Employers Should Exhaust Collective Bargaining Procedures Before Making Direct Offers To Workers

• Published date: 24 November 2021
• Subject Matter: Employment and HR, Contract of Employment, Employee Rights/ Labour Relations
• Law Firm: Wrigleys Solicitors
• Author: Ms Alacoque Marvin

Supreme Court confirms that offers which would temporarily take a term of employment out of collective bargaining procedures can be unlawful.

Until fairly recently, most employers and many employment lawyers were unaware of the risks of claims when making direct offers to members of a recognised trade union. The case of Kostal UK Ltd v Dunkley and others has however brought the little-known section 145B of the Trade Union and Labour relations (Consolidation) Act 1992 (TULRCA) squarely into the limelight.

We covered the Court of Appeal judgment in this case in our article from June 2019: Can employers change terms and conditions by making offers directly to workers and avoiding trade union negotiations? (available on our website). The Supreme Court has now found in favour of the claimants, allowing their appeal against the Court of Appeal decision. This decision highlights once again the significant risks for employers who seek to by-pass collective bargaining procedures.

When will a direct offer be unlawful?

Section 145B makes unlawful any direct offer by an employer to a member of a trade union which is recognised or seeking to be recognised where:

a) the effect of the offer, if accepted, would be that the workers' terms, or some of those terms, will not or will no longer be determined by collective agreement (this is known as the "prohibited result"); and

b) the employer's sole or main purpose in making the offer is to achieve the prohibited result.

What are the penalties for making an unlawful offer?

Awards for unlawful offers under section 145B TULRCA are very significant and are increased each year. Since April this year, claimants can be awarded '4,341 for each separate unlawful offer. This is a fixed penalty and there is no mechanism for an employment tribunal to reduce this award.

Following the original decision of the employment tribunal in Kostal, the employer's liability was reported to be in the region of '400,000.

One-off or forever more?

A key question which arose as this case went through various stages of appeal was whether the prohibited result occurs where an offer, if accepted, only temporarily takes a term out of the collective bargaining procedure. Or was it confined to situations where the offer, if accepted, would take the term of employment out of collective bargaining procedures completely, so that it would not be included in future bargaining rounds.

For example, could it be unlawful for an employer to offer individual workers a...