A Supreme Court decision in Kostal UK Ltd v Dale Dunkley and others, has given the final word to litigation which has lasted over several years and which has focused on the interpretation of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”). The decision makes it clear that employers who bypass collective bargaining arrangements do so at their peril.
This decision diverts from the previous Court of Appeal decision by clarifying that the protection offered by section 145B of TULRCA applies to:
- direct offers by an employer to an employee involving the permanent surrender of the collective bargaining right; and.
- also relates to the surrender of such rights on a temporary basis.
On this basis, the Supreme Court decided that an offer of a pay deal made by Kostal directly to its employees where talks had broken down with their recognised union (Unite) did amount to an unlawful inducement. However, the Supreme Court went on to explain that where the collective bargaining process has been followed by the employer and exhausted then a direct offer may be possible (as there would be no longer be collective bargaining arrangements to bypass given that there would be no prospect of doing a deal with the union).
In this blog we take a look in more detail at the background to the case and the Supreme Court’s decision as well as focussing on some practical points for employers.
The law and the background this far
Section 145B of TULRCA prohibits employers from inducing a worker, who is a member of a recognised trade union, to bypass the collective bargaining agreement if the sole or main purpose is to achieve a ‘prohibited result’.
Before this case reached the Supreme Court, this case was heard by an Employment Tribunal and the Employment Appeal Tribunal (EAT) before being appealed to the Court of Appeal by Kostal.
The case had important implications for Kostal who were facing awards against them of over £400,000.
The Court of Appeal found in Kostal’s favour, unanimously agreeing that s.145B should not be interpreted so as to give trade unions the power to veto even the most minor changes to an employees’ terms and conditions. As such, the Court of Appeal held that s.145B did not cover a situation where an employer makes a one-off offer directly to its employees where the recognition arrangement with the union remained in place, as an employer’s purpose of bypassing the collective bargaining agreement was not automatically considered a ‘prohibited result’.
To see a more detailed description of the law and the background of this case, please refer to our previous blog post regarding the Court of Appeal decision.
Supreme Court decision
Unite the Union appealed the Court of Appeal’s decision.
Both Unite and Kostal agreed that the category of offers which would fall within the remits of s.145B(1) and (2) TULRCA would include offers which, if accepted, would require workers who are members of trade unions to relinquish their collective bargaining rights on a permanent basis.
However, the difference in the parties’ positions was that Kostal argued this was the only type of offer that would be caught within s.145B and which would therefore constitute a ‘prohibited result’ and so if the employer intended to continue to recognise the trade union in its dealings with the colleagues covered by the bargaining arrangement then there would be no breach.
The Supreme Court allowed the appeal by Unite, disagreeing with the Court of Appeal’s view that s.145B can only be contravened when inducing employees to surrender their collective bargaining rights on a permanent basis. The Supreme Court found that there was little difference in inducing employees to surrender their rights on a permanent basis, as opposed to a short period of time given that s.145B does not require any specified time period.
In making its decision, the Supreme Court focused heavily on article 11 of the European Convention on Human Rights (ECHR). Article 11 outlines the rights of individuals to join a trade union and also includes the right to be represented by that trade union during negotiations with their employer.
Whilst the decision made it clear that making pay offers directly to employers away from the negotiating table where there is a recognition agreement in place will normally be unlawful, the Supreme Court indicated that where an employer has negotiated with the trade union and has been through the different stages of their collective bargaining process without an agreement having been reached:
- there is no justification or reason within the law that prevents the employer from then making a direct offer to its employees; and
- such offer would not be inconsistent with either article 11 ECHR or s.145B TULRCA.
Practical implications of this decision
Although the Supreme Court decision emphasises the risk to employers of not respecting collective bargaining arrangements where these exist, it does at least provide some certainty. Specifically, that should an employer genuinely believe they have exhausted the collective bargaining procedure as agreed with the recognised trade union, they can then, and only then, approach employees with a direct offer without being in breach of s.145B TULRCA.
Employers should still be alive to the fact that successful claims under s.145B TULRCA can be potentially very high value, currently £4,341 per employee. Disputes relating to collective bargaining can also be very damaging to industrial relations and can drive a wedge between employers, the union and the wider workforce.
As such, we would advise employers who recognise trade unions to review their recognition agreements and ensure they don’t contain any onerous or outdated terms surrounding the different stages of the collective bargaining processes. For assistance with this review and to reduce the risk of any offers to employees who are covered by collective bargaining falling foul of s145B TULRCA please contact Joseph Shelston
This article contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.
