Employment Law Case Update: Union Collective Bargaining

Our Employment Law team today reviews the case of Kostal UK v Dunkley and others 2021 in which the Supreme Court considered whether an employer who was engaging in pay negotiations with a recognised trade union had acted unlawfully by making an offer directly to workers before the collective bargaining process had been exhausted.

The workers bringing the claim were members of Unite, a union which was recognised by the employer, Kostal. In December 2015, Kostal made an offer to the union to increase pay by 2% and pay a 2% Christmas bonus in exchange for changes to terms regarding overtime, breaks, and sick pay. The union rejected this offer. The company then approached the workers directly with the same offer, circumventing the union. The workers were told that if the offer was not accepted they would not receive the Christmas bonus for that year. Following another unsuccessful negotiation with the union, both Kostal and Unite agreed to refer the matter to ACAS.

In January 2016, the company made another direct offer to those workers who had not yet accepted the direct offer made in December. They were informed that if agreement could not be reached their employment might be terminated.

In May 2016, workers filed a claim in the Employment Tribunal (ET) that by making an offer directly to the workers, the company had violated the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA 1992”).

The ET decided in favour of the workers and ordered the company to pay a statutory award of £3,800 to each worker for each direct offer they received. The total amount to be awarded was £421,800. The case was then appealed through the Employment Appeal Tribunal (EAT) and the Court of Appeal, all the way to the Supreme Court for the final word on this matter.

At the centre of this case was the interpretation of section 145B of TULRCA 1992 and whether the direct offers, if accepted, would achieve the “prohibited result,” i.e. that the workers’ terms of employment, would not (or would no longer) be determined by collective bargaining with the union.

The company argued that they had not infringed section 145B because the direct offers were not an inducement for the workers to completely relinquish their collective bargaining rights (either permanently or temporarily). The direct offers were a temporary arrangement while the company continued to negotiate with the union.

The majority in the Supreme Court rejected this argument, finding that 145B is infringed when an employer makes a direct offer to workers before the collective bargaining process has been exhausted. Kostal had not exhausted its collective bargaining process when it made the direct offers, as it had referred the matter to ACAS. The Supreme Court therefore upheld the workers’ claims and restored their financial awards.

However, the Supreme Court also rejected the argument that any direct offer made by an employer to its workers would be a breach of TULRCA 1992, as this would give trade unions an effective veto over any new contractual terms.

Employers may make a direct offer to their workers where they genuinely believe that the collective bargaining process has been exhausted. This includes any dispute resolution step, such as referral to ACAS. Employers with a recognised trade union should review their collective bargaining processes to ensure that the process to be followed is clear, and that they can easily determine when the process has been exhausted.

If you have any questions regarding this article, you can call our Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

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ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.