Employers cannot bypass collective bargaining by making direct pay offers before the process is complete

Background

Where an employer recognises a trade union for collective bargaining, the law prohibits it from making offers on pay or other terms directly to union members if the sole or main purpose is to achieve the result that those terms will not be determined by a collective agreement.

In London North Eastern Railway Ltd and another v Jiwanji and others [2026] EAT 102, the respondent operated rail services and recognised three trade unions for collective bargaining over pay. The applicable collective bargaining agreement provided for negotiations through a Joint Committee but imposed no rigid structure and no formal mechanism for determining when the process had been completed.

Pay negotiations took place through five meetings in 2017. At the final meeting on 17 October 2017, the National Union of Rail, Maritime and Transport Workers (RMT) negotiator agreed to recommend the respondent's offer to members. The RMT subsequently reversed its position and balloted its members, recommending rejection. On 13 November 2017, the same day the rejection was confirmed, the respondent wrote directly to the entire workforce implementing the pay award and inviting RMT members who did not wish to accept it to opt out. The RMT negotiator immediately asked for further meetings. Negotiations did in fact resume and ultimately resulted in a collectively bargained agreement on different terms.

Around 1,250 RMT members brought claims. The employment tribunal found that the respondent had made a direct offer while there was still a realistic chance that terms would have been collectively agreed, and that the respondent's purpose in doing so was to bypass the collective bargaining process. The respondent appealed.

EAT decision

The Employment Appeal Tribunal (EAT) dismissed the appeal on both grounds.

On the first issue, the EAT held that whether there was a real possibility of reaching a collective agreement at the time the offer was made was a question of fact for the tribunal. The tribunal had been entitled to find that such a possibility existed. The collective bargaining arrangements were unstructured and flexible, in contrast with those considered in the leading case of Kostal UK Ltd v Dunkley [2021] UKSC 47, and the tribunal had relied on a range of factors, including that the parties were close to agreement, negotiations had not reached an impasse, the Joint Committee could have been reconvened, and a collective agreement was ultimately reached. The respondent could not unilaterally bring the process to an end simply because it no longer wished to participate.

On the second issue, the EAT rejected the argument that the tribunal should have treated the respondent's underlying business reasons, including the desire to pay staff before Christmas and frustration with the RMT's change of position, as its statutory purpose. The EAT held that employers will ordinarily have commercial or operational reasons for wanting to bypass collective bargaining, and that if those reasons were sufficient to displace the statutory test, the protection would rarely, if ever, apply. The tribunal was entitled to find that the respondent did not genuinely believe bargaining was complete, but rather made a business decision that it no longer wished to continue, and that this was the prohibited purpose.

Learning points for employers

This decision is a useful reminder that where a union is recognised for collective bargaining, employers must follow the agreed process through to its conclusion before making offers directly to staff. The fact that negotiations have become difficult, or that other unions have already accepted a deal, will not by itself be enough to treat the process as exhausted. Employers should also bear in mind that having a legitimate commercial reason for wanting to move quickly will not provide a defence if the real effect is to sidestep ongoing bargaining.

The case highlights the practical value of a clearly defined collective bargaining procedure with identifiable stages and a mechanism to determine when the process is complete. Where the procedure is vague or informal, it will be harder to demonstrate that bargaining was genuinely at an end before a direct offer was made. Employers who recognise trade unions should review their collective bargaining agreements to ensure they are clear on this point.

For more information or advice, please get in touch with Khadija Khatun in our Employment team.