Employment Law Cases
Unlawful inducements and collective bargaining
An employer’s imposition of a pay award, at a time when negotiations with the union were stalled, was an unlawful inducement.
Mr Jones and his colleagues worked for Ineos at its Grangemouth plant in Scotland and were UNITE members. Ineos recognised UNITE as entitled to bargain collectively in relation to pay, hours and holidays. The relevant agreement did not include detailed collective bargaining procedures (e.g. the minimum or maximum number of meetings which would be held). Following acrimonious collective bargaining, Ineos made the union a ‘best and final offer’ of 2.8% which UNITE presented to its members but did not recommend acceptance (the parties weren’t actually that far apart on the numbers). The members authorised UNITE to resume talks with Ineos in the hope of securing an improved offer. However Ineos decided that negotiations had been exhausted and that its only option was to impose the pay award unilaterally. On 5 April it wrote to all staff saying that it would implement the pay increase and terminate the collective bargaining agreement with UNITE. Mr Jones and other affected employees brought ‘unlawful inducement’ claims under s. 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. This legislation prohibits offers to union members if acceptance of the offers would have the ‘prohibited result’ that terms of employment or any of them will not or will no longer be determined by collective bargaining and that was the employer’s sole or main intention in making the offers.
The scope and correct interpretation of s. 145B was considered by the Supreme Court in Kostal UK Ltd v Dunkley. This case came before the tribunal before the Supreme Court’s decision and the appeal to the EAT was stayed pending that decision.
The tribunal upheld the employees’ claims and Ineos appealed.
The appeal was dismissed.
Ineos argued that a unilateral pay award could not be an ‘offer’ - it was a unilateral promise that did not require acceptance as a matter of Scots law. The EAT disagreed. The word ‘offer’ should be given its ordinary meaning. In this case Ineos was offering increased pay, which employees could accept by continuing to work. This also reflected how Ineos had communicated with its employees. The position was the same in England and Scotland.
The next issue was whether the offer would achieve the ‘prohibited result’ that terms would no longer be determined by collective agreement. After the decision in Kostal, the answer to that depended on whether there was still a real possibility that the matter in question would have been decided by collective agreement if the offers had not been made and accepted. If there was no detailed procedural arrangement that would show whether collective bargaining had been exhausted (as was the case here), it was the tribunal’s role to ascertain objectively whether negotiations were as a matter of fact at an end. The tribunal had clearly been entitled to find that the parties were close to agreement and that it was likely that agreement would have been reached through further collective bargaining.
It was also clear that achieving the prohibited result was Ineos’ sole or main purpose in making the offer. It did not want to use the arrangements agreed with UNITE for collective bargaining further and its termination of the agreement was a relevant factor to take into account when deciding what its purpose was in making the offer.
While the tribunal didn’t directly apply the test set out in Kostal, its conclusion was, held the EAT, entirely consistent with the correct legal test.
This is a case that employers should take note of, especially given the current threats of strikes in many areas of business. Going over the heads of the unions is likely to end badly for employers.