Kostal UK Ltd v Dunkley

Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 is engaged where acceptance of direct offers would cause one or more terms of employment to be determined directly rather than by collective agreement. The result need not remove collective bargaining for the future or be permanent. The effect of acceptance is assessed when the offers are made.

The employer’s sole or main purpose is a fact-sensitive question. The burden lies on the employer to establish its purpose once the worker has raised a prima facie case. A separate fixed award is required for each distinct unlawful offer.

Kostal UK Ltd appealed against liability and remedy decisions of the Sheffield Employment Tribunal. The Tribunal upheld claims by members of Unite under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 concerning direct offers made after collective pay negotiations had failed.

The first offer included a pay increase, a Christmas bonus and changes to contractual terms. The second offer concerned employees who had not accepted the first and included a threat that their contracts might be terminated. The Tribunal found that acceptance of either offer would take terms outside collective bargaining and that the employer’s main purpose was to achieve that result. It awarded the fixed statutory sum for each offer received. The issues were the meaning of the prohibited result, the employer’s purpose and whether two awards were permissible.

1. Liability appeal dismissed. The majority held that section 145B(2) covers two situations: removing all terms from collective bargaining, and removing one or more terms. In the latter case, direct agreement on a term is sufficient, even if other terms remain subject to collective bargaining. The use of the future tense does not require the term to be excluded from collective bargaining at a future bargaining round. Nor must the effect be permanent.
2. The effect of acceptance is ordinarily a question of fact assessed when the offers are made. This follows from the conditional wording of section 145B(1)(a), the statutory time limit and the need for a workable scheme. The employer’s purpose under section 145B(1)(b) is distinct from the effect of acceptance and concerns the subjective aim or object the employer sought to achieve.
3. The worker must raise a prima facie case, after which the employer bears the burden of showing its sole or main purpose on the balance of probabilities. The matters specified in section 145D(4) are mandatory and reinforce the fact-sensitive nature of the inquiry. Direct offers remain lawful where the employer can establish a genuine business purpose unconnected with undermining or narrowing collective bargaining.
4. The Tribunal was entitled to infer an unlawful purpose from the timing of the offers, their connection with the rejected ballot, the direct and conditional approach to union members, and the attempt to weaken Unite’s negotiating position. The employer’s purpose in relation to the second offer was especially unsupported because the Christmas bonus had already been lost.
5. Remedy appeal dismissed unanimously. The two offers were factually distinct: the first included a Christmas bonus, while the second did not and contained a possible termination warning. Section 145E required an award in respect of each offer complained of. The Tribunal therefore correctly made two fixed awards to claimants who received both offers.
6. The appeals were dismissed.

• Employment Appeal Tribunal: dismissed both appeals from the Sheffield Employment Tribunal’s liability and remedy decisions, promulgated on 10 January 2017 and 13 March 2017.