Direct pay offers to workers during collective bargaining ruled unlawful

A file marked "Collective agreement"

In late October 2021 the Supreme Court handed down judgement in the highly anticipated case of Kostal UK Ltd v Dunkley & others. This was the first time the appellate courts had considered the interpretation of “unlawful inducements,” found ins145B of the Trade Union and Labour Relations (Consolidation) Act 1992.

This legislation makes it unlawful for an employer to make an offer to trade union members, which, if accepted, would have the result of one or more terms of their employment not being, or no longer being, determined by collective bargaining. It is crucial that the employer’s sole or main purpose in making that offer was to achieve that result.

This case was brought forward by members of Unite the Union. In this case, industrial negotiations were ongoing and, prior to exhausting collective bargaining procedures in the Recognition Agreement (an agreement which names the union or unions that have rights to represent and negotiate on behalf of employees in a workplace), the employer wrote out to the members of Unite, stating that if they did not accept the offer by a certain date, they would not receive a Christmas bonus. The Supreme Court found that the employer had unlawfully induced the Unite members by making an offer to them individually which would bring their terms and conditions outwith the scope of collective bargaining.

The Supreme Court’s judgment can only be described as a huge victory for the Unite members. However not only that, it also has consequences for the wider trade union movement.

As Unite General Secretary Sharon Graham said:

“With the support of their union the workers stood firm. Now they have won an historic case that creates a legal precedent for every union member across the UK. It means that employers cannot subvert or by-pass union collective bargaining processes by offering their workforces inducements of one type of another to abandon union mandates. That is momentous.”

So what does this case really mean for trade union members and what can you do practically to enforce your collective rights?

Firstly, this case applies only to trade union members who work in workplaces where trade unions are recognised, or are seeking to be recognised, by their employer. If you are not a member of a trade union, or your union is not recognised, speak with your union officer or organiser to come together with your colleagues to gain recognition. Workers are stronger together.

Secondly, when your union is recognised, and the employer and the union are engaged in collective bargaining to discuss changes to terms and conditions of employment (this could be to do with wages, holidays, sick pay, or any other term negotiated via collective bargaining), it is unlawful for the employer to circumvent that process. For example, if the employer elects to disengage in the collective bargaining process or writes to you individually seeking to impose a change to your terms and conditions, this offer could be considered an unlawful inducement.

Thirdly, if the employer’s purpose in making that offer, was not to take the negotiation of terms and conditions out with of collective bargaining, but that it had some other genuine commercial purpose in doing so, the employer may escape liability. Employers may try and utilise this moving forward, despite it being said in passing by only two of the judges in the case.

Finally, what the case does tell us is that employers should adhere to the collective bargaining agreement that they have signed up to. Often Recognition Agreements and collective bargaining arrangements are long standing and do not have clear procedures. If this is the case in your workplace, make sure efforts are put in place to ensure the procedure is reviewed, agreed and written down. Should an employer not exhaust the collective bargaining measures before making offers directly to its employees, it could be in contravention of s145.

If you have any questions about this case or the ruling may affect your workplace, please get in touch.

Email Alice Bowman
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