Kostal UK Ltd v Dunkley and others  EWCA Civ 1009
Kostal UK Ltd (KU) recognised Unite for collective bargaining purposes. KU offered employees a new package, which included some detrimental changes to sick pay, overtime and breaks together with pay increases and a Christmas bonus. Unite members voted overwhelmingly to reject it. KU sent two letters directly to all employees offering them the same package. A number of union members brought employment tribunal claims alleging that each letter was an unlawful inducement under the Trade Union and Labour Relations (Consolidation) Act 1992.
This prohibits an employer from making offers to members of a recognised trade union if the sole or main purpose is to achieve a prohibited result, defined as one where "the workers' 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."
The Court of Appeal concluded that the legislation would only be engaged if the employer's sole or main purpose was that the workers' terms of employment (or one or more of those terms) would no longer be determined by collective agreement on a permanent basis. This was not the case here – the employer's purpose was just to bypass the stalled negotiations but it would continue to recognise Unite and collectively bargain with it in future. To hold otherwise would mean that unions had a complete veto over any offer made directly to employees to change terms and conditions. The claims were therefore dismissed.
The Court of Appeal has provided welcome clarification to employers who recognise trade unions in this judgment. However, the legislation is unclear so it is possible that the judgment could be appealed to the Supreme Court and it appears that Unite is in fact seeking permission to appeal. Where an employment tribunal find that an unlawful inducement has been given to employees, it can be an expensive claim for employers: the compensation is currently £4,193 per inducement per employee, which is mandatory and cannot be decreased.