The Court of Appeal has held in Kostal UK Ltd v Dunkley and ors that it is not against the law for an employer to go over the head of a union recognised for collective bargaining purposes and make an offer directly to the workforce if the employer’s aim is just to ensure that a single term is not determined by collective agreement on a one-off basis.
Thompsons was instructed by Unite the Union’s Strategic Case Unit to act on behalf of its members and are also instructed to appeal against the decision.
After a pay offer was rejected by union members in a ballot, the company wrote to all their employees making the offer directly to them and explaining that if it was not accepted by 18 December 2015 they would not receive the Christmas bonus element.
On 14 January 2016, the union wrote to the company saying that it was in breach of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). On 29 January 2016, the company wrote to those employees who had not accepted the offer, warning them that they could be dismissed, but that If they agreed to the pay offer they would receive a backdated 4 per cent pay increase.
A group of workers claimed that the letters of 10 December 2015 and 29 January 2016 constituted unlawful inducements, contrary to section 145B TULRCA.
Section 145B states that employers are prohibited from making an offer to workers of recognised trade unions if the “sole or main purpose” of that offer is to achieve the “prohibited result”. That is, that the workers' terms of employment” will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union”.
Tribunal and EAT decisions
Holding that it was not permissible for employers to abandon collective negotiation when they do not like the outcome of a ballot, the tribunal concluded that both the December 2015 and January 2016 letters constituted inducement offers which would, when accepted, have the “prohibited result”. As there had been two inducement offers, the tribunal made two awards of £3,800 to each claimant in respect of each letter.
The EAT (see weekly LELR 559) held that the point of section 145B was to prevent employers from “going over the heads of the union with direct offers to workers”, thereby avoiding a collective agreement with the union. That did not mean employers could not make offers directly to workers. They just had to be able to demonstrate that their primary purpose was not to induce workers to abandon collective bargaining.
Decision of Court of Appeal
The Court of Appeal, however, disagreed, holding that the earlier decisions would give a recognised trade union a veto over minor changes. It held that section 145B only applies in two cases.
The first is where a union is seeking to be recognised and the employer makes an offer with the aim of preventing the workers’ terms of agreement from being determined by collective agreement. The second is where the union is already recognized and the employer makes an offer with the aim of ensuring that the workers’ terms and conditions should no longer by determined by collective agreement.
Neither of these scenarios applied in this case where the employer made an offer with the aim of ensuring that one term could not, on a one-off basis, be determined by collective agreement. This did not render the union powerless as it could still ballot their members for industrial action or implement an overtime ban.
Unite are seeking permission to appeal the decision to the Supreme Court.