Home / Insights / Blog / Union Loses Landmark Outsourcing Appeal

Union Loses Landmark Outsourcing Appeal

Union Loses Landmark Outsourcing Appeal


The Independent Workers Union of Great Britain (IWGB) says it will continue “fighting to win the war” against outsourcing after losing a landmark High Court appeal over the employment rights of outsourced workers at the University of London.

The High Court decision to reject IWGB’s appeal follows on from a case heard by the Central Arbitration Committee in 2017. The IWGB took legal action to try and represent 75 security guards, post room workers, audio-visual staff, porters and receptionists at the University of London in collective bargaining with the institution.

However, the Central Arbitration Committee (CAC) rejected the workers’ rights union’s application to represent the workers, upholding the university’s argument that the workers were employees of facilities management company Cordant, which already had an agreement with the Unison trade union. The CAC further ruled that the university was not legally an employer of the outsourced workers.

Upholding the CAC’s decision in the High Court, Justice Supperstone said:

“I do not except that … [IWGB] should have a right of compulsory collective bargaining with the university, which is not the relevant workers’ employer and with whom they have no contract relationship.”

With its appeal to challenge the CAC’s decision dismissed, IWGB vowed to continue efforts to hold more organisations legally responsible as employers and put an end to “the exploitative, discriminatory and fundamentally unfair practice of outsourcing.”

Case fails to introduce ‘joint-employer’ status to English law

If successful, the trade union’s appeal would have had significant implications on the legal duties of companies across the country.

Campaigners had said they hoped to extend “the rights of the UK’s 3.3 million outsourced workers” and by extension the duties of the companies using their services by introducing the concept of a joint-employer – long recognised in US law – to English law.

The IWGB argued that the University of London should be legally held as an employer of the workers because it was “in reality” the outsourced workers’ “de facto employer” alongside Cordant. In addition, the union claimed that the refusal to allow the workers IWGB representation amounted to a violation of their human right to collective bargaining.

Under Article 11 of the European Convention on Human Rights, workers are entitled to the right to “freedom of assembly and association,” including the right “to form and to join trade unions for the protection of [their] interests.” English law however only permits workers to bargain via unions with their direct employer, meaning that outsourced workers can not take union actions directly against the organisations that hire their services.

Upholding this principle, the High Court maintained that “a de facto employer is not a known or recognised concept” in English law. The judge also held that the workers’ right to collective bargaining was not infringed by the decision, adding that the union was “free to seek voluntary collective bargaining arrangements with both Cordant and the university.”

Outsourcing deemed “efficient and beneficial”

The High Court’s decision preserves the rights of companies to use the outsourcing model to reduce their duties and costs by avoiding legal employer status. In his decision, Justice Supperstone stated that the university and other organisations were entitled to outsource work to companies “in an efficient and beneficial manner.”

One of the outsourcing model’s main design features is severing the direct employer-employee connection between a company and the workers that serve them by introducing a middle-man contractor which is legally the workers’ employer.

This arrangement allows the end company to avoid the legal responsibilities of being an employer whilst still having control over the hours, pay and conditions of workers. Due to their lack of employee rights, outsourced workers are exposed to inferior pay, holiday entitlements, sick pay and pension contributions than in-house employees.

Employment law advice for businesses

Our experienced employment solicitors provide advice on the employment aspects of all major business decisions including policies, training, dispute resolution and tribunal claims, settlement agreements, TUPE and more. For advice, please contact a member of the team on 03456 381 381 or email employment@ibblaw.co.uk.