The law states that employers cannot make offers to workers which, if accepted, would mean that their terms of employment would no longer be determined by collective bargaining. In Ineos Infrastructure Grangemouth v Jones and ors, the Employment Appeal Tribunal (EAT) held that employers cannot necessarily bring collective bargaining to an end by simply asserting that an offer was “final”.
The members’ union, Unite the Union, instructed Thompsons to act on their behalf.
After some protracted– and at times acrimonious - pay negotiations which took place over five months with representatives of Unite the Union, the company put forward what it described as its 'final and best' offer of a 2.8 per cent increase. When the offer was rejected, the company gave notice to terminate the collective bargaining agreements and unilaterally implemented the pay increase.
Backed by Unite, a group of union members brought claims for unlawful inducements in relation to collectively bargained terms and conditions in breach of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). This provision states that employers are prohibited from making an offer to workers of recognised trade unions if accepting it would mean that their terms of employment would no longer be determined by collective bargaining. This is known as the 'prohibited result'. However, employers are only prevented from making these offers if their 'sole or main purpose' is to achieve that 'prohibited result'.
Ineos argued that what it had put to the employees was not an offer per se, but rather a 'unilateral obligation', but even if it was an offer it would not achieve the prohibited result nor was it their intention to do so.
The tribunal held firstly that the communication sent to employees was of the nature of an offer, not a 'unilateral obligation'; secondly, that the offer had achieved the prohibited result; and thirdly, that the employer’s sole or main purpose had been to achieve that result.
Relying on the Supreme Court decision in Kostal UK Ltd v Dunkley and ors (weekly LELR 746), the company appealed, pursuing a number of arguments which included the contention that the unilateral imposition of a pay award did not constitute an 'offer' and an assertion that even if there was an offer, as it was made when collective bargaining had come to an end, there was no 'prohibited result'. In addition, as the company had genuine business reasons for making the pay award, the 'sole or main purpose' was not to achieve the 'prohibited result'. In other words, it had not acted to avoid its collective bargaining obligations.
Dismissing the appeal, the EAT held that the tribunal had asked itself the right questions and reached conclusions that it was entitled to reach.
In terms of whether an offer had been made, the company itself had clearly stated in the letter sent to employees on 5 April that it intended to “implement [the] pay increase as described in our latest offer backdated to 1st January 2017”. This language demonstrated that even the company understood it was making an offer through its communications to employees and it was clear that its intention was to implement that offer in order to vary the employees’ contractual terms with regard to pay.
In terms of whether the offer had the prohibited result, the EAT held that it would be “anti-purposive” to hold that employers could avoid their obligations under section 145B simply by stating that any particular offer was a 'final' one. Instead, the proper approach was to ascertain, objectively, whether or not negotiations were as a matter of fact at an end. In this case, given the findings of fact made by the tribunal they clearly were not.
The EAT also concluded that the tribunal had been entitled to reach a finding that the employer had acted to achieve the prohibited result. It had noted that the company had chosen not to use collective bargaining arrangements agreed with the union nor anything proposed by it and instead had chosen to terminate existing bargaining arrangements. In light of those facts, there was ample evidence of the employer’s sole or main purpose being to achieve the prohibited result.
The decision is important for a number of reasons. Significantly there is now an EAT authority that the imposition of a pay award amounts to an 'offer' for the purposes of the relevant statutory provision. Furthermore, the EAT provides important guidance on the correct approach to determine if collective bargaining arrangements are concluded.