UK: Collective Bargaining: Unlawful Inducement

Last Updated: 25 July 2019
Article by Ceri Fuller

THE FACTS

As we reported (available here), the EAT last year considered section 145B of the Trade Union Labour Relations (Consolidation) Act (TULR(C)A) for the first time. The EAT's decision, which went against the employer Kostal, upheld the employment tribunal's decision that Kostal had offered employees unlawful inducements to cease collective bargaining when it directly offered them a package of terms and conditions, going over the head of the recognised trade union. Kostal appealed to the Court of Appeal.

Section 145B prohibits employers making offers to workers who are members of a recognised trade union, if acceptance of the offer would have "the prohibited result" and the employer's sole or main purpose in making the offer is to achieve that result. The "prohibited result" is that the workers' terms of employment, or any of those terms, "will not (or will no longer) be determined by collective agreement negotiated on behalf of the union". The aim of the legislation is to prevent employers going over the head of the union with direct offers to workers in order to achieve the result that one or more terms will not be determined by collective agreement.

The recognition agreement between Unite and Kostal provided that formal pay negotiations would take place annually, and that any proposed changes to terms and conditions would be negotiated with Unite. In 2015, Unite and Kostal entered into pay negotiations for the first time. Kostal offered a 2% increase in basic pay and a lump sum Christmas bonus in return for (amongst other things) a reduction of sick pay for new joiners and a reduction in Sunday overtime. Unite felt that it could not recommend the offer made by Kostal and gave its members a "free vote" in a subsequent ballot. Only 20% of those who turned out voted to accept the proposal. Kostal was disappointed in this result and it wrote to Unite informing it that Kostal was going to write to every individual employee to offer the pay increase and changes to terms and conditions. Kostal put up posters in the workplace explaining this and then wrote to every employee, setting out the pay offer and explaining that if the offer was not accepted by 18 December, employees would not receive a Christmas bonus.

In January, Kostal wrote again to employees who had not accepted the offer, this time offering a 4% increase in basic pay if they agreed to the proposed changes in terms and conditions and threatening dismissal if they did not do so.

In response, 57 employees who were members of Unite brought employment tribunal claims against Kostal, alleging that the December letter and the January letter each constituted an unlawful inducement and therefore a breach of s145B. The tribunal upheld these claims and awarded compensation of £3,830 per employee in respect of each of the letters.

Kostal appealed to the EAT. Kostal argued that it had never intended to cease collective bargaining – indeed, a collective agreement was ultimately reached on pay and terms and conditions. The EAT dismissed the appeal. It held that, if acceptance of direct offers to workers means that at least one term of employment will, as a result, be determined by direct agreement (whenever that occurs), and not collectively (even if other terms continue to be determined collectively) that is sufficient to amount to the "prohibited act" under s145B. The fact that the result is temporary (in the sense of being a one off direct agreement following acceptance of the offer) rather than permanent does not affect this question. There is nothing in s145B that deals with the duration of the effect or requires a permanent surrender of collective bargaining in the future.
The EAT also held that the tribunal had not erred in making two financial awards to each claimant - an award in respect of the two unlawful offers made in the December and January letters respectively. They were two separate unlawful inducements, meaning separate awards could be made.

Kostal appealed to the Court of Appeal on the liability point only.

The Court of Appeal upheld the appeal. It considered the wording of the legislation, and held that the provisions should be interpreted as dealing with two types of cases only:

  1. Where an independent trade union is seeking to be recognised and the employer makes an offer whose sole or main purpose is to achieve the result that the workers' terms of employment will not be determined by a collective agreement; and

  2. Where an independent trade union is already recognised and the workers' terms of employment are determined by collective agreement negotiated by or on behalf of the union, and the employer makes an offer whose sole or main purpose is to achieve the result that the workers' terms of employment (as a whole), or one or more of those terms, will no longer be determined by collective agreement. "No longer" clearly indicates a change which takes the term or terms concerned outside the scope of collective bargaining on a permanent basis.

The court held that the type of case relevant to Kostal did not come within the scope of S145B. These are cases where an independent trade union is recognised, the workers' terms of employment are determined by a collective agreement negotiated by or on behalf of the union, and the employer makes an offer whose sole or main purpose is to achieve the result that one or more of the workers' terms of employment will not, on this one occasion, be determined by the collective agreement. The court held that the inclusion of this category of case would give a recognised trade union an effective veto over any direct offer to any employee concerning any term of the contract, major or minor, on any occasion. The court considered that it was unlikely that this was intended by Parliament. In this category of case, union members are not being asked to relinquish, even temporarily, their right to be represented by a union in the collective bargaining process. All that has happened is that the employer has gone directly to the workforce and asked them whether they will agree to a particular term on this occasion.

WHAT DOES THIS MEAN FOR EMPLOYERS?

It is possible that this case will be appealed. However, in the absence of a successful appeal, this case is authority that employers will be able to break impasses in collective negotiations by making direct offers to the workforce, on the understanding that it is only intended to resolve the current impasse rather than end collective bargaining generally or over a specific issue. So, this decision removes the "veto" that the EAT's decision had appeared to give recognised unions over employers making direct offers to employees to break a negotiating deadlock.

Kostal UK LTd v Dunkley [2019] EWCA Civ 1009 (13 June 2019)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions