Rebecca McGuirk and Vikki Cunliffe recently acted for the employer in a claim around unlawful inducement and collective bargaining. McGuirk explains why their case was successful in demonstrating that the employer’s intention was not to bypass the process.
The recent case of Adams v Walsall Housing Group centred around the employer making two direct “offers” or inducements to employees during a period of collective bargaining.
The housing group offered a one-off payment, which it claimed was because the financial year was about to close and could not be carried over, and later a pay rise of 3.1%, which it claimed would be the minimum it would agree to through collective bargaining.
We acted for Walsall Housing Group in this claim, and it’s a useful one to be aware of when it comes to claims under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992.
This decision illustrates how, in certain circumstances, employers can make a direct offer to employees while collective bargaining is ongoing without falling foul of the law, provided that they can show that their purpose is not to circumvent the collective bargaining process.
The law on unlawful inducement
Section 145B prevents employers making offers directly to workers where an acceptance of the offer means that the workers’ terms of employment will no longer be determined by collective agreement, and the employer’s purpose in making these offers is to circumvent the collective bargaining process.
Collective bargaining
In Kostal UK v Dunkley and others, the Supreme Court held that an employer’s direct pay offer to workers, bypassing stalled collective bargaining with the recognised trade union constituted an unlawful inducement by virtue of s. 145B.
The decision in Kostal was followed by the Employment Appeal Tribunal (EAT) in Ineos Infrastructure Grangemouth v Jones and others, where the EAT held that an employer’s imposition of a pay award, at a time when pay negotiation with the recognised union were at an impasse, amounted to an unlawful inducement.
Both these cases considered the making of offers which meant that terms were no longer determined by the collective agreements in place.
What they did not do was consider whether the employer’s purpose in making the offers was to get around the collective bargaining process.
What are the facts of the case?
Walsall Housing Group was involved in collective negotiations over an annual pay award. The trade unions involved pushed for a higher award. Although collective bargaining was ongoing, an impasse had been reached in the negotiations.
The respondent emailed all employees informing them of its proposal to pay a one-off payment of £300 in addition to a pay award of 3.1%, but stated that this could only be paid if the pay award was agreed in the 2022-23 financial year as there was no budget for it the following year.
After further negotiations with the unions the respondent made the decision on 21 March that the £300 payment would be paid to all employees in the March payroll as it had to be paid by the end of March, otherwise it would be lost, and the respondent did not want the employees who expected it to miss out. This decision was communicated to all employees via email as a first offer.
There was then a decision in May to go ahead with the 3.1% pay increase, backdated to 1 April 2023, despite continued union opposition.
This decision was reached in the light of the worsening cost of living crisis which meant that the employer felt that it was important for staff to receive a pay rise as soon as possible. This second offer was conveyed to all employees via email on 11 May.
The tribunal’s finding
The tribunal considered the first offer and concluded that the respondent had shown that its sole or main purpose in making the offer was to ensure that the £300 allocated to pay in 2022/23 from the 2021/22 budget was spent before that financial year ended in March 2022.
There was nothing to suggest to the tribunal that, in deciding to pay the £300 without the agreement of the unions to the overall pay offer, there was any intention to even temporarily stop pay as a whole being determined by the recognition agreement, and pay negotiations were continued straight after the first offer was made.
As far as the second offer was concerned, the tribunal concluded that the respondent had proved that the sole or main purpose of the offer was to ensure that the workforce had the immediate benefit of the 3.1% increase that it had already budgeted for in order to alleviate the impact of the cost of living crisis on its staff.
The tribunal accepted that Walsall Housing’s intention was to help its staff and that it planned to continue with the collective bargaining process (a higher pay award was ultimately achieved and implemented in November 2022).
Why it reached this decision
The tribunal relied heavily on contemporaneous evidence of the ongoing discussions in relation to the pay award.
Provided that an employer’s purpose is not to bypass the process, it is possible for offers to be made while collective bargaining is still ongoing.”
It found from this evidence that there was a real desire to avoid employees being disadvantaged while negotiations were ongoing, and also that there was nothing to suggest that these negotiations had stopped.
As the tribunal put it, “the pay negotiation process was still alive and ongoing”. There was no evidence that the respondent’s purpose in making the offers was to circumvent the collective bargaining process.
Following the decisions in Kostal and Ineos, employers will not be able to bypass a stalled collective bargaining process by making direct offers to workers unless it is clear that the collective bargaining process has been exhausted.
However, the decision in this case suggests that, provided that an employer’s purpose is not to bypass the process, it is possible for offers to be made while collective bargaining is still ongoing.
However, it’s worth noting that this is only a first instance decision so should be treated with a degree of caution. If an employer does make an offer outside the collective process then this should be clearly documented and the purpose behind the offer explained.
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