Kostal UK Ltd’s Direct Approach is not Unlawful Inducement

Good news for employers in the Kostal v Dunkley Case Verdict as the Court of Appeal rules that Kostal UK Ltd did not act unlawfully in making an offer directly to employees when collective bargaining talks with the trade unions stalled.

Kostal is an employer who directly offered its employees a package of revised terms and conditions – going over the head of the recognised trade union. You can see the background to this case here.

Kostal v Dunkley Verdict

Upholding Kostal’s appeal against the EAT ruling, the CoA noted that the employer had not been motivated to make the offer directly to employees out of hostility towards the trade union, nor did it mean that future negotiations would not take place via the collective bargaining. While the offer was made directly to employees in order to circumnavigate the collective bargaining process, the CoA ruled that this didn’t necessarily mean that it had acted unlawfully. It set out two circumstances where an employer would behave unlawfully if it made a direct offer to employees:

1) where an employer makes an offer directly to employees in order to prevent an independent trade union who is seeking recognition from gaining such recognition and thereby preventing collective agreement.

2) where an employer makes an offer directly to employees with the sole or main purpose to achieve the result that terms of employment (either as a whole or one or more of the terms) that are currently negotiated with a recognised trade union, will no longer be determined by collective agreement.

Neither of these applied in Kostal v Dunkley Verdict and as there was no intention to remove collective bargaining for future negotiations on terms of employment.

‘If collective bargaining breaks down, to the extent that the employer has a proper purpose for making offers directly to workers, there is nothing to prevent such offers being made. What the legislation seeks to prevent is an employer going over the heads of the union with direct offers to workers, in order to achieve the result that one or more terms will not be determined by collective agreement with the union if offers are accepted’. -The EAT

This will be a fine line to walk and care will need to be taken to ensure any direct communications with employees does not undermine the relationship with the unions and inadvertently fall into one of the unlawful behaviours.

Find out more about the Kostal v Dunkley Verdict here.