Supreme Court held pay offer to workers bypassing collective bargaining was an unlawful inducement

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Published: 29th November 2021
Area: Corporate & Commercial

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In a case of real interest to those involved in unionised sectors of the economy, and in particular, in collective bargaining, the Supreme Court held an employer’s direct pay offer to workers, bypassing collective bargaining, was an unlawful inducement.  The court held the meaning of S.145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (“the Act”) was applicable here as bypassing collective bargaining with the recognised trade union constituted an unlawful inducement under the act.  This case highlights the need to be familiar with all relevant procedures.

What is an unlawful inducement under s145B?

An unlawful inducement is where an employer makes an offer to workers who are members of a recognised trade union to vary their terms of employment outside the collective bargaining process.

Background to the case

Kostal UK v Dunkley and others

Kostal UK Ltd recognised trade union Unite with regard to collective bargaining purposes.

Further to pay negotiations an offer was put to the Unite members in a ballot but it was not accepted.  Subsequently, the employer wrote to its employees making the offer directly to them.  The employees were advised if they did not accept, that they would not receive their Christmas bonus.

Employees then received another offer, and they were advised if an agreement could not be reached, notice may be served to terminate their employment.

Many Unite members brought a claim that their employer had breached S.145B of the act by the making of the direct offers.

What are the key points from this case?

The Supreme Court was unanimous in its conclusion that S.145B had been breached but did not agree in relation to how it should be interpreted.

The majority held that the correct interpretation was to consider if there was a real possibility that the workers’ relevant terms of employment for the period would have been determined by a new collective agreement, had the direct offer not been made and agreed.  As a result, the employer is not prevented from making an offer directly to workers, as long as the employer has first adhered to and exhausted the collective bargaining procedure.

In this case, the collective bargaining process was still in progress when the offer was made.  Therefore, the Employment Tribunal was entitled to find the offer to be an unlawful inducement and hence a contravention of the act.

The minority decision did not agree that an employer can avoid liability if the bargaining process has been exhausted. It was considered where an employer makes an offer directly to workers who are members of a trade union, and the offer would change one or more of their terms of employment if accepted, the employer would need to establish its purpose in making the offer was for a genuine business purpose.

What does this recent case highlight for employers?

This case again highlights that employers should be familiar with the relevant procedures regarding collective bargaining and beware of making direct offers to employees, unless they are sure they have exhausted those procedures, and even then should proceed with caution, and the benefit of legal advice.

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Natasha is a paralegal in our Employment Team, working within our specialist Employment/Education Team, assisting with our education clients and supporting the wider Employment Team.

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