Circumventing a Collective Bargaining Process is Not Always Unlawful

Employers are generally barred from circumventing collective bargaining agreements by going behind trade unions’ backs and making direct offers to the workers they represent. In a ground-breaking decision, however, the Court of Appeal has ruled that that does not amount to trade unions having a veto over even the most minor changes to their members’ terms and conditions of employment.

The case concerned a technology company which had recognised the sole rights of a trade union to represent its workforce. After collective bargaining failed to achieve an accord in respect of workers’ pay, terms and conditions, a ballot resulted in 80 per cent of the union’s members voting to reject the company’s offer.

The company later made two offers directly to its employees. The first of those offers warned them that a failure to accept the company’s proposals would jeopardise their Christmas bonuses. The dispute was only finally settled, largely in the company’s favour, after the union called for an overtime ban.

In those circumstances, 55 workers launched proceedings under Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. An Employment Tribunal (ET) upheld their complaints that the offers had achieved the prohibited result that their terms and conditions would not, or would no longer be, determined by collective agreement, negotiated by or on behalf of the union. In a ruling that was later upheld by the Employment Appeal Tribunal, the company was ordered to pay each of the workers £7,600 in compensation, a total of £418,000.

In challenging that decision, the company explained that it had written to employees individually because it had no idea how many of them were union members and whether or not the union represented the majority. Direct contact with workers had been made for sound business reasons, not least the company’s desire that they should receive their Christmas bonuses.

In ruling on the company’s appeal, the Court noted this was the first time Section 145B had been considered at appellate level. Although no anti-union motivation on the company’s part had been established, the ET was entitled to find that its purpose in making the direct offers was to circumvent the collective bargaining process. However, it did not follow that that was a prohibited result.

If the union were correct in arguing that Section 145B imposes a complete embargo on any direct offers which circumvent collective bargaining processes, the effect would be to confer on unions an effective veto over any direct offer to any employee concerning any term of his or her contract, major or minor, on any occasion. Such an outcome would go far beyond curing the mischief addressed by Section 145B and was extremely unlikely to have been intended by Parliament.

The company’s offers had been made to all its workers, who had not been asked to relinquish, even temporarily, their right to be represented by the union in the collective bargaining process. All that had happened was that the company went directly to the workforce and asked whether they would accept a particular change to their terms and conditions on this occasion. The Court noted that its ruling did not render unions powerless: it remained open to them to ballot their members for industrial action, as in fact occurred in this instance.