Court of Appeal Restricts Effectiveness of Trade Union Negotiation

In 2002 the European Court of Human Rights decided the case of Wilson v UK and found that UK trade union legislation was contrary the Article 11 of the  European Convention on Human Rights – in particular, at paragraph 48 of Wilson the ECHR found that

by permitting employers to use financial incentives to induce employees to surrender important union rights, the respondent State has failed in its positive obligation to secure the enjoyment of the rights under Article 11 of the Convention. This failure amounted to a violation of Article 11, as regards both the applicant trade unions and the individual applicants.

The UK governments response to the judgement was to introduce new legislation in 2004 which is set out in sections 145A to 145F of the Trade Union and Labour Relations (Consolidated) Act 1992. 

Restrictions on Inducements to Union Members

Section 145B of the Act is the specific section that addresses the prohibition of inducements by an employer to its workers to have terms and conditions directly negotiated with the employer and worker independently of the trade union.

Section 145B introduces a right to individual trade union members of a trade union who is recognised by the employer for collective bargaining purposes (or by a union seeking to be recognised) not to be have a contractual offer be made directly to the worker would when accepted have what is called the ‘prohibited result’ and this result was the employer’s main or sole purpose when making the offer.

The section does however provide some limited circumstances, in section 145D.

The Basic Facts in Kostal

There has been very little caselaw on section 145B. As a union representative there has only been one time I have had occasion to consider it as a possible course of action. It’s prominence however rose with the decision of the EAT in 2017.

The basic facts in Kostal was that Unite was recognised by the employer for collective bargaining purposes and was negotiating with the employer about the pay award. The union and the employer did not reach an agreement but the offer went to a membership ballot and 80% of union members rejected the offer.

Disappointed with the outcome of the union ballot the employer decided that it would make precisely the same offer to each employee directly and that those who accepted, and those only, would receive not only the pay award but a Christmas bonus, those who refused would not.

In the new year the employer also wrote directly to every worker who refused the direct contract change offer and advised that that the employer was considering dismissing those workers who did not agree. The employer in making that offer made no reference to this being a dismissal and re-engagement on new terms dismissal.

The EAT and ET both found the purpose of the employer’s actions was to undermine collective bargaining. The Employment Tribunal itself commented that

it is not permissible for an employer to abandon collective negotiation when it does not like the result of a ballot, approach the employees individually with whom it strikes deals and then seek to show its commitment to collective bargaining by securing a collective agreement which is little more than window dressing – having destroyed the union’s mandate on the point in question in the meantime. In other words, if there is a Recognition Agreement which includes collective bargaining, the employer cannot drop in and out of the collective process as and when that suits its purpose.

Unfortunately, the effect of the Court of Appeal’s judgement in Kostal, independent of the issues in section 145D is that employer’s has been licence to do just that.

In the Court of Appeal the court (45) noted and appear to have accepted that the decision to make individual offers meant that it was “exceptionally improbable that the company did not intend to circumvent the collective bargaining process when it made the offers: in effect (eliminating the double negative) they found, and were entitled to find, that Kostal’s purpose was to circumvent the collective bargaining process.” And yet, even though none of the caveats to this right in section 145D applied, that this was in large part the issue in Wilson, accepted this description but still left open the question of whether the prohibited result was engaged. 

The prohibited reason is set out in 145B(2) and states that prohibited result is “that the workers’ terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union.”

One would think that the fact that by reason of the employer’s decision to avoid negotiating any change of contract on the yearly pay settlement with the union, even if they were willing to do so in the future if the union were more ‘compliant’ the “will not” provision would have been met. But the Court of Appeal had other ideas.

Court of Appeal

In it decision last week the Court of Appeal substantially restricted the circumstances in which a union member will be able to allege unlawful inducements to forego collective bargaining when an employer does not like the negotiating position a recognised trade union adopts to two situations in situations where it is not alleged that the employer is not motivated by express anti-union motives.

First, where a union seeks recognition but the employer makes an offer that would mean that their terms and conditions would not be subject to a collective bargaining unit.

Second, where the employer in making the offer intends to to permanently remove the term or condition from collective bargaining.

If inducement is not for one of these situations then the decision is not a prohibited reason, this would even apply where the employer is motivated by a desire to weaken the union’s bargaining position, as on the summary appears to be the motive of the employer in this case.

The rationale of the decision was that although the literal reading of the statute advanced by Unite was possible this cannot have been Parliament’s intention because that would give a veto over any changes and Parliament cannot have intended that. I am unpersuaded that is really the case on the issue of veto, why not? It is surely proper that in bilateral negotiations upon which agreement is necessary   that each party have a veto. And, besides which, as the initial tribunal noted it is not as though the employer is wholly without options, if the terms is truly necessary, it is open on an employer to serve notice on a dismissal and re-engagement basis which so long as the reason is a reasonable one (within the band of reasonable responses) it is unlikely attract compensatory liability to the employer.

