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Employers with unionised workforces will welcome the Court of Appeal judgment in Kostal UK Ltd v Mr D Dunkley and Others.

Chris Tutton

The court held that laws on unlawful inducement relating to collective bargaining do not give trade unions a general veto over any variations being agreed by an employer directly with its workforce.

Pursuant to section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), it is unlawful for an employer to make an offer directly to members of a recognised trade union (or a trade union seeking to be recognised) where the sole or main purpose in doing so is to induce them to cease collective bargaining. This is known as the prohibited result .

The intention of this legislation is to prevent employers from undermining the collective bargaining arrangements in place. Where an employer is found to have contravened section 145B by making an unlawful offer, each affected worker can claim a mandatory award (currently 4,193) from the Employment Tribunal. There is no statutory basis on which an Employment Tribunal can reduce this award.

In this case, the Court of Appeal considered for the first time whether an employer s attempt to bypass a recognised trade union by negotiating directly with individual employees amounted to an unlawful inducement contrary to section 145B.

Kostal, an automotive parts company, had a collective bargaining agreement in place with Unite which provided for, among other things, pay negotiations to commence in October each year with a normally effective date of 1 January and for any proposed changes to employment terms to be negotiated with Unite.

Pay negotiations for 2016 began with Unite in October 2015 but broke down. Kostal sent letters to every employee in December 2015 setting out its proposed pay offer. This included a 2% increase (or 4% increase for employees earning less than 20,000 a year) and a Christmas bonus in return for a reduction in Sunday overtime and sick pay for new starters and changes to breaks. This offer was identical to that put to Unite and had been rejected. The letters explained that if the offer was not accepted by 18 December, employees would not receive the Christmas bonus, even if a revised offer was subsequently agreed with Unite.

In January 2016 Kostal wrote to those employees who had not yet accepted the offer, this time offering a 4% pay increase (backdated to 1 January 2016) if they agreed to the proposed changes, and threatening dismissal if they did not.

A collective agreement was eventually reached as to pay and the amended terms and conditions on 3 November 2016. However, a large group of employees (all of whom were Unite members) brought claims in the Employment Tribunal, alleging that both letters constituted an unlawful inducement contrary to section 145B. The tribunal upheld the employees claims and awarded compensation of 3,830 (the mandatory award in place at the relevant time) for each unlawful inducement (that is, a total of 7,660 per employee and approximately 433,000 in total)....