Employer Pays for Bypassing Trade Union – Supreme Court Ruling

Employers cannot with impunity make direct offers to trade union members with the aim of pre-empting the collective bargaining process. The Supreme Court made that point in confirming awards of compensation to 57 workers whose employer bypassed their trade union in search of a pay deal.

The manual and shop floor workers were all members of a trade union. Following a ballot of workers, their employer recognised the union on a non-legally binding basis and they commenced formal annual pay negotiations. A pay offer was made but, after a further ballot, it was rejected.

The employer’s response was to make pay offers directly to workers, thus bypassing the union. Workers were warned that they might be given notice if no agreement were reached and 97 per cent of them accepted direct offers. The employer then reached a collective agreement with the union on similar terms to the direct offers.

The workers involved in the case complained to an Employment Tribunal (ET) that the direct offers contravened Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. Their claims were upheld and they were each awarded £3,800 in respect of each direct offer that had been made to them. The awards were confirmed by the Employment Appeal Tribunal but the employer later appealed successfully to the Court of Appeal.

Ruling on the workers’ challenge to that outcome, the Supreme Court noted that, in certain circumstances, Section 145B confers on workers who are members of an independent trade union which is recognised, or seeking to be recognised, a right not to have offers made to them by their employers.

The provision takes effect where the acceptance of an offer by a group of workers would have the prohibited result that terms of their employment would not, or would no longer be, determined by collective agreement with a union. Employers bear the burden of proving that their sole or main purpose in making such offers is not to achieve that prohibited result.

In upholding the appeal, the Court noted that what Section 145B prohibits is an offer which, if accepted by all the workers to whom it is made, would have a particular result. It is the causal link between the presumed offer and the prohibited result that matters, rather than the particular content of the offer. There must at least be a real possibility that, had an offer not been made and accepted, workers’ terms of employment would have been set by collective agreement.

On the basis of that interpretation, the Court ruled that there is nothing to prevent an employer making an offer directly to its workers in a matter that falls within the scope of a collective bargaining agreement provided the employer has first followed, and exhausted, the agreed collective bargaining procedure.

What the particular employer had done, but could not do with impunity, was to make a direct offer to its workers, including union members, before the collective bargaining process that it had agreed, albeit in honour only, to follow had been exhausted. The workers’ compensation awards were restored.