In December 2017 we blogged on the case of Kostal UK Ltd v Dunkley and others. In this case, an employer’s proposal to change terms and conditions was rejected in a consultative ballot and it subsequently wrote to all employees directly saying that a failure to agree to the terms would “lead to no Christmas Bonus and no pay increase this year”. The employer argued that it did this, not to circumvent collective bargaining, but because otherwise it would run out of time to pay the Christmas Bonus. The Tribunal and EAT held that these actions were a breach of S145B of TURLCA which prohibits employers from offering employees an ‘inducement’ if, in accepting such an offer, the employee’s terms will not (or will no longer be) determined by collective agreement negotiated by or on behalf of the union.
In reaching its Judgment, the EAT said that, whilst an employer is free to make an offer directly to employees when talks with the union have broken down completely, that was not the case here and the offer was clearly made with the purpose of evading collective bargaining. It felt it did not matter that this offer had a temporary result (being a one-off direct agreement) and that collective bargaining remained in place for the future. This resulted in a substantial award being made against the employer as it was recognised that the law imposes a fixed penalty (at this time £3,800 per employee per unlawful offer).
The employer appealed and the Court of Appeal has today handed down its judgment overturning the Tribunal’s and EAT’s decisions. It held that offers made as a ‘one-off’ and not to prevent collective bargaining in the future were not caught by S145B. It said allowing this would effectively give the union a ‘veto over any direct offer to any employee concerning any term of the contract, major or minor, on any occasion’ and that this would go beyond the type of scenario that S145B was designed to protect against (i.e. the situation where offers are made with the purpose of removing the individuals from collective bargaining on a permanent basis). In this case it said that employees were not being asked to relinquish, even temporarily, their right to be represented by their union in the collective bargaining process. All that had happened was that the employer had gone direct to the employees and asked if they would agree terms on this particular occasion.
It should be noted by employers that, as recognised by the Court of Appeal, a union is not left powerless in this situation. It can of course ballot its members for industrial action as Unite did in this case.
Michael Sippitt, Chairman of Clarkslegal LLP, assisted in the drafting of S145B and said of this Judgment “Having been involved from the employer perspective in the drafting of this section, and hearing various legal opinions of others about it over the years, it is gratifying to see the clarity of this Court of Appeal judgment, which to my mind addresses very sensibly the purpose of the section.”