postmistresses
(hereafter ‘sub-postmasters’), who perform their services under a contract
with the Post Office. The circumstances under which such contracts are
entered into may vary but typically a potential sub-postmaster would see an
advertisement for, or learn from friends and family of the availability of,
freehold or leasehold premises and a business — usually of a newsagent or
general store — from which their predecessor would have been acting as sub-
postmaster. Although there is no entitlement to assign or have assigned the
office of sub-postmaster, during the negotiations for acquisition, there would
be an appointment as sub-postmaster and the particulars of sale of the
premises and business would be likely to be advertised on the basis of
including reference to past revenue and/or estimated future revenue from the
continuation of the sub-post office at the premises on the basis of which the
acquisition would then be completed. In a letter to my office of 4 June 2013
the National Federation of Subpostmasters (the NFSP) set the scene as
follows, “Sub-postmasters contract with Post Office Limited to provide post
office products and services from their own private business premises, mainly
in conjunction with other retail business provision. Thus they derive income
from their general business activities in addition to remuneration derived from
Post Office Limited.”
2. The NFSP has been in existence since 1897. It has been on the list of
trade unions retained by my office since the creation of the position of
Certification Officer in 1976. According to its most recent annual return filed
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at my office, the NFSP had 7,168 members as at 31 December 2012 and net
assets of £3,623,766.
3. The status of the NFSP came to my attention during the course of my
investigations of an issue raised by a number of members who were
concerned that the NFSP was no longer independent within the meaning of
section 5 of the 1992 Act. I was given grounds to believe that the NFSP may
no longer meet the definition of a trade union in section 1 of the 1992 Act (if it
ever did so), notwithstanding the work it had done for its members over many
years. I postponed my enquiries into the independence of the NFSP pending
a resolution of this more fundamental matter.
4. Section 1 of the 1992 Act defines a trade union as follows:
“1 Meaning of “trade union”
In this Act a "trade union" means an organisation (whether temporary or
permanent) —
(a) which consists wholly or mainly of workers of one or more
descriptions and whose principal purposes include the
regulation of relations between workers of that description or
those descriptions and employers or employers' associations”
5. The status of the NFSP is called into question by the requirement that
the members of a trade union are required to be ‘workers’. This word is
defined in section 296 of the 1992 Act as follows:
“296 Meaning of “worker ” and related expressions
(1) In this Act “worker” means an individual who works, or normally
works or seeks to work —
(a) under a contract of employment, or
(b) under any other contract whereby he undertakes to do or
perform personally any work or services for another party to
the contract who is not a professional client of his, or
(c) in employment under or for the purposes of a government
department (otherwise than as a member of the naval, military
or air forces of the Crown) in so far as such employment does
not fall within paragraph (a) or (b) above.”
6. Where it appears to me that an organisation whose name is entered in
the list of Trade Unions is not a trade union, I may remove its name from the
list in accordance with section 4 of the 1992 Act. Section 4 provides as
follows:
“4 Removal of name from the list
(1) If it appears to the Certification Officer, on application made to him
or otherwise, that an organisation whose name is entered in the list of
trade unions is not a trade union, he may remove its name from the list.
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(2) He shall not do so without giving the organisation notice of his
intention and considering any representations made to him by the
organisation within such period (of not less than 28 days beginning with
the date of the notice) as may be specified in the notice.
(3) The Certification Officer shall remove the name of an organisation
from the list of trade unions if -
(a) he is requested by the organisation to do so, or
(b) he is satisfied that the organisation has ceased to exist.”
7. In the Inland Revenue case, the EAT asked itself whether the sub-
postmasters in question were employees and, if not, whether they were
workers within the relevant statutory definition. The EAT concluded that those
sub-postmasters were neither employees nor workers. As to worker status,
the EAT noted that it was common ground that the test was whether the
undertaking of the relevant personal services was the ‘dominant purpose’ of
the contract (as expounded by the Court of Appeal in Mirror Group
Newspapers v. Gunning (1986) IRLR 27 and by the House of Lords in Kelly &
Loughran v. Northern Ireland Housing Executive (1998) IRLR 593). It further
noted that even if the claimants were able to establish ‘personal services’ they
had still to succeed on a second issue; namely whether the status of the Post
Office is, by virtue of the contract, that of a client or customer of any
profession or business undertaking carried: out by the sub-postmasters. The
claimants failed at both these hurdles.
