Collective Bargaining

Posted on Aug 22, 2019

The rules regarding trade unions and what employers can and cannot do in regards to them can be a particularly tricky and grey area for employers. However, some light has recently been shed by the Court of Appeal in the case of Kostal UK v Dunkley regarding s145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

S145B TULRCA is bewildering but essentially prohibits employers bypassing trade unions and negotiating offers directly with their workers with the sole aim of undermining collective bargaining. This amounts to unlawful inducement and the employee can be awarded compensation.

In this case, the employer, Kostal, signed an agreement with the trade union giving the union sole recognition and bargaining rights. Kostal put forward a 2% increase in pay (4% increase for those earning below £20,000) and a Christmas bonus in return for reduction of sick pay for new joiners, reduction in Sunday overtime and consolidation of two 15 minute breaks for one 30 minute break. The union balloted its members who rejected the offer. Kostal then proceeded to directly approach workers asking them to accept the new terms by 18th December or they would receive no Christmas bonus or pay increase and the majority of workers agreed to do so.  Kostal then wrote to those who did not agree and said if they could not reach an agreement then they may be served notice. A collective agreement was reached to amend terms and conditions but some workers bought claims saying s 145B TULRCA was breached.

Kostal argued that their intentions were not to induce workers but was merely to ensure they got their Christmas bonus so they had not breached legislation. This failed in the Employment Tribunal and Employment Appeal Tribunal but in the Court of Appeal they succeeded.

The Court of Appeal clarified the meaning of prohibited result in the Act. They stated that there were two situations s145B TULRCA prevented: 1) where a trade union is seeking to be recognised and the employer makes an offer whose sole or main purpose is to achieve the result that the workers’ terms of employment will not be determined by a collective agreement, 2) where a trade union is already recognised a collective agreement is in place and the employer makes an offer where the sole of main purpose is that the workers’ terms of employment will not be determined by a collective agreement. They held Kostal fell within neither of these categories.

It is highly likely that this will be appealed by the trade union to the Supreme Court so it will be interesting to see what happens. However, for the meantime the case has created what seems to be a loophole in which if an employer can prove their proposition was a one off offer and their intention was not to undermine collective bargaining, then they can bypass trade unions.

Whilst this is an attempt to clarify s145B TULRCA it has also resulted in further confusion as to when a one off event is not a breach and when it is. Let’s hope the Supreme Court finally clarifies this extremely confusing piece of law which would benefit everyone!