Tag Archive: trade unions

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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Government releases details of Trade Union Bill

With the disruption caused by last week’s tube strikes still fresh in people’s minds, the Government has today published a press release providing further details on its proposals for strike reform.

The proposals are in response to a number of strikes in recent years which have arguably caused significant disruption to business and consumers, despite, on the figures, not being supported by a majority of the particular workforce.  This situation has arisen because a lawful strike needs only the support of a majority of the workers voting, meaning that very low turnouts of voting workers can still result in legitimate industrial action.

The Government has now confirmed that it will introduce a Trade Union Bill which will implement:

  • A 50% threshold for ballot turn-outs;
  • An additional threshold of 40% of support to take industrial action in key public services such as education and transport;
  • A 4 month time limit for industrial action from the date of the ballot;
  • Changes to the ballot paper to give a clear description of the trade dispute and the planned industrial action;
  • A requirement for members to make an active choice of opting-in to contributions to political funds; and
  • Safeguards to ensure non-striking members of a workforce are able to continue work without intimidation.
  • The Government will consult on a number of its proposed measures including:
  • The proposed introduction of the 40% threshold for strikes in essential public services;
  • Reforming and modernising the rules and codes of practice on picketing and protests linked to industrial disputes; and
  • The repeal of a ban on the use of agency workers.

The consultation will open today and run until September 2015.

Trade unions are, unsurprisingly, highly opposed to the proposed reforms, stating that the proposals will make legal strikes “close to impossible”. UNITE has gone further and indicated this week that it has passed a motion to remove from its rule book the words caveating strike action, “so far as may be lawful”.

The real impact remains to be seen, however.  There is no doubt that the reforms will have a significant impact on sectors which have traditionally seen low levels of turnout, for example in essential public and civil services – where not only a 50% turnout but also a 40% threshold of support will apply.  However, whether this will lead to a reduction in strikes remains to be seen; given the potential sanctions for trade unions in relation to illegal strike activity, unlawful action seems unlikely, despite UNITE’s  amendment to its rules. Employers should, however, remain vigilant to potentially unlawful activity.  Where legal picketing is curbed, employers may see more ancillary protests where employers need to look more broadly at the laws of nuisance and other non-industrial torts, and become more creative about how they deal with concerted action by trade unions. Unions may also adopt a more militant approach in an attempt to galvanise the workforce into turning out and voting.  However, a number of sectors, such as transport, have historically had high levels of turnout in support of industrial action and would already meet the new thresholds. In the rail industry, RMT recently obtained a 60% turnout with an 80% vote in favour of strike action.  In practice, therefore, the impact of the new reforms may be limited in some sectors.

Where lawful strike action does take place, being able to use agency workers to cover striking workers may also not be the ideal solution it seems; this is potentially a piecemeal approach which does not adequately meet the needs of employers or their customers.  The outcome of the consultation on this will therefore be awaited with interest.

We will report on the progress of the Bill in future alerts.

 

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