Legal risk to boycotting blacklisters

A protest at the Scottish Parliament aimed at firms which blacklisted trade unionists. Picture: Jane Barlow

Moves by public bodies to “blacklist the blacklisters” would be in breach of European Union rules, according to a Scottish law firm that has been approached for advice.

Michael McAuley, a partner at Dundas & Wilson, said blocking bids from firms for public sector contracts would be fraught with difficulty and subject to legal challenges.

The Scottish Government and some councils are considering action against the 44 firms that have been exposed for using a database of 3,213 workers confiscated in a raid by the Information Commissioner’s Office (ICO). At least one public body is thought to be on the verge of heeding calls from trade unions and adopting a wide-ranging ban against all those on the list.

McAuley said: “Whilst it may be possible for a local authority to take action against one company, the proposal by trade unions is a non-starter.”

The list was drawn up by the Consulting Association, which was closed down in 2009 after being raided by the ICO. It was largely used by firms to exclude trade union activists as well as workers who raised health and safety concerns.

Trade unions are helping members who were blacklisted to sue for compensation but say none of the firms involved has been punished. They are calling on councils and government not to award any more public work to the companies that operated the blacklist until they apologise and compensate those they damaged.

But McAuley says the European Court has made clear that, under public procurement tendering laws, state bodies are only allowed to exclude a company where there’s evidence of grave misconduct. He says that might make it possible to target the worst offenders or those that persist in using such tactics.

“It’s likely that blacklisting, if proved, could constitute grave misconduct, but that can only be done on the basis of individual companies,” he said. “The major issue would be establishing to what extent a company was involved.”

McAuley also noted that, with so many large players involved, a blanket ban would leave public bodies short of firms to carry out work, pushing up prices and forcing them to turn to foreign companies instead of local firms.

Some councils have adopted motions to exclude firms still believed to be blacklisting, but with caveats such as “where permitted by legislation”.

But Justin Bowden, national officer at the GMB union – which is campaigning for a blacklist of blacklisters – expects at least one council to announce a blanket ban soon.

The union has also sought legal advice and insists using a blacklist, even in the past, does constitute grave misconduct under EU rules.

Bowden said: “It’s an urban myth that it breaches European law to exclude companies on anything other than price. Someone will do this sooner rather than later and I think once one does others will follow very quickly.”

A Scottish Government spokesman said: “We are looking to amend our procurement processes to identify any firms wishing to bid for public contracts that have been involved in blacklisting activity and, where identified, what remedial action they have taken.

“A company’s continued participation in the bidding process will be assessed on a case-by-case basis and there can be no automatic ban.”