8. The status of sub-postmasters has been the subject of many judicial
decisions over the years, culminating in the Inland Revenue:case of 2003. As
noted above the EAT, in that case, decided that sub-postmasters were neither
employees nor workers. Whilst this decision may not be binding upon me, as
it was not determined under the definition of a worker in the 1992 Act, I regard
it as being highly persuasive for the following reasons. The Appeal Tribunal
determined four separate appeals that had been consolidated and therefore
dealt with the contractual and factual position of four different subpostmasters.
The division of the EAT which decided these four consolidated appeals was
chaired by the then President, Mr Justice Burton. The EAT had the benefit of
argument from two QCs and three Junior Counsel. The EAT carefully
reviewed the relevant case law back to 1980. It noted that other divisions of
the EAT had reached the conclusion that subpostmasters were neither
employees nor workers in appeals chaired by Slynn P, Wood P, Morison P,
Lord Johnston and His Honour Judge Pugsley. The EAT noted that these
different divisions of the EAT had considered the meaning of ‘worker, as
defined in what is now section 230(3) of the Employment Rights Act 1996,
section 54(3) of the National Minimum Wage Act 1998, Regulation 2(1) of the
Working Time Regulations 1998, the Race Relations Act 1976 and the
Disability Discrimination Act 1976. It also had regard to, and dealt with, two
decisions which came to a contrary conclusion, that of a VAT Tribunal in 1997
and an Employment Tribunal in Inverness in 1999.
9. On 9 July 2013 I caused a letter to be written to the NFSP which set
out my powers under section 4 of the 1992 Act and requested its views on
whether sub-postmasters are ‘workers’ as defined by section 256. The NFSP
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responded initially by a letter dated 12 August 2013. My office wrote to the
NFSP again on 29 August 2013. This letter was sent in compliance with my
duty under section 4 of the 1992 Act to give the Union notice of my intention
to remove the NFSP from the list of Trade Unions, subject to any
representations it might make by 4 October 2013. The NFSP sought an
extension of time to respond until the end of December 2013, having regard to
the importance of this matter to it. I granted an extension until 18 December.
The NFSP submitted its response dated 17 December.
10. The view of the Post Office on the status of the NFSP has been
submitted to me in various forms. In an email of 4 January 2013 the Post
Office responded to a Freedom of Information Act request from a Mr Baker. It
stated, “Sub-postmasters are not ‘workers’ for the purposes of the Trade
Union and Labour Relations (Consolidation) Act 1992 and as such the Post
Office Ltd cannot recognise the NFSP for collective bargaining purposes”. In
an email to a Mr Heslop of 10 June 2013, the Post Office stated,
“....Subpostmasters are in business on their own account and are not
obliged to provide Post Office services personally. For these reasons,
amongst others, subpostmasters are not employees of Post Office Limited
... .Post Office Limited does not recognise the NFSP under section 178 of
the 1992 Act....Post Office Limited regards the NFSP as an independent
membership organisation supporting operators of Post Office branches
across the UK and which is solely acknowledged by Post Office Limited to
represent operators. For that reason, the NFSP is the only body with
which Post Office Limited will seek to discuss and consult on matters
affecting operators, subject to any other legal or regulatory obligations ...
The majority of Subpostmasters are engaged under the ‘Standard
Subpostmasters Contract. ... Under the terms of the Subpostmasters
Contract, Post Office Limited are required to negotiate with the NFSP prior
to revising other aspects of the Remuneration Booklet... These obligations
arise out of the contract between Post Office Limited and the individual
subpostmaster, not out of any separate agreement with the NFSP”.
11. I The general view of the NFSP as to its status is evidenced by a circular
letter to colleagues issued by its General Secretary on 12 April 2013. This
states that, “According to the narrow definitions of the Trade Union and
Labour Relations (Consolidation) Act 1992, subpostmasters are not ‘workers’
and so Post Office Limited believes it is unable to recognise a trade union to
‘collectively bargain’ on their behalf...” In a similar circular of 13 May 2013
the General Secretary stated that “The NFSP is and always has been a
moderate, reasonable organisation representing self employed business
people”. As noted above, in a letter to my office of 4 June 2013 the General
Secretary stated, “subpostmasters contract with Post Office Limited to provide
post office products and services from their own private business premises,
mainly in conjunction with other retail business provision. Thus they derive
income from their general business activities in addition to remuneration
derived from Post Office Limited”.
