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Collective Bargaining

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Can an employer make an offer directly to employees covered by collective bargaining without being liable to a penalty under s145B Trade Union and Labour Relations (Consolidation) Act (TULR(C)A) 1992?

Yes, but only when collective bargaining has been exhausted, held the Supreme Court in Kostal v Dunkley and others, upholding the Claimants’ appeal against the decision of the Court of Appeal.

The Supreme Court unanimously upheld the appeal, with a 3-2 split as to why. The employer had made pay offers directly to its workforce, by-passing the recognised trade union during collective bargaining, so workers’ terms were determined outside the collective bargaining process - ‘the prohibited result’.

In order for an offer made by an employer outside of collective bargaining to have the ‘prohibited result’ there must be at least a real possibility that the workers’ terms would have (otherwise) been determined by a new collective agreement in that bargaining round (para 65).

Where a union is applying to be recognised (and s145B still applies), an employer can make individual pay offers to employees because there is no possibility of agreeing terms through collective bargaining.

Where there is a recognised trade union, an employer can make offers directly to employees provided the employer has first followed and exhausted the agreed collective bargaining procedure, as there would not have been a real possibility, when offers were made, that terms could have been determined by collective agreement. What an employer cannot do with impunity (as the tribunal found in this particular case) is make offers to workers before the collective bargaining process has been exhausted.

In summary, the Court noted two means of protection for employers: the first is to ensure that the collective agreement clearly defines and delimits the bargaining procedure to be followed, the second is that if the employer’s sole or main purpose in making an offer is not to achieve the ‘prohibited result’, it is not liable. If an employer genuinely believes that collective bargaining has been exhausted, any offers could not be said to be aimed at achieving a prohibited result.

Thanks to Ed McFarlane of Worknest LAW for preparing this case summary.