Court of Appeal rules that law on inducements relating to collective bargaining does not give unions a veto

In Kostal UK Ltd v Dale Dunkley [2019] EWCA Civ 1009 the Court of Appeal holds that s.145B TULRCA 1992 does not make it unlawful for an employer to change terms and conditions without a union’s agreement in collective bargaining. The section is intended to close the Wilson and Palmer loophole but is not intended to preclude direct offers where there has been a failure to agree.

Devereux’s Andrew Burns QC and Georgina Hirsch (instructed by Angela Brumpton of gunnercooke LLP) recently appeared in the Court of Appeal in Kostal UK Ltd v Dale Dunkley [2019] EWCA Civ 1009. This important case decides the meaning of “the prohibited result” for the purpose of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. The majority of the EAT in Kostal v Dunkley [2018] ICR 768 agreed with the wide interpretation put on the section by a number of trade unions in recent years. They argued that the words in the statute have wider effects and stop any direct offer to employees outside of collective bargaining – even when the employer is not hostile to the union and the collective bargaining process has been followed. This controversial issue has affected industrial relations in recent years and the appeal was identified as one of the “employment decisions that will shape 2019”.

The EAT had been split in its decision, with the majority rejecting the argument that s.145B’s prohibition against ‘Inducements Relating to Collective Bargaining’ is aimed only at Wilson and Palmer [2002] IRLR 568 inducements to end or prevent collective bargaining of terms, and is not intended to catch offers outside of collective bargaining which might be seen as undermining the union’s negotiating position. On the facts, Kostal argued that collective bargaining of pay would continue the following year, but that year’s pay offer had to be made directly to ensure that the workforce did not miss out on their Christmas bonus.

The Court of Appeal (Bean, King, Singh LJJ) held that although the union’s construction of s.145B(2) was possible as a matter of literal interpretation of the words used, it was “extremely unlikely that it is the result which Parliament intended”. Bean LJ said that “it would amount to giving a recognised trade union…a veto over even the most minor changes in the terms and conditions of employment, with the employers incurring a severe penalty for overriding the veto”.

The Court therefore allowed the appeal and dismissed the claims. The Union is applying for permission to appeal to the Supreme Court.

For further details, see the case note from Andrew Burns QC and Georgina Hirsch.

This case has been covered in the national press, including The Times and Personnel Today.

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Court of Appeal rules that law on inducements relating to collective bargaining does not give unions a veto

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