Kostal UK Ltd v Dunkley & Ors

Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 targets offers whose sole or main purpose is to secure the permanent removal of terms from collective bargaining, or the abandonment of collective bargaining altogether. It does not prohibit every direct offer made after negotiations reach an impasse. A one-off agreement taking a term outside collective bargaining on that occasion is not, without more, the prohibited result. Recognition of a union does not give it a veto over changes to terms. The employer’s purpose remains a factual question, but an unlawful purpose alone is insufficient unless the statutory prohibited result is established.

Kostal recognised Unite for collective bargaining. After Unite members rejected a pay and terms offer, Kostal made direct offers to individual employees, first including a Christmas bonus and later offering a pay increase while warning that failure to agree might lead to notice being served on their contracts.

The employment tribunal upheld claims by 55 members under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 and made two fixed awards per claimant. The Employment Appeal Tribunal, by majority, affirmed that decision, reported at [2018] ICR 768. The central issue was whether a direct offer producing a one-off departure from collective bargaining had the statutory prohibited result, and whether the employer’s purpose satisfied the separate statutory requirement.

1. Appeal allowed. The Court of Appeal set aside the decisions of the employment tribunal and the majority of the Employment Appeal Tribunal and dismissed the claims.
2. Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 imposes two cumulative requirements. Acceptance of the offers must have the prohibited result, and the employer’s sole or main purpose in making them must be to achieve that result.
3. Where a union is seeking recognition, the prohibited result is that the workers’ terms will not be determined by collective agreement. Where a union is already recognised and terms are determined by collective agreement, the relevant result is that the terms as a whole, or one or more terms, will no longer be determined collectively. That wording denotes a permanent change taking the terms outside the scope of collective bargaining.
4. There was no separate category covering an offer which caused a term to be agreed directly on one occasion only. That interpretation would give a recognised union an effective veto over even minor direct offers and would go beyond the mischief identified by the European Court of Human Rights in Wilson and others v United Kingdom [2002] IRLR 568.
5. Article 11 protects representation by a trade union and the opportunity for its voice to be heard in negotiations. It does not confer a right to impose a particular result on the employer. The absence of anti-union motivation, the fact that the offers were made to the whole workforce, and the continuation of Unite’s representation distinguished the present case from the Strasbourg cases.
6. The employment tribunal was entitled to find that Kostal intended to circumvent collective bargaining. That finding did not establish the prohibited result. Section 145B contains no general reasonableness qualification, and the EAT’s proposed protection for employers acting reasonably and rationally was unsupported by the statutory language.

1. Court of Appeal (Civil Division) allowed Kostal’s appeal, set aside the decisions below and dismissed the claims: [2019] EWCA Civ 1009.
2. Employment Appeal Tribunal dismissed Kostal’s appeal by a majority, with the president and one member in the majority and one member dissenting. The decision was reported at [2018] ICR 768.
3. Employment Tribunal upheld 55 claims concerning two offers made in December 2015 and January 2016 and awarded the statutory fixed sum for each unlawful offer. The decision was promulgated on 10 January 2017.