What is unlawful inducement? Can an employer make a direct offer to employees in order to bypass collective bargaining?

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What is a collective bargaining agreement?

A collective bargaining agreement (CBA) is a contract between a union representing employees and the employer regarding the employees’ labour. A CBA will set out certain terms of the employment contract such as; wages, employee benefits, working conditions and hours of work, employer’s rights and responsibilities, as well as the union’s rights and obligations. The CBA can even cover limitations and grounds for strikes. A CBA will run for a specified period of time (agreed between the union and employer). A CBA differs from a regular employment contract as the obligations of both parties do not automatically cease should the CBA period lapse. If the majority of employees continue to support the union, then the union representatives and the employer must bargain again (in good faith), in order to achieve a further CBA for a new period of time. 

The National Labour Relations Act (NLRA) governs the collective bargaining process in all industries in the private sector except rail and air transport. The latter two are governed by the Railway Labour Act. The NLRA seeks to resolve disputes between the employer and the union representing employees in good faith and calls for arbitration should a dispute arise. If a union or an employer does not act in good faith, the matter can be resolved by the National Labour Relations Board (NLRB) which has exclusive jurisdiction to resolve such matters. 

Can an employer bypass the collective bargaining process and give offers directly to employees?

Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) contains a prohibition where employers cannot induce their workers to forgo the collective bargaining process in certain circumstances.  In essence, an employer cannot make a direct offer to their employees where the sole or main purpose in making the offer is to bypass the collective bargaining process. In the event that section 145B has been breached, then the affected employees can claim a mandatory award from the employment tribunal (currently £4,341). 

Kostal UK Ltd v Dunkley and others [2021]

This was a recent case decided by the supreme court this year. It was a case in which Kostal UK Ltd (Kostal) had agreed to recognise Unite the Union (Unite) as the representative of Kostal’s employees. An agreement was put in place between Kostal and Unite that established collective bargaining. The agreement also provided that any changes to the terms of employment was to be negotiated with Unite beforehand. Unite had written to Kostal in order to negotiate an increase in basic pay for all employees as well as increasing their Christmas bonus. Kostal proposed their own changes that were then subsequently rejected by a large majority of Kostal’s employees that were part of the union. 

Following this rejection, Kostall then gave written notice to all employees directly with the message that in essence offered the same terms that were recently rejected. The written notice also stated that failure to agree to said terms would lead to no pay raise at all or no Christmas bonus. Kostal’s basis for this was to allow employees the chance to be paid their Christmas bonus and urged the employees to sign by a short deadline in order to receive said bonus. Kostal maintained that the purpose of this was not to induce employees out of collective bargaining. 

A second letter was sent to the employees that had not agreed to the terms of the original letter’s pay proposal. It reaffirmed that no changes to their employment would be implemented without their express agreement and that in the absence of an agreement, there was a potential risk of Kostal serving notice on their employment contract. There was no mention of whether the employees would be served new terms of employment once notice was given. Months later a collective agreement was reached, but a larger number of employees brought claims to the employment tribunal stating that their rights under section 145B of TULRCA was infringed by both letters. 

Originally the employment tribunal had awarded employees the mandatory award for breach of section 145B. This was then taken to the Court of Appeal allowing Kostal’s appeal, in which the Court had ruled in Kostal’s favour. The employees appealed and took it to the Supreme Court in which the Supreme Court reaffirmed the employment tribunal’s decision. Section 145B relates to any agreement that would require an employee to relinquish their collective bargaining rights regardless of whether it is on a temporary or permanent basis. 

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