Trade Unions Cannot Veto a Direct Approach to Workers
Key Contact: Claire Knowles
Author: Adam McGlynn
It’s final, trade unions do not have an absolute right to veto employers negotiating directly with union members in their workforce. However, the Supreme Court’s judgement in Kostal UK v Dunkley and others (2021) imposes a new rule that requires meaningful efforts before an employer can make direct approaches.
The interpretation of Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) has caused much confusion over the past few years, especially as it has evolved throughout the lifecycle of Kostal v Dunkley. The statutory rule itself is vital to ensuring workers have a right to freedom of association as it prohibits employers from inducing their workers to surrender their union rights and bypass collective bargaining in certain circumstances. Trade unions have often interpreted these circumstances quite widely, to the extent that they would enjoy something akin to a veto over employers making offers directly to their members. However, the case of Kostal v Dunkley has shown over the years that such an interpretation would be too wide.
Kostal entered into a voluntary recognition agreement with Unite in 2015, granting Unite sole bargaining rights and agreeing that Kostal and Unite would engage in formal pay negotiations on an annual basis. Included within the agreement was a bargaining and dispute resolution process which included three stages of meetings with representatives and a final optional stage where the issue would be referred to ACAS conciliation.
In late-2015, Kostal entered negotiations with Unite, proposing salary increases and bonuses as well as reduced sick pay, a reduction in Sunday overtime pay, and consolidated rest break arrangements. When the proposed package was rejected by a ballot of members, Kostal approached employees in December 2015 and again in January 2016 to offer the package directly. The December communication threatened that refusal would result in the Christmas bonus and following year’s pay increase being withheld while the January communication threatened that refusal could lead to dismissal.
Several employees brought claims before the Employment Tribunal relying on s145B of TULRCA and were successful at both this hearing and before the Employment Appeal Tribunal, who adopted a strict interpretation akin to a right to veto. The Court of Appeal, however, allowed Kostal’s appeal, adopting a new interpretation whereby direct offers to members to negotiate their terms of employment outside of collective bargaining on specific occasions would not constitute unlawful inducements within s145B. Instead, s145B only prohibited direct approaches where the purpose of the offer was to induce the member to surrender their rights of collective bargaining permanently.
The new rule
The Supreme Court, upholding the employees’ appeal, disagreed with the Court of Appeal’s interpretation that a level of permanency is necessary under s145B of TULRCA. Interestingly, the Supreme Court disagreed with the submissions of both parties as well as the previous judgments by determining that the content of the offer itself was not the deciding factor. While the employees argued that any offer to agree a change would be caught and Kostal argued that only offers requiring members to permanently opt out of collective bargaining would be caught, the Supreme Court found that the determining factor was actually one of causation.
The wording of s145B revolves around the concept of a ‘prohibited result’, being the member’s terms of employment not being, or will no longer, be determined by collective bargaining. The Supreme Court found that an employer’s direct approach would not ‘result’ in a prohibited result if it would have occurred anyway. A prohibited result would therefore only arise where there is at least a real possibility that the member’s terms would (otherwise) be determined by that round of collective bargaining. Where there is no such possibility, there is no causal connection between the direct offer made and the result that those terms have not been determined by collective agreement. In the case of Kostal, the parties had not exhausted the bargaining process when the offers were made, entitling the Supreme Court to find in favour of the employees.
What can the employer do?
An employer can approach its union-represented workers directly to negotiate employment terms which are caught within the scope of a collective bargaining agreement provided the agreed bargaining procedure has been followed and exhausted, such that when the offer is made there is no real possibility that the matter would have been determined by collective agreement. By contrast, an employer cannot approach its union-represented workers directly before exhausting this process.
What is the extent of bargaining required before exhaustion?
The bargaining procedure required should be agreed and clearly set out in a recognition and/or collective bargaining agreement. Employers may, therefore, wish to review any such existing agreements and consider both clarifying the required procedures and limiting them to go no further than necessary. Employers can also note that it will not be liable where its sole or main purpose in making the direct approach is not to achieve a ‘prohibited result’, which would be unlikely where the employer has a genuine belief that collective bargaining has been exhausted.
Can an employer thwart the bargaining process?
Exhaustion of the collective bargaining process may not, in and of itself, give the employer free reign to approach workers directly. The main principle relates to the possibility of successful collective bargaining, which may still be the case following the conclusion of an agreed process, for example, where an employer has purposely thwarting that process by refusing to engage meaningfully. A minority of the Supreme Court panel reached a slightly different way of considering this point – that an employer would only be excused from direct offers where there was a genuine business purpose for the approach. A genuine business purpose would not be achieved which the agreed procedure was ongoing, however, completion of the procedure would still not necessarily mean that a genuine business purpose was achieved.
If you would like assistance negotiating with trade union representatives or reviewing and/or drafting collective agreements in light of this judgement, please contact our employment team.