In the case of Kostal UK v Dunkley and others, the Supreme Court had to determine whether a “prohibited result” arose where an employer made a direct offer to its employees outside the scope of agreed collective bargaining arrangements.

In February 2015, the employer entered into a recognition agreement with Unite and annual pay negotiations took place in October 2015. The collective bargaining agreement entailed a four-stage process. An initial offer was made and the employees voted to reject that in a ballot. 

Notwithstanding that, the employer then wrote directly to the employees in December 2015, making the same offer and bypassing the union as the negotiations had stalled. In January 2016, the employer made a further similar offer to those who had not yet accepted. It also informed those employees that if the offer was not accepted, the company may serve notice to terminate their employment. 

The employees submitted Employment Tribunal proceedings alleging the employer’s direct offers amounted to an unlawful inducement and breached section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. The Employment Tribunal found in their favour.

The employer appealed to the Employment Appeal Tribunal and its appeal was dismissed. It appealed again to the Court of Appeal and its appeal was allowed. The claimants appealed to the Supreme Court and it agreed with the Employment Tribunal’s original decision.  

Section 145B of the 1992 Act says that a worker who is a member of an independent trade union that is recognised has the right not to have an offer made by an employer if the acceptance of the offer has a particular result namely, their terms of employment would not (or no longer) be determined collectively, and the employer’s sole or main purpose in making the offer was to achieve that result.  

In October 2021, the Supreme Court decided that an employer can make a direct offer to its employees but only provided it follows and exhausts the collective bargaining mechanism first. 

What an employer cannot do, is make a direct offer to employees who are union members before the process has been exhausted. This decision respects the right of trade unions to be heard and have a seat at the table for the purposes of collective bargaining.

Joanne Galbraith-Marten
Director of Employment Relations and Legal Services

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