Can an employer by-pass a recognised trade union in negotiating temporary changes to terms and conditions when a collective agreement is in place? The answer is no, according to the employment tribunal in Dunkley v Kostal UK Ltd.
Section.145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) prohibits an employer from agreeing terms and conditions directly with members of a recognised trade union when they should be the subject of a collective agreement. A breach of this section can be costly; each affected employee can claim a mandatory award which currently sits at £3,830.
The Claimants in the Dunkley case were all members of the trade union Unite which alleged that s.145B had been breached. The sequence of events was as follows:
- November 2015 – the company made a pay offer of a 2% increase in basic pay plus a 2% Christmas bonus, in return for changes to terms relating to sick pay for new starters, reduction in overtime rates and consolidation of breaks.
- The Union then balloted members on the offer and it was rejected.
- After this, the Employer sent a notice to all employees summarising the deal and giving them until 18 December to accept. Failure to sign would result in the Christmas bonus not being paid.
- In January, the employer sent a letter to those who did not accept stating that if no agreement could be reached, this may lead to notice being given to terminate employment.
The company tried to argue that it was seeking a temporary solution to an impasse and therefore its actions were outside of the reach of s.145B, which they said was designed to prevent permanent changes being agreed. It also argued that its aim was to ensure that employees could maintain their Christmas bonuses and not to circumvent the collective bargaining process. Both of these arguments were rejected by the ET who decided in favour of the Claimants and upheld their claims.
The interesting thing about this case is that it extends the reach of the section, which was originally added to TULRCA following a European Court decision in Wilson and Ors v UK. This case involved the permanent surrender of collective bargaining whilst Dunkley did not. Although this is only an ET case and is therefore not binding on future ET decisions, some unions are already seeking to rely on it to prevent employers engaging directly with employees in relation to terms and conditions so it is important that employers take note.
What can employers do?
- Be clear in communications with the union and the employees what the business reason or need is for any proposed change to terms and conditions and the reason for any urgency. You must be able to prove that the business need is the main purpose behind the new terms for it to be lawful.
- You need to make sure that any offers made to employees directly are in the same terms as made via the trade union. You should also aim to ensure that the scope of collective bargaining is unchanged going forward.
- Make sure to exhaust all collective bargaining procedures first and remain open to it. This is likely something the ET would take into account.
- Review any collective bargaining agreements that are already in place.
And, of course, contact your Employment Solicitor if you have any questions on this above and how it might affect your business.