The EAT has upheld a seven-figure award against an employer which did not properly conclude collective bargaining before making a direct pay offer to its workforce.
Under section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), employers are prohibited from making offers to employees who are members of its recognised trade union(s) which, if accepted, would mean that their terms and conditions will not or will no longer be determined by collective bargaining. This outcome is known as the “prohibited result”.
An employer will only be in breach of section 145B if the sole or main purpose of making the offer is to achieve the prohibited result.
However, the Supreme Court has confirmed in the leading case of Kostal (which we wrote about here) that, in order for an offer to be capable of having the prohibited result, there must at least be a real possibility that the relevant terms would otherwise have been determined by collective bargaining. The upshot is that if an employer has exhausted the collective bargaining process, it is free to make direct offers to employees without incurring liability under section 145B.
The penalty for unlawful inducements in breach of section 145B is currently 5,993 per offer per union member, meaning these claims can be punitively expensive for large, unionised employers.
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