Unlawful offers to trade union members

The consequences of an employer making unlawful inducements to trade union members were demonstrated in the recent case of Kostal UK Limited v Mr D Dunkley & Others. It is a warning to employers that, where there is a recognised trade union, they must be able to show genuine business reasons (unconnected with collective bargaining) for approaching workers directly outside the collective bargaining process.

Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (“the Act”) prohibits an employer from making offers to members of a recognised trade union (or one seeking to be recognised), where the purpose of the offer is that the workers’ terms of employment or any of those terms, will not, or will no longer, be determined by collective agreement. The worker is not protected if he / she is the only recipient of the offer so there must be other workers (at least two) targeted by the offers.

This is a complex legal point but is easier to understand by reference to the facts of the recent case. The case is the first time that the Employment Appeal Tribunal (“EAT”) has considered this section of the law.

The case

Kostal and Unite (the employees’ recognised union) were involved in an ongoing collective negotiations process about pay. However, following Unite’s rejection of Kostal’s pay offer proposal, Kostal sent two separate offer letters directly to the workers.

A case was brought in the employment tribunal by 57 workers who alleged that that Kostal had sought to bypass the collective bargaining agreement and that the two letters infringed their rights under the Act.

The employment tribunal held that the two offers breached the workers’ rights under the Act, and awarded each employee the mandatory fixed award of (what was then) £3,800 in respect of each offer letter. This meant that Kostal had to pay penalties of more than £400,000. [Note: the penalty has now increased to £3,907 per affected employee.]

Kostal appealed to the EAT. The EAT agreed with the employment tribunal. Kostal had not exhausted the dispute resolution provisions in the union Recognition Agreement and, instead, Kostal adopted direct approaches to individual workers in a way that was unreasonable and designed to undermine Unite’s mandate. The EAT upheld the financial award to the employees.

How to avoid unlawful inducements

The EAT helpfully set out what an employer should do to avoid falling foul of this law. It said that where an employer acts reasonably and rationally and has evidence of a genuine alternative purpose, tribunals are likely to be slower to infer an unlawful purpose than in cases where the employer acts unreasonably or irrationally or has no credible alternative purpose. The EAT said if collective bargaining breaks down, to the extent that the employer has a proper purpose for making offers directly to workers, there is nothing to prevent such offers being made. What the legislation seeks to prevent is an employer going over the heads of the union with direct offers to workers, in order to achieve the result that one or more terms will not be determined by collective agreement with the union if offers are accepted. The EAT said it considers that employers who act reasonably and rationally for proper purposes and are able to demonstrate that their primary purpose in making individual offers is a genuine business purpose, retain the ability to make offers directly to their workforce without fear of contravening s145B of the Act.

The key point to note from this case is that any direct offers made to employees, where the result would be that one or more terms would not be determined by collective agreement with the relevant union, should be for a genuine business purpose unconnected with collective bargaining.

For schools, this will be particularly important to remember following an academy conversion or transfer when collective bargaining agreements may be overlooked. Schools should ensure that they follow the collective bargaining agreements and do not try to bypass the agreement.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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