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Supreme Court Hearing on Collective Bargaining Likely to have a Significant Influence on Employment Law and HR Policies

BY Jenny Brunton
Employment Law & HR

Earlier this month, Kostal UK Ltd v Dunkley and Others was heard in the Supreme Court which is likely to have a significant impact on Trade Unions, collective bargaining and inducements.

The Court will effectively decide whether organisations are able to negotiate directly with staff, where trade unions hold collective bargaining rights.

The decision reached in this case could potentially provide employers with complete autonomy to agree changes with their staff directly, in scenarios where talks with the union have broken down.

Generally, employers avoid direct negotiations with staff when negotiations with the union have broken down as they are mindful of the hefty financial penalty which can be imposed as a result.

This case revolves largely around, section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) which prohibits employers from inducing their workers to bypass collective bargaining in certain circumstances. A breach will result in a mandatory award being issued, currently set at £4,341 per employee. In this case, there was a collective bargaining agreement in place with dispute resolution procedures.

Essentially, the employer circumvented these procedures and approached employees directly with their offer regarding pay because of time constraints. The employer said that the offer was made to employees directly so that a Christmas bonus could be paid before the end of the year. Mr Coop, acting on behalf of the trade unions wrote to the Respondent on 14th January 2016 putting them on notice that he believed the letter making the offer directly to employees was a breach of S. 145B of TULRCA. The Respondent made it clear on 29th January 2016, that they were rejecting that contention.  

Both the Employment Tribunal and the Employment Appeal Tribunal upheld the claims. The Company appealed, arguing that it never intended to induce employees to opt out of collective bargaining. Their argument was based on the fact that it continued to negotiate with the union and reached a subsequent agreement on pay, illustrating there was no intention to induce employees to opt out.

The Court of Appeal overturned the preceding decisions, stating that S.145B is only triggered where there is said to be a permanent bypassing of collective bargaining by way of inducement, not just a one-off instance as was the case here. This ruling has faced some criticism on the basis that it significantly weakens the protections offered under S. 145B.

The Supreme Court decision will be of huge importance for many public sector organisations where collective bargaining remains a key feature of negotiation when agreeing changes to terms and conditions of employment. It also has the potential to have a profound impact on trade unions. With trade union membership numbers on the rise, it is likely that this will continue given growing interest in employment status and private sector equal pay claims. We will report on the judgment as soon as it becomes available.

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