Amalgamated Society of Railway Servants v Osborne

Amalgamated Society of Railway Servants v Osborne [1910] AC 87 is a UK labour law case, which ruled that members of trade unions would now have to "contract in" if they wanted a portion of their salary to go to a trade union, unlike the previous system of "contracting out", in which the portion of salary was taken unless the individual explicitly stated otherwise.
Facts.
Osborne, a member of the Amalgamated Society of Railway Servants for 16 years in Walthamstow alleged that the union's creation of a political fund to support the Labour Representation Committee in elections was done irregularly in breach of union procedure. The original rules, from 1900, contained no reference to seeking Parliamentary representation. Because of the irregularity, it was argued that the donations by the union were "ultra vires" and void.
Judgment.
House of Lords.
The House of Lords held that a union’s authority was circumscribed by the union’s rules. Use of union funds for any purpose other than those enumerated in the union rules was "ultra vires".
Court of Appeal.
After bringing his action, Mr Osborne was expelled from the union. He brought a further claim that his expulsion was wrongful. The Court of Appeal held that he was wrongfully excluded. Lord Cozens-Hardy MR noted that the union was, at common law, a lawful association.
Significance.
The judgment threatened one of the Labour party's main funding sources. This was especially detrimental to the Labour Party as its supporters were generally poorer than other political parties. The two elections in 1910 saw Labour gain 40 seats and 42 seats respectively. In 1911 H. H. Asquith's government decided, for the first time, that MPs should receive a salary. (Previously, only people with savings or funding organizations behind them could become members of parliament.) David Lloyd George, the Chancellor of the Exchequer gave MPs a wage of £400 per annum, which alleviated financial problems.
The Osborne judgment was overturned in 1913 by the Trade Union Act 1913, which compromised by giving members the choice to opt out of union political funds. The Trade Disputes and Trade Unions Act 1927 required union members to opt into the political fund. The Trade Disputes and Trade Unions Act 1946 repealed the 1927 Act and again required that members opt out. Currently under TULRCA 1992 s 82, members have the right to not contribute to a political fund, not be discriminated against for it, and the right to complain to the Certification Officer.