Reinforcing Protections under Section 145B: Kostal UK Ltd v Dunkley & Ors ([2021] UKSC 47)

Introduction

The case of Kostal UK Ltd v Dunkley & Ors ([2021] UKSC 47) marks a significant development in the interpretation and enforcement of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (the 1992 Act). This case is pivotal as it addresses the boundaries within which employers can make direct offers to union members, particularly in contexts where such offers might undermine collective bargaining agreements.

The primary parties involved are Kostal UK Ltd, an employer in the electromechanical and electronic manufacturing sector, and Dunkley alongside other claimants, who are members of Unite the Union. The core issue revolves around whether Kostal's direct offers to employees—made outside the established collective bargaining process—constituted a violation of section 145B, thereby infringing upon the employees' rights protected under Article 11 of the European Convention on Human Rights (ECHR).

Summary of the Judgment

The United Kingdom Supreme Court ultimately upheld the decisions of the Employment Tribunal and the Employment Appeal Tribunal (EAT), finding in favor of the claimants. The court determined that Kostal's direct offers to employees, which bypassed the agreed-upon collective bargaining procedures, violated section 145B of the 1992 Act. Consequently, Kostal was liable to pay statutory awards to the affected employees.

The Supreme Court emphasized that section 145B is designed to prevent employers from undermining collective bargaining by making direct offers that result in terms of employment being determined outside of collective agreements. The court rejected the Court of Appeal's narrower interpretation, which suggested that only permanent relinquishment of collective bargaining rights would constitute a breach. Instead, the Supreme Court affirmed a broader interpretation, covering any instance where collective bargaining is sidestepped, even temporarily.

Analysis

Precedents Cited

The judgment heavily referenced the European Court of Human Rights (ECtHR) case Wilson and Palmer v United Kingdom (2002) 35 EHRR 20, which had previously established that UK law permitted employers to offer inducements to employees to renounce union representation, thereby infringing Article 11 of the ECHR. This case was instrumental in shaping the legislative amendments to the 1992 Act via the Employment Relations Act 2004.

Additionally, the court referred to cases like Uber BV v Aslam [2021] UKSC 5, and Demir v Turkey (2009) 48 EHRR 54, which further elucidate the nuances of collective bargaining rights and the obligations of employers under Article 11.

Legal Reasoning

The Supreme Court's reasoning centered on a detailed interpretation of section 145B, which prohibits employers from making offers to union members that would result in terms of employment being determined outside of collective agreements, provided the employer's main purpose is to achieve such an outcome.

Prohibited Result: The court defined the prohibited result as any scenario where, upon acceptance of the employer's offer, one or more terms of employment are not determined by collective bargaining. This includes both permanent and temporary deviations from collective agreements.

Employer's Main Purpose: For section 145B to apply, it must be established that the employer's main purpose in making the offer is to bypass collective bargaining. The employer must demonstrate that their motive was not solely to undermine collective agreements but had a genuine business purpose.

The court emphasized that the cumulative effect of all offers made to employees must be considered. If the acceptance of these offers could reasonably be expected to impact collective bargaining, they fall within the scope of section 145B. The Supreme Court also clarified that the language of the statute requires a causative link between the offers and the prohibited result, ensuring that the law is applied contextually and not merely based on the content of individual offers.

Impact

The judgment significantly impacts the realm of industrial relations by reinforcing the protections afforded to collective bargaining processes. Employers are now more circumspect in making direct offers to union members, ensuring that such offers do not inadvertently or deliberately undermine collective agreements. This decision upholds the sanctity of negotiated terms and curtails practices that could erode union influence within workplaces.

Future cases will likely refer to this judgment to interpret section 145B, setting a precedent that any offer making collective bargaining less effective—whether temporarily or permanently—can lead to legal consequences. Employers must now carefully assess their negotiation strategies to align with the statutory requirements, fostering a more balanced power dynamic between employers and trade unions.

Complex Concepts Simplified

Section 145B of the 1992 Act: This provision makes it unlawful for employers to make offers to employees that would result in terms of employment being decided outside of collective agreements negotiated with trade unions, especially if the employer's main goal is to bypass these agreements.

Collective Bargaining: A negotiation process between employers and a group of employees aimed at reaching agreements that regulate working conditions. Terms agreed upon are meant to apply collectively to all employees within the bargaining unit.

Prohibited Result: The outcome where employment terms are not determined by collective bargaining but rather through individual agreements or other means that exclude union involvement.

Recognition Agreement: A formal agreement between an employer and a trade union that recognizes the union as the representative for collective bargaining purposes within the company.

Conclusion

The Supreme Court's decision in Kostal UK Ltd v Dunkley & Ors serves as a robust affirmation of the protections surrounding collective bargaining within the UK legal framework. By broadening the interpretation of section 145B, the court ensures that employers cannot circumvent collective agreements through indirect or temporary means without facing legal repercussions. This judgment not only aligns UK law with the stipulations of Article 11 of the ECHR but also fortifies the role of trade unions in safeguarding employees' collective interests.

Employers must now navigate the complexities of direct negotiations with a heightened awareness of the legal boundaries established by this ruling. Simultaneously, trade unions can leverage this precedent to reinforce their bargaining positions, knowing that legal safeguards are in place to prevent undermining their negotiated agreements. Overall, this judgment underscores the importance of maintaining equitable and transparent negotiation processes in the workplace, fostering a balanced and fair industrial relations environment.