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Ban on offers intended to end collective bargaining
[ch 5: pages 149-152]It is unlawful for an employer to make an offer to members of a recognised independent trade union (or one that is seeking recognition) the sole or main purpose of which is that one or more terms and conditions are not (or no longer) decided through collective bargaining. This is section 145B, TULRCA.
Section 145B, TULRCA applies not only where an employer attempts to permanently end collective bargaining arrangements but also where the employer wants to temporarily remove one or more terms from collective bargaining (for example, for one pay round). In other words, it is a breach of section 145B to make an offer direct to the workforce over the heads of union negotiators during an ongoing negotiation with a recognised union, where the aim of the offer is to circumvent the collective bargaining process. This was decided in the following important case:
Fifty-six Unite members won compensation totalling £420,000 after management at car electronics firm Kostal attempted to bypass the recognised union midway through a pay bargaining negotiation and put a pay offer direct to individuals that included changes to their contract terms. Unite had won recognition at Kostal in November 2014, signing a recognition agreement. A year later, a pay offer put to members through a consultative ballot was rejected by a large margin (78.4%, on an 80% turnout). The pay increase had been conditional on members accepting changes to rest breaks, overtime and sick pay, which they rejected.
Instead of continuing pay negotiations, Kostal pinned a general notice to the notice board and wrote twice to individual employees, in each case urging them to accept the offer and to agree the contract changes, or else forfeit their Christmas bonus. The second letter told recipients how many co-workers had already accepted the offer, referring explicitly to trade union members, and warned recipients that failure to accept could lead to dismissal. The tribunal concluded that Kostal contacted the workers direct in order to circumvent the collective bargaining process.
In evidence, the union negotiator said his mandate to negotiate was “blown away” by the management decision to write to workers direct. The tribunal ruled in favour of the Unite members, commenting that “It is not permissible for an employer to abandon collective negotiation when it does not like the result of a ballot, approach the employees individually with whom it strikes deals and then seek to show its commitment to collective bargaining by securing a collective agreement which is little more than window dressing, having destroyed the union’s mandate on the point in question in the meantime. If there is a recognition agreement which includes collective bargaining, the employer cannot drop in and out of the collective process as and when it suits its purpose”.
The EAT upheld the tribunal’s ruling and confirmed that where, as here, multiple offers are made, a separate award of compensation must be paid for each offer.
As Law at Work goes to press, an appeal against this ruling is due to be heard by the Court of Appeal.
Kostal UK Limited v Dunkley & Others [2017] EAT UKEAT/0108/17/RN
Union members have achieved other significant rulings to enforce their rights under section 145B:
• in 2006, supermarket chain Asda was ordered to pay £850,000 after it offered a 10% pay rise to 340 GMB members at its distribution depot in Washington, Tyne and Wear conditional on ending collective bargaining at the site;
• in 2014, Bromley Council was ordered to pay more than £64,000 to compensate 18 UNISON employees after it offered £200 each to staff if they signed new contracts replacing regional and national collective agreements with a localised pay award.
In Arnott & Others v Ineos Chemicals Grangemouth Limited 4102181/2017, 6 March 2018, an employment tribunal ruled that a unilateral pay award communicated direct to the workforce was an unlawful offer. It did not matter that the employer’s announcement in this case needed no action in response from workers, or that individual workers were not asked to give up existing rights in return for accepting the pay rise. The announcement was an offer because it was a statement of the employer’s intention to vary pay, which the employees accepted by continuing to work. (This ruling is not binding and is under appeal — see box below.)
It is not the law that employers can never make offers direct to their workforce. According to the EAT's judgment in Kostal, whether the law has been broken will depend on the facts of each case. Employers who make direct offers to their workforce while negotiations are still ongoing are likely to break the law, but employers who have already engaged in “lengthy and meaningful collective consultation and have reached an impasse before considering making direct offers” (Kostal) are unlikely to do so.
Section 145(D), TULRCA lists some relevant factors. These include evidence of an employer’s negative attitude towards collective bargaining. In the Kostal case, the employer’s decision to emphasise how many co-workers — especially union members — had already accepted its offer was treated as clear evidence that the employer intended to circumvent union negotiations, making the offer unlawful.
To breach section 145B, the offer must be made to more than one worker (section 145B (1)(a), TULRCA).
The award payable to each worker who is made an unlawful offer is a fixed sum of £4,193 (April 2019). If multiple offers are made, a separate award must be made for each offer.
Ineos in section 145B defeat at Grangemouth
During ongoing collective pay negotiations at the Grangemouth oil refinery, recognised union Unite agreed to recommend a 3% pay increase to members, whereas Ineos’ “final offer” was 2.8%. The offer was put to a branch meeting where it was rejected without a ballot. The tribunal accepted evidence that the union expected the pay dispute to be escalated to a further stage of the bargaining procedure. Instead, Ineos responded by writing direct to employees to tell them that the pay increase would be implemented on a unilateral basis. Ineos simultaneously gave notice to end the Unite recognition agreement.
Ineos argued before the employment tribunal that it was justified in putting the offer direct to employees because negotiations had reached an impasse and were “bankrupt”. The tribunal disagreed, describing the employer’s response as neither reasonable nor rational. The parties were close to agreement and a reasonable bystander would have considered a collective agreement to have been likely had negotiations continued.
There is a history of hostility to Unite at Grangemouth and the tribunal accepted internal email evidence that Ineos’ real purpose was “to engineer a way to get rid of Unite”. The communication of the pay rise was an offer to staff, the sole or main purpose of which was to circumvent the collective bargaining process. Ineos acted precipitously in going over the heads of the union, said the tribunal. The pay rise was an unlawful offer in breach of section 145B.
An appeal to the EAT is expected in spring 2019.
Arnott & Others v Ineos Chemicals Grangemouth Limited 4102181/2017, 6 March 2018
Section 145B rights can be particularly important after a TUPE transfer. This is because changes to TUPE since 2014 have made it easier for incoming employers to make unwelcome changes to collectively agreed terms (see Chapter 12, page 458). Reps in a workplace where the employer wants to interfere with collectively agreed terms after a TUPE transfer should take urgent advice from their national union.