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The importance of the collective agreement – beware!

21 February 2017

In the first instance case of 'Dunkley and others v Kostal UK Ltd', an Employment Tribunal has held that an attempt to bypass a recognised trade union and negotiate with individual employees directly amounted to unlawful inducement in breach of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”).

A trade union had asked staff in a consultative ballot whether to accept a package of pay increases (and a Christmas bonus) and a number of detrimental changes to terms and conditions. This was rejected.

David Hoey
David Hoey, Partner

The employer decided to contact all employees directly to offer the same package. Staff were told that if agreement was not reached, there would be no bonus. Details were also given as to the number of staff that had accepted with some reference to what trade union representatives and union members had done (since a number had accepted the offer). Staff were later advised that in the absence of agreement, those who did not accept the offer could be dismissed.

The trade union argued that the employer’s approach amounted to a "prohibited result" under section 145B of TULRCA, under which an employer may not make offers to members of a recognised trade union where the purpose of the offer is to cease collective bargaining.

The Employment Tribunal rejected the employer’s argument that because it was seeking a temporary solution to an impasse, the prohibition did not apply. The Tribunal also rejected the argument that the main purpose behind the offers was to ensure that the employees did not lose the bonus. The Tribunal held that it was "exceptionally improbable" that the company did not intend to circumvent the collective bargaining process when it made the offers.

It is not permissible for an employer to abandon collective negotiation when it does not like the result of a ballot, and to approach the employees directly to strike deals.

This case is an important reminder of the need to follow established processes in connection with changes to terms and conditions. Where collective bargaining machinery has been established to consider changes to terms and conditions, that forum should be used to seek agreement. This is a difficult area with the consequences of getting it wrong being significant.

Contact: David Hoey, Partner  T: 0141 221 8012 


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