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Do Employers Need to Consult With Trade Unions When Changing Terms and Conditions?

on Friday, 10 September 2021.

The Employment Appeal Tribunal recently held that a claim brought by employees for unlawful inducement was brought out of time, and was therefore dismissed.

What Does the Law Say?

Where an employer recognises a trade union as having collective bargaining rights in relation to some or all of its workers then, if the employer wishes to change those workers' terms and conditions relating to pay, hours or holidays, it must negotiate those changes with the union. Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) prohibits employers from bypassing this process by making offers directly to the employees.

Specifically, TULRCA provides that such offers are prohibited if the purpose of the offer is to achieve the result that the employees terms "will not (or will no longer) be" determined by collective agreement negotiated by the union. If a worker, or the relevant union, considers that an employer has breached this requirement it can bring a claim, known as an unlawful inducement claim, within three months of the offer.  

The Claim

In the recent case of Scottish Borders Housing Association Ltd v Caldwell and others, Scottish Borders Housing Association Ltd (SB) had negotiated with a recognised trade union about amending terms for over two years, but had failed to reach agreement. Following this, on date A, SB wrote to its employees to provide them with the chance to agree to the new terms directly. Although the majority of its employees agreed to the new terms, a small minority refused and a few months later, on date B, SB wrote to those employees to inform them of their intention to impose the new terms from a given date.  

Some of the affected employees brought claims for breach of s145B of TULRCA on the basis that the imposition of the new terms amounted to unlawful inducement. Although the claims were brought within three months of date B, they were not within three months of date A. Although the Employment Tribunal initially found that the claims were in time, the EAT disagreed, holding that the letter sent on date B was not an offer, but an indication of an intention, and accordingly the claim should have been brought within three months of date A. As it was not, it was therefore out of time. 

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A Helpful Reminder for Employees

Whilst the employer in this case escaped liability on technical grounds, the case serves as a useful reminder that employers who seek to bypass collective bargaining obligations could face claims and, had the claims not been out of time, it is possible that they may have succeeded.

Successful claims for unlawful inducement were initially brought by 55 Unite members in the case of Kostal UK Ltd v Dunkley and Others, which we have reported on previously, but that decision was overturned by the Court of Appeal who held that the prohibition is s145B TULRCA only applied if the employers purpose in making the direct offer was that the employees' terms would no longer be determined by collective agreement going forward.

In the Court of Appeal's view, a situation in which an employer makes a direct offer to the employees as to particular terms that would be applied on one occasion should be distinguished from a situation where an employer is offering employees some inducement to permanently surrender their collective bargaining rights. The Kostal case was the subject of a further appeal to the Supreme Court, which was heard earlier this year, and the judgment is awaited.

Pending the outcome of the Kostal case, the law remains uncertain and employers should always consult with unions before looking to impose changes to employee terms and conditions.


For legal advice on employee terms and conditions, please contact Lorna Scully in our Employment Law team on 07500 846624, or please complete the form below.

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