Last month, the Supreme Court delivered a ground-breaking ruling in the case of Kostal v Dunkley and others. Richard Arthur examines the judgment and finds it has far-reaching implications for every unionised workplace in the UK.
In the 2015/16 pay round, automotive components manufacturer, Kostal UK, made an offer to the Unite union which included pay and a Christmas bonus and which was then rejected by Unite members in a ballot.
The company then attempted to bypass the union bargaining procedure by making the offer direct to employees, giving a deadline for acceptance if the bonus was to be paid. The great majority of employees accepted. Similar further offers were then made to those who had not accepted. A collective agreement was reached with Unite later in 2016.
However, 57 Unite members brought employment tribunal claims that “unlawful inducements” had been made for them to give up collective bargaining rights.
Section 145B Trade Union and Labour Relations (Consolidation) Act 1992 provides union members with the right not to have offers made to them if acceptance would have the “prohibited result”. The prohibited result is that one or more of their terms and conditions will not, or will no longer, be determined by collective bargaining. But the offers are only unlawful if the employer’s purpose in making them is to achieve the prohibited result.
If the tribunal upholds such a claim, it must award a prescribed amount of compensation (currently £4,341) to each claimant, for each offer made to them.
Collective bargaining
In Dunkley and others v Kostal, the employment tribunal upheld the claims. It found that making the offers had “destroyed” the union’s mandate and bypassed the agreed collective bargaining procedures. The tribunal awarded compensation in excess of £420,000, representing the prescribed award (then £3,800) for each offer of the two offers made to employees.
That decision was upheld by the Employment Appeal Tribunal, but then overturned by the Court of Appeal. The Court of Appeal ruled that the prohibited result only arose where the terms were taken outside the scope of collective bargaining permanently.
The five Justices of the Supreme Court unanimously upheld Unite’s appeal on 27 October 2021. The court ruled that an employer must not make offers which, if accepted, would cause bargaining arrangements to be bypassed. This would be the case where, if the offers had not been made, there was a ‘real possibility’ that the term(s) would be determined by collective bargaining.
The Court therefore ruled that employers must complete and exhaust union bargaining procedures before they make offers directly to the workforce. An employer cannot be allowed to ignore agreed union bargaining procedures, either by refusing to follow the procedure, or by being free to “drop in and out of the collective process as and when it suits its purpose”.
Where an employer genuinely believes that the collective bargaining process has been completed and exhausted, then its purpose will not be to achieve the prohibited result. However, it is implicit in the ruling that the collective bargaining must be conducted in good faith.
It is important to appreciate the types of offer, which will be unlawful if made before the bargaining procedures have been completed in good faith. They include offers to agree to give up a right to have terms and conditions determined by collective bargaining permanently. They also include offers to agree to give up a right to have terms determined by collective bargaining in an individual pay round. But, very significantly, they also include offers which, if accepted, would mean that one or more terms will not be determined by collective bargaining in that particular pay round.
An employer that makes such offers before completing and exhausting the agreed bargaining procedures in good faith will be liable to pay the prescribed amount of £4,341 for each offer made to each employee.
This is the first time the UK’s highest court has had to consider trade union collective bargaining rights. Section 145B was introduced following the decision of the European Court of Human Rights in the Wilson v Palmer case in 2002, and followed government consultations which indicated that section 145B was also intended to cover ‘comparable situations’. The Supreme Court therefore had to give effect to rights derived from Article 11 of the European Convention in a UK labour law setting which is hostile to trade unions.
The Supreme Court’s ruling breaks new ground for the extension and protection of trade union collective bargaining rights in the UK.
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In European Convention terms, this protection is rooted in trade union membership – the right for everyone to join a trade union ‘for the protection of their interests’. It has long been the case that trade union collective bargaining means better pay and terms and conditions, and safer workplaces. Trade union membership continues to rise as we emerge from the pandemic. The Supreme Court’s ruling shows exactly why membership of a trade union is so important.
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