Legal experts warn that industry may be hit by the same chaos as BA if workers at subcontractors take action

The construction industry could be hit by disputes similar to the one that affected BA unless it reforms subcontracts, say legal experts.

BA is estimated to have lost £30m because of the dispute at Gate Gourmet, which supplies the airline with in-flight meals. The dispute spread dramatically, stranding 100,000 travellers, when BA baggage handlers, who were not directly involved in the Gate Gourmet dispute, took unofficial action in support of the Gate Gourmet employees.

Lawyers claim that construction firms will also be vulnerable to industrial action at subcontractors unless they put in place agreements to limit their liability.

The experts say that the potential for such problems has been increased by the trend to make greater use of labour-only subcontractors supplying migrant workers.

Rebecca McGuirk, an employment associate at law firm Cobbetts, said: “BA’s situation can be transposed to construction, because of the industry’s heavy use of subcontracting. Many firms that have faced pressure to drive down prices through outsourcing could, like BA, quite innocently find themselves in a position where they are picking up the tab for someone else’s strike action, and attracting bad publicity.”

Kevin Barrow, outsourcing and staffing partner at solicitor Tarlo Lyons, said contractors needed to be more stringent when negotiating contracts.

Many other businesses could meet a fate similar to that of BA unless they tighten up their contracts

Kevin Barrow, Tarlo Lyons

He said: “Many other businesses could meet a fate similar to that of BA unless they tighten up the legal parameters that are put in place at the onset of the contract.”

The question of liability for strikes must be addressed when an outsourcing deal is agreed, according to lawyers. Simon Bates, a commercial partner at Cobbetts, said: “Very often outsourcing contracts will exclude liability for the impact of strikes if either company is worried that their own workers may strike. Companies doing this could shoot themselves in the foot if workers on both sides take action, as happened at Gate Gourmet.”

Barrow added that any problems could be intensified by Transfer of Undertakings Protection of Employment (TUPE) regulations if a dispute grew so bad that the subcontractor had to be replaced.

He said: “The probability is that any replacement contractor would inherit all of the outsourced staff under TUPE.

“The cost of doing this will obviously be included in the bid costs and so the end user will not receive competitive quotes from prospective suppliers, pushing up costs.”