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An offer that should never be made

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Kostal UK Ltd v Dunkley and others

Under the Trade Union and Labour Relations (Consolidation) Act 1992 employers are prohibited from making offers directly to employees that would shortcut existing collective bargaining arrangements. Trade union members who have had offers made to them of this nature will have a right to claim compensation. In the case of Kostal UK Ltd v Dunkley and others the Supreme Court had to decide whether the offers that the employers had made to the employees were sufficient to establish liability.

Facts

Mr Dunkley and the other claimants were members of "Unite" which was a union recognised by Kostal. Pay offers made by the employer had been rejected so Kostal made the offers direct to the employees bypassing Unite. Most accepted and a follow up letter to those who had not accepted was sent indicating that they might be given notice. Claims were made by Mr Dunkley and others that the employer had breached the statutory prohibition by making these offers as the pay would not be collectively agreed. 

Decision

The Supreme Court has held that the employer did breach the statutory prohibition. The direct offers to Unite members had the effect that terms which would or may have been agreed collectively following negotiations would be determined otherwise. That was sufficient to establish liability and entitle the claimants to compensation. The only time that a direct communication of an offer would be permitted from the employer was if the bargaining procedure had been exhausted as only then would it be reasonable to conclude that the terms would have not been collectively agreed in any event.

Key takeaway point

The decision highlights the risks of employers making offers directly to employees where there is a union recognised or seeking to be recognised. If acceptance of the offer would mean that terms will not be collectively agreed the union members will be able to bring claims for compensation. These claims can be very costly for the unwary employer as there are mandatory awards of compensation that are currently fixed at £4,341 in respect of each union member for every communication made. 

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