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Guide to Landmark case in collective bargaining arrangement

Rebecca McGuirk

“This is a helpful decision for employers who may be trying to settle a dispute with unions or circumvent an impasse in negotiations. This case makes it clear that  a one-off agreement with employees will not be sufficient to amount to a breach of section 145B. Rebecca McGuirk, Employment Partner – Trowers Hamlyn.

A breach will take place when an employer attempts to induce an employee to permanently surrender their collective bargaining arrangements. It is only then that each of the affected employees will be able to claim a mandatory award from the Employment Tribunal, currently set at £4,193.”

The Court of Appeal has considered whether an employer’s attempt to bypass a recognised trade union by negotiating directly with individual employees amounted to unlawful inducement contrary to section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) in Kostal UK Ltd v Dunkley and ors.  In a decision that will come as a relief to employers who are bound by collective bargaining agreements, it held that a one-off direct agreement by itself is not capable of breaching section 145B as the section is only intended to make unlawful an offer to bring an end to collective bargaining.  It does not extend to an offer made to employees outside the collective bargaining mechanism.

The employer entered into a recognition agreement with Unite to establish a framework for collective bargaining.  The agreement provided that formal pay negotiations would take place annually, and that any proposed changes to terms and conditions of employment would be negotiated with the union.  When a package of pay increase, a Christmas bonus and some detrimental changes to terms and conditions was rejected in a consultative ballot the employer took the matter into its own hands.  It wrote to all employees, whether they were in the union or not, directly offering the same package, and posted a notice stating that if employees did not agree to the new terms, they would forfeit their Christmas bonus.  The employer then wrote again to the employees who had not accepted the pay proposal offering them a 4% pay increase and stating that dismissal might be a possible outcome if agreement could not be reached.  A group of employees then brought claims in the employment tribunal alleging that their rights under section 145B TULR(C)A had been infringed on two separate occasions by the letters they received.

The Court of Appeal overturned the Employment Tribunal’s and the Employment Appeal Tribunal’s decision and dismissed the claims.  It noted that the offers had been made to the whole workforce and that they would continue to be represented by Unite under the collective agreement whether they accepted their offer or not and whether they were a member of the union or not. The offer that had been made directly to the claimants did not have the ‘prohibited result’ of ceasing collective bargaining in the future.  

The fact that the result is temporary (in the sense of being a one-off direct agreement) rather than permanent meant that section 145B had not been breached.  The Court of Appeal also noted that such an interpretation did not render the union powerless. It remained open to them to ballot their members for industrial action, as Unite had done in this case.

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