Nigel Bryson takes a look at the ongoing problem of blacklisting “troublemakers” in the construction industry.

Background

On 23 February 2009, investigators from the Information Commissioner Office (ICO) raided the premises of the Consulting Association (CA). There they found numerous files holding personal details of 3218 construction workers. They confirmed that these files formed an illegal blacklist. As a result, they prosecuted the Director Ian Kerr and he was fined £5000 under the Data Protection Act.

From the files, the ICO was able to identify the construction companies that had established, funded and used the illegal blacklist to stop certain workers from being employed. Each of the companies the ICO identified was sent an “enforcement letter”. This required them not to use the information they had obtained.

There were 42 companies and they included many of the sector leaders: Balfour Beatty, Sir Robert McAlpine, Carillion and Skanska.

Where did the blacklist come from?

During the 1970s into the 1980s, an organisation called the Economic League held a list of up to 30,000 “trouble makers”. The League had operated since 1919. In 1993, following a Parliamentary investigation, the League closed down. However, the files related to the construction industry were kept and the CA formed in 1993 to maintain the blacklisting service. Ian Kerr had worked for the Economic League and so a number of construction companies helped set up the CA and invited Mr Kerr to direct it.

The first chair of the CA was Callum McAlpine (Sir Robert McAlpine). Companies paid an annual fee of £3000 and the association was clearly funded and supported by key companies in the construction sector. Supporting companies would ring up and provide a name. If it was on the card index of over 3000 names, Mr Kerr would state exactly what was on the card. Then a few days later, the company representative would ring back and say what they had done. Therefore, if they blocked the recruitment of the named individual, this would be recorded on the card.

When invoices paid by companies were analysed by the ICO investigators between 1996 and 2009, it was found that Sir Robert McAlpine had paid £200,000 for the illegal service. As a “search fee” for a name was £2.20, over 70,000 workers were “vetted” over 13 years, including those Sir Robert McAlpine had used on the Olympic Games site. In one quarter — the last three months of 2003, Carillion spent £6108 + VAT on name searches — equating to around 2776 names checked. However, it is likely that not all the information about the CA’s customers will have been found. This is one of the problems associated with an illegal, covert organisation — finding evidence ― although there is no doubt that the use of the illegal blacklist was extensive over the 13-year period.

Legal action

In 2008, three workers successfully claimed compensation for their dismissal and cited being on a blacklist as a contributory factor. In making the award, the tribunal recorded that: "Disgraceful though it is, the tribunal concludes that a blacklist exists in relation to certain workers in the industry in which the claimants work and that the claimants are all on that blacklist."

It was this tribunal that helped establish the ICO investigation. Once the prosecution of the ICO became public, workers who thought they might be on a blacklist, trade unions and others sought information from the Commissioner’s Office. Some individuals were able to retrieve their files, which were then used to make claims against the companies that supported the CA. It is worth reflecting on these claims.

In January 2012, Dave Smith, an electrician, had his claim heard at an Employment Tribunal. It was against Carillion plc and the subsidiary companies Carillion (JM) Ltd and Schal International Management Ltd. The claim was about being blacklisted by the companies due to his trade union activities, with health and safety being identified as a key reason, even though it was said he had "reasonably brought health and safety concerns to their attention". His 17-page “dossier” unearthed from the ICO investigation of the CA was used in evidence.

Carillion admitted that two companies it acquired had used the illegally held database and had supplied information to it. However, Smith lost the claim because he was an agency or sub-contractor worker. Carillion successfully argued that because Mr Smith was not an employee, the company was not liable. Mr Smith was allowed to appeal because the legal advice included a breach of the Human Rights Act, which came into force in the year 2000.

At a preliminary hearing in February 2013, the case was reviewed and it was ruled that it should be heard in full by a High Court judge. The point was made that the implications of the claim were “going well beyond this case or even blacklisting”, which begs the question, why?

Employee or worker?

In UK law, most protective laws associated with workers are held for employees. As the initial tribunal revealed, the legal protection associated with different forms of employment — other than that of an “employee” — is less. The transient nature of employment in construction and the “bogus” self-employed status of many construction workers can leave them vulnerable. However, human rights legislation applies to workers. The implication is that the Human Rights Act is not effectively implemented in UK law. Mr Smith’s legal advisors are seeking a judgment on this.

If the High Court accepts the failing of the Human Rights Act, it implies that employment protection needs to be applied to all workers, including employees, agency staff and the self-employed. This would have a significant impact on the construction sector.

In an article for Building Magazine online published on 14 March 2013, the issue of blacklisting was raised. The Construction Industry Joint Taxation Committee (JTC) represents 11 major trade federations, including the UK Contractor’s Group (UKCG) and the Civil Engineering Contractor’s Association (CECA). Liz Bridge, secretary of JTC, is quoted as saying that blacklisting is a “phenomena of disposable workforces”. The article goes on: “Bridge argues that a wider problem is that construction remains stuck with a macho and old-fashioned mindset that works against employment rights in general. ‘It is a world of dinosaur trade practices,’ she says. ‘People [in management] feel that holiday pay is still a bit of an annoyance and a surprise to them.’”

She goes on to argue that the construction industry is unlikely to reform itself, as the employment practices with the casual work provides lower taxes for workers and the companies employing them.

In a separate development, the trade union GMB is building a multi-case High Court claim against Carillion for blacklisting its members. The union claims to have over 100 members seeking damages.

While the claims will be processed over time, the construction trade union UCATT has formally agreed a change in the Construction Industry Joint Council (CIJC) agreement, which covers 500,000 workers. The agreement has been amended to include: “The CIJC does not condone any form of blacklisting by any member.”

Conclusion

It is unlikely that the issue of blacklisting will be resolved in the near future. While there is now greater protection in law against blacklisting, this is too late for those listed on the CA’s illegal database. However, as the claims proceed, it could mean that the employment practices popularly undertaken by companies in the construction sector may well have to change.

Last reviewed 26 April 2013