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Home » Latest News » Contractual changes without trade union agreement made easier by the Court of Appeal

Contractual changes without trade union agreement made easier by the Court of Appeal

Contractual changes without trade union agreement made easier by the Court of Appeal

The Court of Appeal has recently handed down a decision which will be relevant to all employers who recognise a trade union for collective bargaining purposes, as well as those workplaces where unions are trying to obtain recognition.

The employer in this case recognised Unite the Union for collective bargaining purposes. It offered a pay rise and bonus to all the workers but this was conditional upon some changes to overtime, sick pay and breaks. Unite rejected the offer.

The employer was under some time pressure to get the changes agreed and it wrote directly to all of the employees and made the same offer Unite had refused. Most of the employees accepted the offer (and the related changes to their terms and conditions) but some refused.

The union felt that by making the offer the employer was trying to bypass the collective bargaining arrangement which was in place. The union argued the employer had breached section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992.

Section 145B makes it unlawful for an employer to make an offer to an employee if that offer results in some or all of the employee’s terms and conditions no longer being determined by collective agreement, where that outcome was the employer’s sole or main purpose. There is a fixed penalty for making such an offer – currently this is more than £4,000 per offer.

The employer argued that section 145B was only contravened where an offer resulted in collective bargaining ceasing permanently. The union argued there was no need for collective bargaining arrangements to be disregarded forever – if an employee’s terms were agreed outside of the collective bargaining mechanism on just one occasion this was sufficient.

The Union won at the Employment Tribunal hearing and the employer was ordered to pay £420,000 in compensation. The employer appealed but lost again at the Employment Appeal Tribunal before appealing to the Court of Appeal.

The Court of Appeal held that where there is a ‘one off’ offer directly to employees over the heads of the union this will not amount to a breach of section 145B. So long as collective bargaining arrangements remain in place, there is no breach.

However, if an offer is made to an employee to permanently forgo their right to have a union collectively bargain on their behalf (whether a union is actually recognised or is just seeking to be recognised) this will be unlawful.

As the Court of Appeal pointed out, if section 145B prevented an employer from making a direct offer to employees on just one occasion it would be impossible for an employer to make changes without the union’s agreement (where a union is recognised or seeking to be recognised). The Court of Appeal felt this would be tantamount to giving a union a veto over changes to terms and conditions, which in the Court’s view was not the intention of the legislation.

However, there are still some unanswered questions. In this case the employer made an offer on one occasion. What if an employer makes no effort to agree terms with a recognised union and makes offers directly to employees year after year, leaving the collective bargaining arrangements theoretically in place? Is that a breach of section 145B? Also, in this case it was accepted there was no hostility to the trade union from the employer – with the suggestion that the outcome might have been different if there had been.

The Union have applied to the Supreme Court for permission to appeal, so this litigation is not over yet. Even if the Union do not succeed with an appeal, as the Court of Appeal pointed out in this case a union who is dissatisfied with an employer who makes an offer directly to its employees does have options open to it – most notably industrial action. Our experience of collective bargaining is that negotiations can be difficult and sometimes fraught and employers should tread carefully.

If you have any queries about this article, please get in touch with Lee Whiting or your usual contact in the employment team.