There are strict rules around employers approaching employees directly when a trade union is recognised for collective bargaining purposes. Bypassing the union in that way, making offers directly to employees, is very risky and the penalties can be huge. So the latest decision from the EAT on this – a case called Caldwell – is welcome news for employers who adopt the tactic of unilaterally imposing new terms on employees, as the employer did in this case.
A reminder. Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 is the law which, broadly speaking, is designed to stop an employer from making an offer to a member of a recognised union which results in either all of their terms, or some of them, no longer being determined by collective agreement. It’s meant to stop the employer going over the head over the union and approaching employees directly. The legislation is very strict – it imposes a penalty on employers for every breach - a penalty which is in excess of £4,000 per breach at current rates, so very big numbers. In this case, Scottish Borders Housing v Caldwell, the EAT has ruled that by telling employees who are members of a recognised trade union that it will unilaterally impose new terms, it was not making an ‘offer’ contrary to section 145B. The case is welcome news for employers considering their options when negotiations with the trade union hit an impasse.
You might recall that the scope of the law under s145B is currently being considered by the Supreme Court. Back in May they heard an appeal from the Court of Appeal in the case of Kostal UK v Dunkley. In that case – which went the employer’s way – the Court ruled there is no breach of section 145B if an offer to amend terms of employment is made that does not result in the terms being determined without collective bargaining on a permanent basis. The Supreme Court’s judgment is expected later this year – one of the most keenly anticipated cases of 2021.
So let’s get some reaction to this latest EAT decision in Caldwell. Ed Goodwyn joined me by phone from London to discuss the case. I started by asking Ed what he makes of the tactic adopted by the employer in this case of seeking to unilaterally impose new terms:
Ed Goodwyn: “I think it could be a useful alternative to get employers home where they hit a buffer in collective negotiations, particularly in light of the trouble that we've seen in the line of appeal cases in Kostal v Dunkley. I mean, the key issue, to be honest, is, to what extent of when that decision comes out, is it going to uphold the previous finding, which again, is quite useful for employers. Just to explain, the Kostal case basically said that you can't, as an employer, go behind the collective bargaining arrangement and go directly to the employees to make an offer other than in very narrow circumstances and that's the point that's being appealed - whether it's possible at all and, if so, in what circumstances. This new case has come about basically saying, well, actually, an employer from a legal perspective can effectively get around collective bargaining where there's been an impasse by avoiding making an offer, as a matter of law, if it seeks just to unilaterally impose the change. So the starting point for all this is a section 145B in the Trade Union Labour Relations Act which basically says, employers where it's a collective bargaining arrangement, can't go directly to the employees and make an offer. That makes perfect sense but the statute doesn't deal with what happens were those collective bargaining arrangements, those negotiations, are just bogged down and no agreement can be reached. What happens then? That’s what the court has been struggling with in the Kostal case. In the Caldwell case, the employer said, well, I'm actually not making an offer anymore. So what I'm actually going to do is unilaterally impose this change. Now that then triggers what's called a repudiatory breach which the employee has an option of either accepting or not and there was some discussion in that situation, whether the acceptance there is an acceptance of an offer in the same way as in the Kostal position where it was an offer made to the employee but the court said no, it's not an offer, not in it's true analysis, it’s the opposite effectively, the employer is not making an offer, the employer is actually been quite aggressive and unilaterally imposing. So quite a technical point, but it does give an employer a different route through an impasse in collective bargaining. I would, as I said at the beginning, put some caveats on it. Firstly, the Kostal that we are waiting for may be an alternative and better route because in the Caldwell case if you are going to impose unilaterally a change that as a negative prospect of creating a very negative industrial relations reaction. There's a lot of chat in the press from the unions that they don't like this whole concept, for example, of ‘fire and rehire’ and in light of some of the changes within various unions some employers could potentially expect that such a unilateral imposition could trigger, for example, industrial relations and industrial action.”
Joe Glavina: “The outcome in the Caldwell is a good one for employers Ed but, as we know, the stakes a very high when it comes to breaches of section 145B so I’m assuming your advice to employers is take legal advice in all these cases?”
Ed Goodwyn: “Yes, it's absolutely fundamental. It's one of those points, it’s a bet your farm position, that only the bravest employer who really needs to push a change through should be going through. It creates from a legal perspective, as you rightly say, an automatic penalty of just over £4,300 per offer per employee, together with an unpicking of what you thought was agreed. If you go down the other route of unilateral imposition, whilst you may get there legally you've created industrial unrest which could precipitate in strike action. So before any issues like this are decided upon, if an employer is having trouble in getting home on collective bargaining arrangements they really must take legal advice. It's a very nuanced analysis of the legal risks together with industrial relations risks. So be very much you working with your lawyer and your HR team to work out what's the best strategy from a commercial perspective.”
Ed mentioned the case of Kostal v Dunkley. It was back in May that the Supreme Court heard the appeal from the Court of Appeal in that case and, of course, we will be reporting on the judgement when it comes out, probably towards the end of this year Ed Goodwyn talked about that at the time, as the Supreme Court deliberated on the scope of s145B and whether the Court of Appeal got it right. That programme is: ‘Landmark collective bargaining case heard by Supreme Court’ and is available for viewing now from the Outlaw website.
LINKS
- Link to case report: Scottish Borders Housing Ltd v Caldwell (EAT)
