Thompsons Solicitors’ Trade Union Law Group acted for approximately 1,235 RMT members in the case, which builds on the team’s previous successes in Kostal UK Ltd v Dunkley and others and Ineos Infrastructure Grangemouth v Jones.

The case arose from pay negotiations involving Virgin Trains East Coast, TSSA, Unite and the RMT, which began in March 2017 under a collective bargaining agreement known as the “Great Northeastern Railway Limited Procedure Agreement 1”. 

During those negotiations, Virgin Trains East Coast was unable to secure RMT’s agreement to its pay proposal following a ballot of members. The employer then decided to impose the proposed pay increase and gave RMT members the option to opt out of receiving the award. 

The RMT argued that the direct offers made to its members amounted to unlawful inducements to give up collectively bargained terms. The claims were initially stayed pending the outcome in Kostal and were later heard by the Leeds Employment Tribunal in 2022. By that stage, Virgin Trains East Coast had lost the franchise to operate on the East Coast Main Line, and the affected employees had transferred to other operators, London Northeastern Railway and Hitachi Rail. 

The Leeds Employment Tribunal found that the communication to members with the opt-out was an offer to give up collectively bargained terms. It concluded that Virgin Trains East Coast had made “a unilateral business decision” to treat collective bargaining as at an end and implement the pay award, rather than a decision based on a genuine belief that the bargaining process had been exhausted. 

The tribunal also found that, when the offer was made, there remained a realistic chance that the relevant terms would have been collectively bargained. On that basis, the offer had the prohibited result required under section 145B. 

The Employment Tribunal ordered payment of £3,907 to each claimant. 

On appeal, the employer challenged both the finding that the offers had the prohibited result and the finding that Virgin Trains East Coast’s sole or main purpose was to achieve that result. The Employment Appeal Tribunal rejected those arguments and upheld the Employment Tribunal’s findings. 

The EAT confirmed that, when deciding whether direct offers have the prohibited result, the central question is whether there was a real possibility at the time the offer was made that the terms would have been determined by collective agreement. It also confirmed that this is a question of fact for the Employment Tribunal. 

In this case, the EAT held that the Employment Tribunal was entitled to find that bargaining had not been exhausted. It also noted that the fact two unions, excluding the RMT, had agreed a deal at Joint Committee did not mean negotiations with the RMT had been exhausted. 

The EAT also upheld the tribunal’s conclusion that Virgin Trains East Coast’s executive directors did not subjectively believe the collective bargaining process was exhausted. The tribunal had been entitled to find that the employer had taken a business decision not to continue collective bargaining, and that its purpose was to achieve the prohibited result. 

The decision means Virgin Trains East Coast is liable for a sum in excess of £6 million when interest is taken into account. The judgment is another significant development in the case law around section 145B and underlines the risks for employers who seek to sidestep collective bargaining arrangements and impose unagreed terms directly on workers.