12. By a letter dated 17 December 2013 the General Secretary of the
NFSP responded to my ‘show cause’ letter, which requested written
representations as to why the NFSP should not be removed from the list of
trade unions. He argued that the EAT’s decision in the Inland Revenue case
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turned on the circumstances of those specific individual appellants who were
not required to render personal services. He went on to argue that whilst the
contract between the Post Office and individual sub-postmasters states that
sub-postmasters are not employees and are not required to render personal
service the position in reality is quite different. He noted that the earnings of
many of his members are so low that they cannot afford to hire assistance
and are therefore effectively compelled to provide personal service. The I
General Secretary also argued that the Post Office has now impliedly
recognised the worker status of sub-postmasters by making a top up payment I
to 800 post offices so that the remuneration of those subpostmasters is I
brought up to that of the National Minimum Wage. In addition, the General I
Secretary relied upon the statutory requirement of the Post. Office to deduct I
primary class one National Insurance contributions from sub-postmasters, the I
fact that the Post Office has a criminal injuries compensation scheme which
applies equally to Post Office employees and sub-postmasters and to the fact
that the Post Office retains the right to discipline sub-postmasters for
misconduct.
13. Further representations on this matter were made to me by some of the
members who had originally raised the issue of the independence of the
NFSP. In an email dated 1 November 2013, a particular member argued that
new evidence is now available which cast doubt on whether the Inland
Revenue case would be similarly decided in the present circumstances. This I
member asserted that when someone now applies to be a sub-postmaster he
or she must provide a very detailed business plan outlining his/her proposal in
the form of a spreadsheet, including the amount of time he/she intends to
spend working in the Post Office. He also referred to a Post office Guide to
potential new subpostmasters. In the section headed “Frequently Asked
Questions’, there is a question, “Will I have to work in the business full time or
can I have a manager look after my Post Office?” The rather vague response
refers to the importance of fully participating in the day to day running of the
business and devoting an appropriate amount of time to ensure its success. It
states that each proposition will be judged on its merits. This member also
argued that personal services are now required by sub-postmasters by virtue
of them having to take compliance tests via the computers in their post offices
on the Post Office’s own Horizon computer system. Further, he relied upon
Redrow Homes (Yorkshire) Limited v. Buckborough (2009) IRLR 34.
14. The definition of a worker in section 296 of the 1992 Act requires the
identification of a contract between an individual and another party and a
‘subsequent determination of the nature of that contract. There can be no
doubt that sub-postmasters overcome the first hurdle by having a contract
with Post Office Limited. It is the nature of those contracts which falls for
consideration. In this regard, I note that the Subpostmasters Contract
supplied to me by the NFSP in August 2013 is in virtually identical terms to
that set out extensively by the EAT in the Inland Revenue case.
15. I accept the careful analysis of the EAT in the Inland Revenue case in
its decision that none of the four subpostmasters in question were employees
of the Post Office nor workers in that none of them worked under a contract
whereby they undertook to do or perform personally any work or service for
the Post Office but, even if they did, they did so by way of providing services
to a client.
16. I have therefore considered whether there has been any material
change of circumstance since the Inland Revenue decision of 2003 and
whether the NFSP satisfies the definition of a trade union in section 1 of the
1992 Act, specifically whether the NFSP ‘consists wholly or mainly of
workers”.
17. In my judgment none of the representations I have received establish
any sufficiently changed circumstances to persuade me that sub-postmasters
should now be considered workers within the relevant statutory definition.
The amount and type of payments made to sub-postmasters or statutory
deductions made from their payments are not determinative or even weighty
considerations on the present facts. Even less persuasive is the inclusion of
sub-postmasters in the criminal injury compensation scheme of the Post
Office or the reservation of certain disciplinary powers by the Post Office in its
contracts with sub-postmasters. I.am similarly not persuaded that sub-
postmasters now work under a different contractual regime by virtue of the
business plan that new applicants must present to the Post Office, having had
the opportunity of considering the response to a “Frequently Asked Question”
nor by the requirement that compliance tests must be taken via the Post
Office’s computer system. The issue as to whether the contracts between
subpostmasters and the Post Office are a sham was canvassed in the Inland
Revenue case but not pursued. On the information before me, I am unable to
reach any such conclusion.
18.. Accordingly, I conclude that the NFSP does not consist wholly or
mainly of workers, within the definition of a worker in section 296 of the 1992
Act and that therefore the NFSP does not meet the definition of a trade union
in section 1 of that Act.
19. For the above reasons and pursuant to section 4 of the 1992 Act, I
remove the NFSP from the list of trade unions that I keep under section 2 of
that Act.
David Cockburn
The Certification Officer
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