Is a one-off pay offer an inducement to leave collective bargaining?

A welcome Court of Appeal regarding pay offers made direct to employees could help employers facing union resistance to reasonable pay deals.

You might remember the case of Kostal v Dunkley and the provisions of s145B of the Trade Union & Labour Relations Act. The Act prohibits ‘inducements’ which have the effect of taking one or more terms of employment out of collective bargaining. There was a dearth of authority on how it should be applied until last year, when the EAT decided in Kostal v Dunkley that even agreeing one term ‘over the heads’ of a recognised union on a one-off occasion would infringe the prohibition. In that case each of the 55 employees who claimed got over £7k in damages, so it obviously could turn into an expensive business. However, the employers then appealed to the Court of Appeal which has now reversed the decision.

Court of Appeal’s interpretation

In the view of the Court of Appeal judges, the provision only kicks in when the inducement would have the effect of taking employees permanently outside a collective bargaining arrangement – not simply to agree a one-off change. The Court of Appeal noted that the decisions of the lower courts failed to deal with the problem that their interpretation of s145B would have left unions with an effective veto over changes where they couldn’t be agreed through the collective bargaining process. The Court of Appeal’s interpretation, in contrast, does allow employers to try to strike a deal directly with some or all of the employees where the collective bargaining process has broken down. It’s still an area where employers need to tread carefully, but it’s a really sensible and welcome decision. Generally, the Court of Appeal decision would be final but there is always the outside chance of a further appeal to the Supreme Court and/or Europe (for the moment at least). We’ll keep you informed of any further developments.

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