Tag Archive: trade union

Collective Bargaining Stalemate? – Tribunal finds employer’s direct approach to employees unlawful

Employers who recognise a trade union for the purposes of collective bargaining should be aware of a recent tribunal decision which may significantly  impact on their ability to implement contract variations where union negotiations reach a stalemate.

The s.145B conundrum

This is due to a little-known section of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Section 145B of TULRCA is complex but essentially prohibits employers making offers directly to union members to change their terms and conditions in order to avoid collective bargaining (i.e. if the employer’s “sole or main purpose” in making the offer is to achieve a “prohibited result”) .

TULCRA defines a “prohibited result”  as being that one or more of the workers’ terms “will not” or “will no longer” be determined by collective agreement. There is no binding case law on what this means in practice. In particular there is uncertainty about whether employers who, despite bargaining in good faith with the union, fail to reach agreement on a new contractual term are able to then approach employees directly to agree the change, without breaking the law.

This is an issue which arises frequently. For example, if an annual pay bargaining negotiation reaches stalemate, or an employer tries and fails to agree new working patterns with its recognised trade union then if the employer invites workers to accept its proposals directly and they accept, that particular contract term will not have then been determined collectively. The key questions are does the employers offer amount to a prohibited result and was this its sole or main purpose?

Following 3 employment tribunal cases in 2013  it was generally considered that for the legislation to be breached the employer had to be seeking either the total or partial elimination of collective bargaining.

Dunkley and others v Kostal UK Limited

This position has been called into question by the recent employment tribunal decision in Dunkley and others v Kostal UK Limited.

Facts

The employer had a recognition agreement with Unite providing for collective bargaining. In pay negotiations in November 2015 the company made a pay offer of a 2% increase in basic pay plus a 2% Christmas bonus, in return for changes to terms relating to sick pay for new starters, reduction in overtime rates and consolidation of breaks.

The union balloted members on the offer, which was rejected. The employer then sent a notice to all employees summarising the deal and giving until 18 December to accept. The notice stated that failure to sign and return would result in the Christmas bonus not being paid. In January the employer sent a further letter to employees who had not accepted the offer stating that if no agreement could be reached this may lead to notice being given to terminate employment. In the meantime the dispute between the company and the union was referred to ACAS but a collective agreement in respect of pay for 2015 was not concluded until November 2016.

The claimants – all members of Unite – brought claims under s.145B.

Decision

The tribunal held that the employer had breached s.145B.  It found that the employer took the conscious decision to bypass further meaningful union negotiations in favour of a direct and conditional offer to individual employees. It was, the tribunal found, improbable that the employer did not intend to circumvent the collective bargaining process when it made the offers. If there is a recognition agreement which includes collective bargaining the employer cannot drop in and out of the collective process as and when that suits its purpose. The tribunal discounted the fact that the employer intended to determine terms and conditions collectively in the future.

Interestingly, the tribunal failed to accept the employer’s arguments that the impact of this would prevent the employer ever implementing a change to terms with union members if the Union refused to agree.  The tribunal disagreed and considered the option was still open to employers of terminating the contract and offering re-engagement on the new terms. In our view, however, this misses the point that the offer of re-engagement would in itself be in breach of s.145B if the tribunal’s interpretation of s.145B is correct.

Implications of this decision

While there is much the employer could have done differently in this case to strengthen their argument as to their true purpose in implementing the changes, the tribunal decision casts new uncertainty on the impact of s.145B and the level of restriction it places on employers with trade unions who are recognised or seeking recognition.

Although this is only a tribunal decision and therefore not strictly  binding, we are aware that Unite is already seeking to rely on it to prevent employers engaging  directly with employees in relation to terms and conditions. There is now a much higher risk that trade unions will encourage employees to bring claims if offers to change terms are made direct to union members even where collective bargaining has been followed in good faith and reached a stalemate and where the employer intends to collectively bargain on all future matters.

Why is this important?

