Have you checked your check-off compliance?

What is “check-off”?

“Check-off” is a system used by employers across a number of sectors whereby trade union membership payments are deducted from union members' salaries at source by their employers, and then transferred to unions. 

There is no statutory obligation for an employer to provide this service, but it is used by many public sector employers.

The new check-off rules

New legislation coming into force on 9 May 2024 will mean that “Relevant public sector employers” will not be able to operate check-off unless:

• trade unions provide employees with alternative means of paying their subscription e.g. by direct debit; and
• arrangements have been made for the union to make “reasonable payments” for the cost of making the deductions.

Who do the new rules apply to?

The regulations define relevant public sector employers in two ways. Most commonly this is by way of a generic description, but in some cases this is done by naming the organisation.

The accompanying guidance explains what all these organisations have in common: they are funded wholly or mainly from public funds, excluding those which do not routinely employ staff, are an advisory body or expert panel, are funded by a levy on a finite or discrete group, or which are predominantly commercially focused.

The generic categories of public sector employers include:

• Local Authorities;
• National Health Service;
• Maintained schools, academies and other educational institutions (including most universities);
• UK Government departments – except the Secret Intelligence Service, the Security Services and the Government Communications Headquarters

Named organisations include leading cultural institutions and arms’ length bodies. These broadly correspond to organisations that have previously had to comply with the trade union facility time legislation. If you are in any doubt whether the new rules apply to your organisation, you should check the schedule to the regulations here.

What do the changes mean?

The first new requirement stipulates that employees should be given an alternative means of paying their union subscription. It is the responsibility of the employer to ensure the trade unions offer this.

The second new requirement provides that employers must make arrangements to ensure that the trade union makes “reasonable payments” to reimburse the employer for the cost of operating the check-off system.  Payments are reasonable if the employer is satisfied that the total amount of the payment is substantially equivalent to the total cost to public funds of operating check-off.  When considering whether a payment is reasonable, the following government guidance should also be considered:

1. costs and time spent by the public sector employer in administering check-off i.e. setting up check-off arrangements where this isn’t an established mechanism, processing consent from employees to pay their union subscriptions through check-off, responding to staff queries and other administration tasks associated with the process;
2. costs associated with payroll contracts; and
3. exceptional or additional costs arising from check-off arrangements charged as a one-off payment i.e. circumstances whereby an increase in trade union fees requires additional administration, including late notice for altering the amount of membership fees payable which results in administration time to make the amendments to the deductions.

If there is no net cost to the employer for administering check off, then the union should not be charged.

How long will these changes last?

The power to make these changes comes from the Trade Union Act 2016. Should the Labour Party form the next government, it has committed to repealing that Act, which would mean an end to these new check-off requirements, as well as other recent changes to trade union legislation, especially the measures tightening the rules on industrial action ballots.