Pay Increase Awarded Before Collective Bargaining Was Exhausted Amounted to Unlawful Inducement

Section 145B TULRCA provides that offers made to staff will be unlawful if their purpose is to achieve the result that the employees' terms "will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union". An employer who unlawfully induces staff to bypass collective bargaining could be making a costly mistake: each affected employee can claim a mandatory Tribunal award (currently £4,554) for a breach of section 145B.

Pay Offer Made by Employer

In the case of Ineos Infrastructure Grangemouth Ltd v Jones and Others, an employer has been found to have unlawfully induced staff to bypass collective bargaining by implementing a unilateral pay award before union negotiations had been exhausted.

There was a collective bargaining agreement in place between the employer, Ineos, and the trade union Unite. It was not legally binding and could be terminated on three months' notice. Whilst the agreement provided for a collective bargaining process, it did not set out the steps to be followed.

Pay negotiations took place between Ineos and Unite, during which Ineos put forward two offers of pay increases. In respect of the second offer, which was described as a best and final offer, Ineos took it to their members but did not put it to a vote. Instead it attempted to continue negotiations. Ineos believed its relationship with Unite had broken down and decided to make the pay award unilaterally.  It wrote to staff, saying it had given notice to terminate the agreement with Unite, and confirming the pay increase would be implemented. The claimants brought claims for unlawful inducement in breach of section 145B. The Tribunal upheld the claims and Ineos appealed to the Employment Appeal Tribunal (EAT).

Collective Bargaining Not Exhausted

The EAT dismissed the appeal, which took place after the Supreme Court handed down its judgement in Kostal. In making the pay award, Ineos had made an 'offer' for the purposes of section 145B. The offer was made before collective bargaining was exhausted, and the result of the offer was that staff terms and conditions were not determined by collective bargaining, which would likely have resulted in an agreement.

Importance of Clear Documents

The case highlights the risk of making offers direct to staff before collective bargaining has finished. It also demonstrates the importance of clearly defined collective bargaining agreements. The collective bargaining process should be set out clearly within the agreement, which should also clearly define when collective bargaining is complete.

For more information regarding collective bargaining, please contact Helen Hughes in our Employment team on 07741 312 352, or complete the form below.