The consequences of a breach of s.145B can be significant. An Employment Tribunal will award  £3,830 to each employee who has been made an offer in breach of the statutory provisions (whether or not they have accepted the offer) and the contract variation may not be effective. In addition, dismissal for failing to accept such an offer will be automatically unfair with no minimum service requirement. While this legislation only restricts offers to union members, making offers only to non-member employees presents other risks.

What should employers now do?

What can employers do to mitigate the potential for a breach of s.145B?

  • Be clear in communications with the union and the employees what the business reason or need is for any proposed change to terms and conditions and the reason for any urgency. Employers must prove their purpose is lawful. The stronger the business need the more likely a tribunal is to accept the business reason for the new terms is the main purpose;
  • Ensure if offers are made to employees the terms are the same as those offered via the trade union and, in most cases, that the scope of collective bargaining going forward remains unchanged;
  • Exhaust collective bargaining procedures first. Avoid expressing hostility towards  collective bargaining arrangements. In determining the employer’s purpose, the employment tribunal must take into account any evidence that  the employer had recently changed or sought to change, or did not wish to use, collective bargaining; and
  • Review collective bargaining agreements.   

Our employment team have extensive experience of advising on changes to terms and conditions where a union is recognised for collective bargaining and succeeded in defending British Airways against a s.145B claim in 2013 following a restructure. If you would like to discuss your current collective bargaining  arrangements or ongoing or anticipated change programmes, please contact your usual DLA Piper contact.

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Trade Union Act 2016 major provisions coming into force 1 March

The major provisions of the Trade Union Act 2016 will come into force on 1 March 2017. The Trade Union Act 2016 (Commencement No. 3 and Transitional) Regulations 2017 will bring into force the following provisions:

  • The 50% turnout requirement for all industrial action ballots (section 2 of the 2016 Act which amends section 226 of the Trade Union and Labour Relations (Consolidation Act 1992 – TULRCA));
  • The requirement that 40% of those entitled to vote support industrial action in important public service ballots (section 3 which amends s.226 TULRCA);
  • New rules governing the information that must be included on the ballot paper, requiring the union to provide a summary of the matters in issue in the dispute, details of the types of industrial action short of a strike and when industrial action is expected to take place (section 5 which amends s.229 TULRCA);
  • Changes to the information which must be notified to union members following a ballot (section 6, which amends section 231 TULRCA);
  • The requirement on unions to include information about industrial action and political expenditure in their annual return to the Certification Officer (sections 7 and 12, which bring into force new s.32ZA-C TULRCA);
  • The extension of the notice of industrial action to be given to employers from one week to two weeks (section 8, which amends s.234A TULRCA);
  • The expiry of the mandate for industrial action six months after the ballot (section 9 which amends s.234 TULRCA);
  • The requirement on unions to appoint a picket supervisor (section 10 which amends s.219 and brings into force new s.220A TULRCA);
  • The requirement that union members opt in to contributing to political funds, subject to a transition period of 12 months and only in respect of new joiners (section 11 which amends s.82 and brings into force new s.84A TULRCA); and
  • Restrictions on ‘check-off’ arrangements, requiring unions in the public sector to make a reasonable contribution to the cost of administration (section 15 which amends s.296 and brings into force new s.116B TULRCA).

The new rules will only apply to industrial action ballots which open on or after 1 March 2017.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/trade-union-act-2016-major-provisions-coming-into-force-1-march/

Trade Union Act 2016

 

Yesterday the most significant piece of trade union legislation in decades, the Trade Union Act 2016, gained Royal Assent. The Government has had to make a number of concessions in order to get the controversial legislation passed before the end of the parliamentary session. The main changes which will come into effect when the Act is brought into force are:

