Today we look at a judgment from The Supreme Court which concerns unlawful inducements to forego collective bargaining.
Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) says that employees who are members of a recognised trade union have a right not to be subject to offers that intend to exclude the operation of collective bargaining (where it has been agreed upon).
Kostal made two offers to a group of unionised employees which did not expressly preclude collective agreement, but impliedly did by making the process redundant.
The issue was whether the Section 145B should be interpreted as:
- Only covering situations where the employer offers an inducement in exchange for the express waiver of collective bargaining;
- Covering all situations where the employer offers an inducement instead of using collective bargaining (therefore meaning even situations where collective bargaining had already been attempted, unsuccessfully, were covered);
- Covering situations where the inducement, if accepted, would have the effect of precluding the operation of collective bargaining. This would mean, therefore, that there has to still be the possibility that collective bargaining could work before the Section was contravened.
The latter option is what Lord Leggatt decided upon. He said that the provisions are designed to prevent employers making offers which, if accepted, would have the effect of precluding the effective operation of collective agreement.
It is not enough that an offer is simply made (and not agreed upon by way of collective agreement). That offer must actually have the possibility of subverting the operation of collective agreement. Therefore, if the employer and the union have already been around the bend in their negotiations and gotten nowhere, an offer by the employer will not offend S145B.
Therefore, where it has been agreed that certain terms will be agreed upon by collective agreement, employers should always exhaust this avenue first. If this is done, they are free to make any offers they wish.
If they do not heed the advice of the Supreme Court, they could potentially face large compensation bills. For each breach of S145B (here, there were 2 per employee), the employee is entitled to £3,830 (this has since risen as the case was heard, at first instance, several years ago). There may be hundreds of affected employees, meaning the bills could be substantial.