Kostal v Dunkley: UK Supreme Court removes veto threat but requires full collective bargaining before any direct offers
The Supreme Court today issued its judgment in Kostal UK Ltd v Dunkley and others [2021] UKSC 47 - the first test case on the proper interpretation of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. Although Kostal was ultimately unsuccessful on the facts, Andrew Burns QC and Georgina Hirsch persuaded the majority of the Court that s.145B should not be interpreted so as to give trade unions an effective veto in collective bargaining (as had been the case following the EAT’s judgment). Lord Leggatt’s leading judgment provided that employers can make direct offers to workers to change their terms and conditions but only after collective bargaining has been attempted and the employer is satisfied that the process has been exhausted.
The appeal was allowed because Kostal had agreed rather than rejected the non-compulsory ACAS stage of its new collective bargaining procedure with Unite the Union. On that narrow basis the Supreme Court held that the company had failed to exhaust the procedure before making its offer.
The minority (Lady Arden and Lord Burrows) accepted the claimants’ arguments that the fact that an offer is made by the employer directly to workers who are trade union members to make changes which have not been collectively agreed to one or more terms of their employment is by itself enough to achieve the prohibited result. However the majority disagreed and held that the Court of Appeal was right to reject this interpretation. They accepted Kostal’s submissions about the wording of the section (with its use of the future tense), its equal application to unions seeking recognition and because it would give unions an effective veto over contractual changes. It also accepted Kostal’s arguments under Article 11 ECHR that s.145B applied only where the offer resulted in collective bargaining rights being surrendered but held that it additionally applied where the arrangements were bypassed. Thus It concluded that employers only needed to show that collective bargaining procedures had been exhausted (or that they genuinely believed them to be exhausted).
The decision gives much needed clarity for both employers and unions as to their options and obligations when agreement cannot be reached during collective bargaining.
Devereux’s Andrew Burns QC and Georgina Hirsch (instructed by Angela Brumpton of gunnercooke LLP) acted for Kostal UK.
For further details, see the case note from Andrew Burns QC and Georgina Hirsch.
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