Court of Appeal to hear unlawful inducements case

Kostal UK v Dunkley will be heard at the Royal Courts of Justice.
Nick Ansell/PA Wire/PA Images

An employer that was found to have breached trade union regulations by directly approaching workers with a pay deal and making “unlawful inducements” is having its appeal heard today.

In 2017, an employment tribunal ruled that automotive parts manufacturer Kostal UK should pay union members more than £420,000 in compensation after it encouraged staff on two occasions to accept a pay deal that had been rejected by the union or risk losing some of their benefits.

Kostal began recognising Unite for collective bargaining purposes in 2015. This included the agreement to undertake formal annual pay negotiations.

Later that year the company proposed a pay deal which saw some entitlements, such as Sunday overtime and sick pay for new starters, reduced. Unite balloted its members and the deal was rejected by 80%.

Kostal then wrote directly to each employee, advising them that failure to sign and return a letter agreeing to the deal would result in them losing their Christmas bonus and pay increase.

A second notice was sent to the staff that had not responded to their first letter, stating that if no agreement was reached “this may lead to the company serving notice on your contract of employment”.

The Sheffield employment tribunal ruled that both letters amounted to “unlawful inducements” contrary to the Trade Union and Labour Relations (Consolidation) Act 1992. The regulations prohibit an employer from making an offer to trade union members that would prohibit the union from negotiating workers’ terms of employment via collective bargaining.

Each employee that received a letter was awarded £3,800 for each inducement offer they received, which meant more than £420,000 in compensation was due. The decision was upheld by the employment appeal tribunal.

Kostal v Dunkley is being heard at the Royal Courts of Justice today (22 May).

Howard Beckett, Unite assistant general secretary for legal services, said the outcome of the appeal will be “hugely significant” as it’s the first time the Court of Appeal has considered unlawful inducements to trade union members.

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