The Risks Of Seeking To Avoid Collective Bargaining

• Published date: 26 September 2022
• Subject Matter: Employment and HR, Employee Rights/ Labour Relations
• Law Firm: Wrigleys Solicitors
• Author: Ms Alacoque Marvin

EAT: Unilateral imposition of a pay rise outside collective bargaining was an unlawful offer.

It seems we are heading into a further period of uncertainty for employers and employees characterised by tough negotiations and consultations on pay, benefits and job security. In these difficult times, it is vital that good relationships are nurtured and transparent communication between employers, unions and staff is prioritised.

Employers with recognised trade unions, or where unions are seeking recognition, should also be aware of the significant legal risks of bypassing union negotiations on terms which are to be determined by collective bargaining.

We reported in November 2021 on the Supreme Court's decision in the case of Kostal UK Ltd v Dunkley and others. For more detail, please see our article: Employers should exhaust collective bargaining procedures before making direct offers to workers (available on our website).

When will a direct offer to employees be unlawful?

Under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), a direct offer of terms by an employer to a member of a trade union which is recognised or seeking to be recognised will be unlawful where:

1. the effect of the offer, if accepted, would be that the workers' terms, or some of those terms, will not be determined by collective agreement (this is known as the "prohibited result"); and
2. the employer's sole or main purpose in making the offer is to achieve the prohibited result.

In Kostal the Supreme Court made clear that offers can be unlawful if there is a real possibility that the term would otherwise have been determined by collective agreement, such as when the steps set out in a procedural agreement are not yet complete.

It also stated that offers can be unlawful where the effect of acceptance would only be a temporary removal of the term from collective bargaining and where the term will be determined by collective bargaining in future.

What are the penalties for making an unlawful offer?

The fixed penalty awards for unlawful offers are increased each year. Since April this year, claimants can be awarded '4,554 for each separate unlawful offer. An employer which makes a number of unlawful offers to a large group of workers could therefore face very significant financial liability.

Collective bargaining procedure must be exhausted

Kostal was found not to have exhausted the agreed collective bargaining procedure, and so there was a real possibility...