It is unlawful for an employer to make an offer to a union member if the purpose of making the offer is that the terms of employment, or one such term, will not be or will no longer be determined by collective agreement. The right was introduced in response to the decision in Wilson v UK in 2002, which found that it was a breach of the European Convention of Human Rights for employers to be able to offer inducements to employees to persuade them to surrender their collective union representation. In Kostal UK Ltd v Dunkley the Court of Appeal had to decide whether an employer had offered an unlawful inducement when it made a direct pay offer to employees after it had failed to negotiate a pay deal with the recognised union.
Kostal UK Ltd recognised Unite for collective bargaining purposes. After pay negotiations during late 2015 failed, it wrote to all employees offering them the deal that had been rejected by Unite members in a ballot. If employees accepted the deal by 18 December they would receive a Christmas bonus and a 2% pay rise; otherwise they would not. The offer was repeated in January 2016. Unite argued that both offers were a breach of the right not to be offered an unlawful inducement and 55 union members brought tribunal claims, which succeeded in the employment tribunal and EAT.
The Court of Appeal upheld Kostal's appeal. There are two types of case in which the unlawful inducement provisions are engaged. The first is where an independent union is seeking recognition and the employer makes offers to employees with the sole or main purpose of achieving the result that the employees' terms are not determined by a collective agreement. The second is where a union is recognised and the employer makes an offer to employees whose sole or main purpose is to achieve the result that terms will no longer be determined by collective agreement.
However, the unlawful inducement provisions do not apply where an employer with a recognised union makes an offer to employees whose sole or main purpose is to achieve the result that the terms and conditions will not on one occasion be determined by collective agreement. If the unlawful inducement provisions applied to such a case, unions would effectively have a veto over any change an employer wanted to introduce, however minor. This case did not involve the mischief that Wilson addressed and Unite members had not given up their right to representation, even on a temporary basis. The employer was not motivated by hostility to trade unions and the employees' claims were dismissed.
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