EAT rules on inducements relating to collective bargaining

Simler J holds that s.145B TULRCA 1992 goes wider than closing the Wilson and Palmer loophole.

Devereux’s Andrew Burns QC and Georgina Hirsch, (instructed by Gunnercooke LLP) recently appeared in the EAT (although not below) in Kostal UK Limited v Dunkley and others UKEAT/0108/17/RN & UKEAT/0109/17/RN. This important case gives the first appellate level decision on the meaning of “the prohibited result” for the purpose of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992.  The section has been widely interpreted as making unlawful an offer to bring an end to collective bargaining, but a number of trade unions have argued that the words in the statute have wider effects and stop any direct offer to employees outside of collective bargaining.   Employment tribunal judgments have gone both ways on this controversial issue.

The EAT was 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 type inducements to end or prevent collective bargaining of terms, and is not intended to catch offers outside of collective bargaining which might merely 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.

Kostal argues that this interpretation would give unions an opportunity to hold employers to ransom by refusing to agree that a round of collective bargaining is complete until their demands are met.  Employers may fear being subjected to the substantial strict liability fines (as per the remedy aspect of this appeal) for each and every offer made to each worker within a bargaining unit if they make an offer on an term before the collective bargaining is finally exhausted.  The EAT majority did not accept this was a risk holding that the employer can rely on a tribunal making a finding of fact as to the true purpose of the offer.  By construing ‘will not or will no longer’ as looking at the immediate purpose of the employer rather than the future purpose, it might be argued that employers in every case will face consider problems. It may be very difficult to show that its purpose was not that the offer would “if accepted, result in new terms agreed directly and not through collective negotiations” (the EAT’s summary of its key finding) when that is the natural consequence of making any direct offer to any employee in any circumstances.

The Kostal case exemplifies the risk involved. Kostal’s parent company required that the workers’ Christmas Bonus must be paid by the end of the year or lost.  Kostal did not wish to alienate its workforce by failing to pay the Christmas bonus, but the union had rejected that year’s collective bargaining offer in relation to pay and other conditions. Kostal therefore made individual offers including the Christmas bonus, but said it would continue to collectively bargain all terms and indeed it did reach an agreement with Unite the Union some months later.  That offer was not to ‘forego’ or ‘relinquish’ collective bargaining rights (language used in Wilson and Palmer and the Parliamentary materials), but did cut across and ‘undermine’ that year’s collective negotiations as nearly all the employees accepted the offer and the union was left without a mandate.

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