Kostal UK Ltd v Dunkley
Pay Offer to Workers Bypassing Collective Bargaining was Unlawful Inducement
Don’t offer directly to me, I’m part of the union! – direct offer to employees was unlawful inducement.
In the case of Kostal UK Ltd v Dunkley, the UK Supreme Court found that it was an unlawful inducement for Kostal to offer a pay deal to their employees “over the head” of its recognised trade union, (Unite the Union). The Supreme Court, however, stated the position would have been different if the employer had exhausted the collective bargaining process it had agreed with the union before making the offer.
The facts in this case relate to a pay deal in 2015. Kostal’s offer was rejected by union members. Rather than continuing with the pay negotiations, Kostal pre-empted the collective process and made offers directly to the employees. They asked them to agree the proposed terms on an individual basis, completely undermining the principles of trade union recognition.
The offer said that employees who did not agree would not receive a Christmas bonus. Quite rightly the union members brought claims, alleging that the Kostal offer amounted to an unlawful inducement.
The Supreme Court agreed with them, that it was unlawful to bypass a collective agreement. The purpose of the unlawful inducement provisions is to protect employee rights and secure the fundamental rights under the European Convention on Human Rights to be represented by a trade union.
However, The Supreme Court thought that the union went too far by suggesting that any offer made by an employer directly to workers asking them to agree to changes that had not been collectively agreed would be a breach of the relevant provisions. They said that Kostal was also wrong to suggest that the protection applied only where an employee was effectively being asked to opt-out of collective bargaining, either permanently or temporarily.
The Supreme Court ruled that the employer had accordingly acted in breach of section 145B. In this case the employer had not exhausted the collective bargaining process that it had agreed with the union, before it made its offer to its workers.
This is a welcome discussion by The Supreme Court. They emphasised that an offer will amount to an unlawful inducement if it is made when there is a possibility that the terms in question would be determined by the collective agreement process. An employer will need to exhaust their agreed collective bargaining procedure before they can make an offer directly to the employee.
Sharon Graham, Unite general secretary said the outcome means no employer can ever offer their employees inducements to undermine union collective bargaining.
Commenting further “With the support of their union, the workers stood firm. Now they have won an historic case which creates a legal precedent for every union member across the UK”.
Our newly qualified employment solicitor Paul Farrell, says “this decision should remind both employers and employees that there is strength in the unions. It is important to have an agreed collective agreement procedure in place, which outlines a clear negotiations process”. This doesn’t just create a strong union in the workplace, it makes good business sense.
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