The Supreme Court has ruled that a company unlawfully made a direct pay offer to its employees who were covered by a collective agreement in a landmark ruling on trade union rights. Kostal UK v Dunkley and others is the first time the appeal courts have considered the interpretation of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992.
The dispute began in 2015 when automotive parts maker Kostal UK Ltd made a direct pay offer to employees before exhausting the process set out in a non-legally binding recognition agreement with trade union Unite. Employees were told that those who did not accept would receive no Christmas bonus and later warned that, if no agreement was reached, ‘this may lead to the company serving notice on your contract of employment’.
Fifty-seven workers took Kostal to an employment tribunal, complaining that the direct offer contravened the 1992 act. The ET upheld the complaints, awarding each worker £3,800 – a total of £421,800 – and Kostal’s appeal to the Employment Appeal Tribunal was dismissed. However the Court of Appeal overturned the previous decisions in 2019.
Five justices today allowed the workers’ appeal, holding that Kostal’s direct offers were made while the collective bargaining process was ongoing in breach of section 145B.
Lord Leggatt said Kostal’s behaviour potentially ‘treated less favourably employees who were not prepared to relinquish their right to have the agreed procedure for collective bargaining followed’.
He found there was ‘a real likelihood’ that workers who did not accept the offer would be left ‘financially worse off.’
Unite’s general secretary Sharon Graham said the ruling ‘means that employers cannot subvert or bypass union collective bargaining processes by offering their workforces inducements of one type of another to abandon union mandates’.