The outcome of this appeal will determine whether employers can contact staff directly to agree changes to terms and conditions if negotiations with their union have broken down. 

From today (18th May), a collective bargaining case will be held at the Supreme Court which is set to have major implications for the HR industry and employers.

Traditionally, employers have avoided negotiating with staff if talks between the union and the employer have collapsed as this could lead to substantial financial penalties for said employer.

However, depending on the outcome of this case, this could be set to see a reversal which would allow employers to agree changes to terms and conditions with the staff member directly.

This case, Kostal UK Ltd v Dunkley and Others, dates back to 2015. The trade union, Unite, argued that Kostal attempted to bypass union negotiations in the first pay talks and induce its staff out of collective bargaining.

The trade union stated that Kostal wrote directly to members who had heavily rejected the company’s pay offer and urged them to accept their offer individually and accept changes to their employment or lose a Christmas bonus worth £270.

This offer was then allegedly repeated to those who did not accept it in January 2016 and was then coupled with the threat of dismissal if workers did not accept.

As such, an employment tribunal stated that Kostal’s actions were contrary to the Trade Union and Labour Relations (Consolidation) Act 1992 and awarded Unite members over £420,000 in compensation.

The decision was upheld at the Employment Appeal Tribunal but then overturned at the Court of Appeal in 2019.

The court ruled that Kostal had written to staff to circumvent collective bargaining, but that it was not unlawful because it was a temporary measure and staff hadn’t been asked to relinquish the right for their union to represent them.

However, Unite has since appealed to the Supreme Court, leading to the issue at hand.

This decision has been classed as a landmark case as its decision will have implications for any organisation where collective bargaining remains a key feature of negotiation when agreeing changes to terms and conditions of employment. It will be particularly significant in the public sector.

Glenn Hayes, a partner and employment law specialist at Irwin Mitchell said:

Prior to the Court of Appeal ruling, it was almost impossible for organisations to make even minor temporary changes to terms and conditions of employment without union agreement, as any mistake could risk huge financial penalties.

Although the decision was controversial, we believe that the Court of Appeal reached a fair compromise on the facts of this particular case. Awards are fixed and tribunals can’t reduce them like they can in other claims – even if they have sympathy with the employer.

However, there are still questions that remain unanswered. If the Supreme Court upholds the Court of Appeal’s decision, we hope that it will put some more flesh on the bones of the scope of this exemption. For example, what happens if pay negotiations break down for a second or third time? Can the employer still write to its staff directly without risk if the changes are temporary rather than permanent? And how much effort must an employer make to agree terms with a recognised union before it can safely approach its staff?

However, Richard Arthur, Head of trade union law at Thompsons Solicitors – the social justice law firm acting for Unite the union in the case, said:

This is the most important trade union rights case in over a decade and is the first time the Supreme Court will consider collective trade union rights.

Making inducements to employees to give up rights to collectively bargained terms is unlawful. This case will have far-reaching implications for the extent to which that protection is available, and will impact directly on employers’ attempts to use practices such as ‘fire and re-hire’.

Employers and their lawyers have already tried to frame the outcome as being about the freedom to negotiate as and with whom they wish. In reality, this is about employers who know that unionised workplaces are safer and better paid seeking legal cover to remove basic trade union rights.