In Dunkley and others v Kostal UK Ltd, an employment tribunal held that an employer's attempt to bypass collective bargaining arrangements with a recognised trade union by making a direct approach to employees amounted to unlawful inducement under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
Section 145B of TULRCA provides that an employer cannot make an offer directly to a member of a recognised trade union, where acceptance of the offer could result in changes to the worker's terms that have not been determined by collective agreement (the 'prohibited result'). Section 145B aims to prevent employers from circumventing collective bargaining arrangements.
The trade union, Unite, entered into a recognition agreement with Kostal UK Ltd (K) in February 2015. The recognition agreement specifically provided that any proposed changes to employee's terms would be negotiated with Unite and that formal pay negotiations would take place annually.
In October 2015, Unite initiated the formal pay negotiations for 2016. K proposed various pay increases in addition to changes to other terms and conditions. Unite did not recommend the offer to its union members as it regarded the additional proposed changes as an "erosion to terms".
A ballot took place on 3 December 2015 and a significant majority of members voted against the proposal.
Following the ballot, K issued a notice summarising its proposed changes to pay and terms, and stating that failure to agree to such changes would lead to "no Christmas bonus and no pay increase this year". This was followed by a letter sent directly to employees on 10 December 2015 setting out the offer.
Later in December, a further notice was issued reminding the employees that they would forfeit their Christmas bonus if they failed to agree to the changes by 18 December. The notice also said that 77% of employees, including trade union representatives and members, had already accepted the revised terms.
On 29 January 2016, K wrote to the remaining employees who had not accepted the offer, advising them that if no agreement could be reached, K may serve notice to terminate their employment contracts.
A group of 57 employees brought claims in the employment tribunal, alleging their rights under section 145B of TULRCA had been breached.
The ET held that section 145B of TULRCA had been breached, finding for the claimants.
The ET found that both letters of 10 December 2015 and 29 January 2016 constituted direct offers to the employees.
K ran two main arguments. Firstly, that the offers were made in order to reduce the risk of staff losing their Christmas bonus and, secondly, that they were made in order to achieve a temporary solution to an impasse.
The ET had to consider what K's sole and main purpose in making the offers was, and in doing so rejected both of K's arguments. The ET noted that the second letter was sent after the payment of the Christmas bonus and that had employees accepted the offer, there would have been a permanent, and not a temporary change, to the employees terms and conditions of employment. The acceptance of the offers would have been a prohibited result. The ET concluded that K had taken "the conscious decision to bypass further meaningful negotiations and contact with the union in favour of a direct and conditional offer to individual employees who were members of that union".
This case highlights that an employer should be extremely cautious about directly approaching employees in relation to matters that fall within the remit of collective bargaining arrangements with a recognised trade union. It should be noted that section 145B also applies where a union is in the process of seeking recognition.
If an employer, who is party to a recognition agreement with a trade union, does wish to approach employees directly, it must be able to demonstrate that the purpose for doing so was not to achieve the prohibited result. Infringement of section 145B results in a mandatory award of £3,830 per claimant.
If employers are unsure as to what they are able or unable to do under the terms of any collective agreement, and in order to reduce the risk of claims being brought under section 145B, they should seek advice.