  • Lawful industrial action will require a minimum turnout of 50% of those entitled to vote, in addition to a majority voting in favour;
  • In essential public services (including health, education, fire and transport), at least 40% of those who were entitled to vote in the ballot will be required to vote in favour of action;
  • The voting paper must include a summary of the matter or matters in issue in the trade dispute to which the proposed industrial action relates;
  • Unions will be required to give employers 14 rather than the current 7 days’ notice of industrial action, unless the union and employer agree otherwise;
  • A ballot for strike action will cease to give the union a mandate to take action 6 months after the ballot, extendable to 9 months if the employer agrees;
  • Unions will be required to appoint an identifiable supervisor when engaged in picketing;
  • After a transitional period of at least 12 months, all new trade union members will be required to pay into union political funds only if they have actively opted in; and
  • The Government will commission an independent review on electronic balloting for industrial action.

More significant restrictions on picketing were abandoned at an earlier stage. Provisions to repeal the ban on the use of agency workers to cover for striking workers are not contained in the Act but may be introduced by secondary legislation

Permanent link to this article: http://www.dlapiperbeaware.co.uk/trade-union-act-2016/

Woolworths redundancy appeal referred to ECJ

Alan Chalmers, a Partner in our Sheffield office comments: the Court of Appeal decided yesterday to make a reference to the European Court of Justice (ECJ) in the controversial Woolworths/Ethel Austin collective redundancy litigation.

In USDAW v Ethel Austin (in administration) the Ethel Austin and Woolworths chains of shops had gone into administration resulting in their employees being made redundant. The employees who were members of a trade union claimed protective awards for failure to consult collectively under s.188 TULRCA, which provides that an employer is required to consult with appropriate representatives when proposing to dismiss as redundant 20 or more employees at one establishment within a 90 day period. At the employment tribunal, only those employees who were employed at premises where 20 people or more were employed succeeded in claiming protective awards. Those who worked at stores of fewer than 20 people failed in their claims. The union appealed to the EAT. The issue before the EAT was whether s.188 was to be interpreted so as to omit the words “at one establishment” in order to give effect to the core objective of the EU Directive on collective redundancies,  allowing protective awards to be made to all employees whose employer dismissed 20 employees as redundant within 90 days. As reported in our Be Alert dated 2 July 2013, the EAT held that those words should be deleted. The consequence of this was that the Secretary of State (and ultimately the taxpayer) was liable for the protective awards.

Not long before the EAT handed down judgment in Ethel Austin, a tribunal in Northern Ireland referred a similar case, Lyttle v Bluebird UK Bidco Ltd, to the ECJ. That case concerned redundancies arising out of the administration of the Bon Marche chain.

In the Court of Appeal, the Secretary of State sought to argue that the appeal in Ethel Austin should be stayed pending resolution of the Lyttle case.

However, the Court of Appeal concluded that the appropriate course of action was to refer the case to the ECJ rather than stay the appeal. The Court took into account the fact that the employees in Lyttle did not have legal representation and considered that the ECJ would benefit from the employees having legal representation. In addition, the ECJ’s judgment in Lyttle might not dispose of all the issues as the ECJ would also need to consider whether, if UK law is incompatible with the Directive, the employees should be able to rely on the Directive against the Secretary of State in any event.

In the long term, it is almost certainly beneficial to employers to have a definitive resolution of this important issue. However, although it is possible that the ECJ will join the reference with Lyttle and expedite it, given the importance of the questions raised, it is unlikely there will be a decision any time soon; the usual timetable from reference to decision is around 18 months.  In the meantime, the practical difficulties arising from the EAT decision continue. This case has important implications for large employers with multiple locations, most obviously those in the retail, logistics and hospitality sectors. Whereas previously those employers did not have to collectively consult until there were at least 20 redundancies at any one establishment, now they must do so if the overall number of redundancies amounts to 20, wherever they occur. This can cause significant problems both in terms of recognising that the obligation has been triggered and in arranging the consultation meetings if participants are at different locations. Collective consultation will be longer and more expensive for employers in this situation.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/woolworths-redundancy-appeal-referred-to-ecj/