Trade union negotiations
Employers who go above a union and offer inducements to employees to give up collective bargaining rights could be open to tribunal claims.
Do you recognise a trade union for the purpose of collective bargaining of terms and conditions of employment? If so, then you must not offer inducements to employees to give up those collective bargaining rights. You have to bargain with the union on pay increases and other matters.
In Katsos UK v Dunkley, the employer had been bargaining with the union Unite, but negotiations broke down. Katsos made two pay offers directly to some of the employees who were covered by Unite’s collective bargaining agreement. The idea was to go over the union’s head to try and get the employees to agree to the new pay rise, despite the union refusing to accept it. 57 employees brought tribunal claims arguing that unlawful inducements had been offered to give up their collective bargaining rights. The tribunal awarded a fixed amount of £3800 to each employee for each unlawful offer that was made. The total compensation awarded was over £400,000. Katsos appealed to the Employment Appeals Tribunal (EAT).
The EAT rejected the appeal, confirming that if the employer’s sole or principal purpose in making the offer is to vary terms outside of collective bargaining, then that is a “prohibited result”. Accordingly, the direct pay offers had been unlawful as they had been made to try and get around the union discussions. They confirmed that, if the acceptance of a direct offer would mean that at least one term of employment was determined by direct agreement, this was sufficient to amount to an unlawful inducement.