Introduction

Any attempt to change the terms and conditions of employment of existing staff to their detriment is bound to carry risk. Should the employees not accept the change then amongst the claims that may be brought are those of breach of contract, unlawful deduction from wages, unfair dismissal (actual or constructive) and a failure to collectively consult (where an institution seeks to achieve the change by termination and offer of re-engagement).

To avoid such risks an institution will try and agree the changes collectively. If that approach is not successful, however, institutions may be tempted to try and agree changes with individual employees. Whilst on the face of it such agreement could reduce the exposure to the claims mentioned above, such an approach could fall foul of an often overlooked provision contained at section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992.

Whilst there has been relatively little case law on the application of section 145B since its introduction, a recent case has provided a timely reminder of the importance of this provision.

Section 145B

This section was introduced in 2004 to bring the UK in line with Article 11 of the European Convention on Human Rights (Freedom of Assembly and Association). The purpose of the amendment to the 1992 Act was prevent the strategy adopted by some employers to offer financial incentives to staff to sign up to terms and conditions of employment which provided that the employer no longer had to collectively consult with the recognised trade union in relation to those terms and conditions.

Whilst institutions would not seek such an approach, the way section 145B is drafted means that its potential coverage is wider than the circumstances it was intended to prevent.

Section 145B states that:

• a worker who is a member of a recognised independent trade union;

• has the right not to have an offer made to him by his employer if acceptance of the offer would have the “prohibited result”; and

• the employer’s sole or main purpose in making the offer is to achieve that result.

The “prohibited result” is that the worker’s terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union.

Where there is a breach of section 145B the employer will be ordered to pay each claimant a fixed amount, which is currently £3,830.

How has section 145B been applied in practice?

In the case of Wyer v Pembrokeshire County Council, the Council had been trying for a number of years to implement a new pay and grading structure following a job evaluation exercise. Terms and conditions relating to pay and grading were subject to collective bargaining and collective negotiations had taken place with the trade unions without agreement being reached. Following the failure of these negotiations the Council decided to try and implement its new structure by obtaining the individual consent of employees.

The Council wrote to individual employees stating that it was under an obligation to implement the new pay and grading structure in order to deliver its commitment on equal pay and following its failure to agree the changes with the trade unions it was seeking to reach agreement with staff directly. Employees were invited to confirm their acceptance of the new pay and grading structure and sign an acceptance form and return that to the Council by the specified date. Approximately 50 employees brought claims alleging that the offer which had been made to them was in breach of Section 145B.

The employment tribunal concluded that there had indeed been an offer, the acceptance of which would result in one or more of the terms of the employees contracts no longer being subject to collective agreement (the “prohibited result”). The tribunal concluded, however, that the sole or main purpose of the offer was not to avoid collective bargaining in relation to pay and grading but instead was to implement a new pay and grading structure to minimise equal pay risks.

In another case, however, of Whittaker v Buckinghamshire County Council the claims were successful. In this case the Council carried out a review of its pay framework and wished to introduce performance related pay. There were a series of meetings with the recognised trade unions who did not agree to the proposed changes. As a result letters were sent by the Council to its employees giving them an opportunity to opt into the performance related pay scheme for which they would receive a one off payment of £750.

A claim was brought by one of the members of staff (who was a trade union representative) and this was successful. The tribunal concluded that, in this case, the sole or main purpose was to achieve the “prohibited result" as acceptance of the offer would mean that the worker concerned would cease to have their contractual position determined by a collective agreement negotiated by or on behalf of the trade union. Whilst the tribunal accepted that an ulterior purpose was to improve efficiency and introduce salary progression, the main purpose was to move away from collective bargaining.

Recent Case

Whilst the two cases mentioned above were both heard by an employment tribunal in 2013 a much more recent employment tribunal decision was given in January this year in the case of Dunkley v Kostal UK Limited.

Following a ballot in favour of union recognition at Kostal UK Limited a recognition agreement was concluded with Unite in February 2015 establishing a framework for collective bargaining. This agreement provided, amongst other things, that formal pay negotiations would take place annually and that any proposed changes to terms and conditions of employment would be negotiated with the union.

In October 2015 the employer and the union commenced pay negotiations for 2016. On 24 November 2015 the employer proposed that employees would receive a 2% increase to basic pay at the beginning of January 2016; 2% of basic pay was to be paid as a lump sum in December as a bonus and for any employee earning under £20,000 a year a further 2% increase to basic pay would take place from 1 April 2016. By way of an “exchange” the employer also proposed to reduce sick pay to SSP for the first year of employment for new starters; reduce the Sunday overtime rate from double time to time and a half and consolidate the two 15 minute rest breaks into one 30 minute rest break.

On 3 December 2015 a consultative ballot took place on the employer’s proposals and this was overwhelmingly rejected with only 20.8% of the staff voting in favour (with an 80% turnout). On 10 December 2015 the employer wrote to all its employees offering the pay increase to each employee pointing out that if the offer was not accepted by 18 December 2015 they would not receive the Christmas bonus and that could not be paid at a later date.

On 29 January 2016 the employer wrote to all of those employees who had, at that point, not accepted the pay proposal. The recipients of the letter were invited to a meeting on 2 February 2016 with an HR Officer or alternatively to return the letter accepting the offer by no later than 4 February 2016. The letter stated that the proposed changes would not be implemented without their express agreement but that they should be aware that in the event that no agreement could be reached that could lead to the employer serving notice in relation to their contract of employment.

57 employees brought claims arguing that the letters of 10 December 2015 and 29 January 2016 constituted a breach of section 145B. Subsequently, on 3 November 2016, collective agreement was reached on the pay proposals.

The employer argued that section 145B did not prevent a temporary solution to an impasse as there had never been any suggestion that any workers who accepted the employers offer would, in the future, no longer be covered by collective bargaining. To the contrary, the employer’s intention was that subsequent pay discussions would take place with the union but, in the absence of agreement on this particular occasion, the employer had sought individual agreement. The tribunal rejected this argument notwithstanding the fact that the employer had continued to engage with collective bargaining following the letters which it had sent to the employees and had eventually reached collective agreement, on the basis that otherwise this would allow an employer to drop in and out of the collective process as and when it suited its purpose. Consequently, the tribunal concluded that there had been an offer, the acceptance of which would have the “prohibited result”.

The tribunal also concluded that the sole or main purpose was to achieve the “prohibited result”. In coming to this conclusion it rejected the employer’s argument that the sole or main purpose was to ensure that the employees did not lose out on their Christmas bonus. The tribunal pointed out that this was only relevant in relation to the December 2015 offer and not the subsequent January 2016 offer but also that this had been introduced into the negotiations by the employer as a bargaining tool and therefore could not be relied upon as a reason for arguing that this constituted their sole or main purpose. In coming to their conclusion as to the sole or main purpose, the tribunal also believed that it was significant that the first offer made in December 2015 had been an immediate reaction to the rejection of the employer’s proposals in the consultative ballot.

As a result the tribunal upheld the claims of breach of section 145B

The outcome of any claims which are brought under section 145B will be decided on their facts. However, the Dunkley case is a salutary reminder for institutions that they need to approach the process of varying terms and conditions with care, especially if they are considering making offers to staff individually.

Most cases will turn on the question as to whether the institution’s sole or main purpose in making the offer was to achieve the “prohibited result”, namely that the workers terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement. Whilst this will very much depend on the particular circumstances, institutions should be mindful of the fact that the burden of proof rests with the institution to show what its sole or main purpose was in making the offers.