Bypassing unions to agree contractual changes
A recent court of appeal case has heard whether inducements offered by an employer to reach agreement to a pay deal with its employees were unlawful by virtue of the offer bypassing the collective bargaining requirements of s145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
Section 145B of TULRCA states:
‘Inducements relating to collective bargaining
(1)A worker who is a member of an independent trade union which is recognised, or seeking to be recognised, by his employer has the right not to have an offer made to him by his employer if –
(a)acceptance of the offer, together with other workers’ acceptance of offers which the employer also makes to them, would have the prohibited result, and
(b)the employer’s sole or main purpose in making the offers is to achieve that result.
(2)The prohibited result is that the workers’ terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union.’
Kostal UK Ltd v Dunkley and others  IRLR 817 CA
The respondent had entered into a recognition agreement with the union in 2015 so that ‘any matters related to proposed change of terms and conditions of employment will be negotiated between the company and the union’. In effect, this was a collective bargaining agreement.
The respondent company had been negotiating a pay deal with the trade union Unite in accordance with requirements of TULRCA. Having not reached agreement with the union and having reached an impasse with the negotiations, the respondent made direct offers to its employees in respect of the pay deal. This was in order to avoid missing the window to pay a Christmas bonus to the staff. However, the union argued that the offers ‘bypassed collective bargaining’ and was unlawful.
Bypassing collective bargaining can be costly for employers where the effect of the bypass results in ‘a prohibited result’. Breaches of s145B results in a fixed penalty of £4,000 per recipient of each offer.
The union presented claims in respect of the breaches and succeeded at both the employment tribunal and the employment appeal tribunal. The court of appeal case was the respondent employer’s appeal against the employment appeal tribunal’s case. The court of appeal found in favour of the respondent. It gave the following hypothetical example of why a breach had not occurred because the legislation would act as an effective veto of any collective bargaining offers:
‘Suppose an employer wishes to introduce bank holiday working for the first time. The trade union says that it will only agree if such days are paid at triple the usual rate: £300 for a worker ordinarily paid £100 per day. An impasse is reached. The employer, anxious to have work done on the forthcoming August bank holiday, makes a direct offer to workers inviting them to volunteer for work on bank holidays at double time, that is to say for £200 per day. On the claimants’ construction of s145B the employers would be liable to pay each worker to whom the offer was made (whether or not he or she accepted) an award, at 2015/16 rates, of £3,800. The trade union would thus have an effective veto over the proposed change.’
Permission has been granted for the union to appeal to the supreme court.
The above case was a recognition by the court of appeal that the effect of s145B of TULRCA could not be simply to give unions the power to veto pay awards and offers that they do not like. Employers in such situations may find themselves losing their negotiating power in such circumstances and face huge financial penalties for failing to reach an agreement or making a direct offer to staff.
If an employer’s offer to staff is simply to circumvent the collective bargaining and ensure the terms and conditions of workers will no longer be subject to collective bargaining requirements, that will be considered a prohibited result and in breach of the legislation. The court of appeal decided that was not the case here. However, this may change on appeal.
Schools and academies should seek professional advice when seeking to change terms and conditions of their workers.