Kostal is a dangerous and anti-union decision. It is not hard to see this will be abused and it is not as though there is a swell of tribunal claims on unlawful inducement grounds that the decision is quelling. Instead the Court of Appeal has given licence to employers to intermittent disavowal of collective bargaining to push through changes that are beneficial to the employers and against the interests of workers. This is acceptable so long as this disavowal and avoidance is ‘temporary.

And the Court’s refrain that this is all OK because the workers can always strike (leaving aside that new strike laws make that more and more a hypothetical right only) it is a strange argument that effectively encourages unions to undertake industrial action and increase industrial unrest.

It is certainly welcome that Unite have already announced that they have sought permission to appeal the decision to the Supreme Court. It may be that the case is also ripe for a further challenge, if necessary, to the ECHR on Article 11 grounds.

 

 

Around the Unions

PCSIn what may become a semi-regular feature here are the union related stories that have caught my attention this week.

POA

The shadow Chancellor John Mcdonnell MP has bowed to Northern Irish delegate concerns at the Prison Officers Association conference had withdrawn from his speaking engagement despite being minutes from stage when he made the decision given controversial comments McDonnell had made about the IRA. Steve Gillan, the union’s General Secretary in a statement reported by the Guardian said “John McDonnell asked to be excused from addressing this year’s conference as he wanted to avoid any distractions from the union’s policy making discussions and campaigning plans.”

PCS

Long standing president of the PCS Union Janice Godrich has announced on her she will be seeking election to replace Chris Baugh as Assistant General Secretary of the Union by seeking the nomination of the Left Unity faction and has received the support of Mark Serwotka in that decision. The Socialist Party are suggesting, bizarrely, that this is a  “divisive step that threatens a split on the left.” It’s worth noting that Janice has not declared she is standing against Chris Baugh in the election itself but is seeking to win an election for nomination within the Left Unity faction to go forward as Left Unity’s candidate and I would expect whomever loses that election to honour the result and not stand for AGS in the PCS election proper next year.

Unite

Former Unite General Secretary candidate and dismissed union official Gerard Coyne has lost one of his legal challenges to Len McCluskey’s re-election as General Secretary. The challenge was focussed on whether, in calling an election before his five year term was complete McCluskey broke union rules. Coyne has announced he has appealed the Certification Officer’s decision to the Employment Appeal Tribunal. For my part, having read the judgement I think the decision is the right one but Coyne’s appeal is perhaps stronger than the political commentators such as Swawkbox suggest.

 

PCS/Unite merger still alive, allegedly

Labour Uncut is reporting that the Unite/PCS merger is still a distinct possibility, and expects the NEC to put forward a motion to this year’s ADC. Here’s a snippet of the article:

PCS has been wracked by well documented financial problems. The sale of the union HQ, which was agreed at the union’s national executive meeting at the start of December, was meant to have placed PCS on a more sustainable financial footing.  But just days later, an emergency executive meeting was called for the 18th December.

With one hour’s notice before the meeting, executive members were given papers that included a proposal to suspend next year’s internal election. The reasoning was that the £600,000 cost would sink the union and delaying it by upto year would help enable PCS’ survival. The motion was passed but with no wider debate across the membership.

PCS insiders have taken this as the clearest sign that merger plans are being revived.

Few believe their leadership’s explanation that this is about cost. Why wasn’t suspending the election discussed as an option along side sale of the HQ? What changed in the week following the scheduled NEC meeting in early December? Many view the emergency meeting as a means to railroad the suspension of internal democracy, which in turn allows the core leadership to fast-track negotiations with Unite, unencumbered by the accountability of elections in 2015.

The power of the Socialist Party cabal at the top of PCS, and their desire to link up with their party comrades in Unite is viewed as the primary driver for merger. The financial crisis merely provides a convenient rationale.

Post-merger, the unified PCS and Unite contingent from the Socialist Party (SP) would take control of the left of the new union, building SP support, much in the same way that its predecessor – Militant – once dreamed of building out its support from the left of the Labour party, if and when the Bennites took over the leadership.

The expectation is that a merger proposal will be put to PCS’ annual conference in May, just days after the general election. The motion will likely be wreathed in warnings of imminent financial disaster (unmet pensions obligations, redundancies and insolvency) if it isn’t supported and, in an atmosphere of panic, passed.

Is there any truth in the suggestion? I have no idea but can’t say it would be a surprise if such a motion was proposed, although how the Standing Orders Committee would justify its inclusion would be interesting since there is already a clear position on the matter by ADC.