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Inducements to Forego Collective Bargaining Rights

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The EAT has heard the first appeal under s145B of TULR(C)A 1992 in Kostal UK v Dunkley, dealing with provisions preventing employers unlawfully offering inducements to employees to forego collective bargaining rights.

Collective bargaining between Kostal and Unite had broken down in December 2015. Kostal made two pay offers to a number of employees covered by Unite’s collective bargaining agreement. 57 employees brought claims in the employment tribunal, alleging that Kostal had offered unlawful inducements to forego collective bargaining under s145B. Section 145B applies where the sole or principal purpose of the employer’s offer is to achieve the ‘prohibited result’ of employees’ terms no longer being determined by a collective agreement, e.g. if they accept a pay rise from a direct offer.

The tribunal awarded the prescribed amount of £3,800 per employee per offer; the December offer included a Christmas bonus, the next offer in January did not. The total awards exceeded £400,000. The EAT rejected the grounds of appeal, holding:

1. under s145B, if the employer’s sole or principal purpose in making the offer is to vary terms outside of collective bargaining, that is the ‘prohibited result’. However, if collective bargaining simply breaks down, there is nothing to prevent employers making offers direct to workers, so long as the purpose is not to evade collective bargaining by ‘going over the heads of the union with direct offers to workers’. The employer must prove the purpose behind the offer.

2. s145B applies when an offer is made, it need not be accepted. Further, it is not limited to circumstances where an offer is to forego collective bargaining in the future.

3. the compensation (at the time £3,800 per ‘prohibited result’) is fixed, there is no discretion for a tribunal to reduce an award. Kostal had contended that its two offers amounted to a single course of conduct, so only one award should have been made. The tribunal found otherwise. Amending this provision would be a matter for Parliament.

Thanks to Ed McFarlane of Deminos HR for preparing this case summary