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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Kostal UK Ltd v Dunkley & Ors [2017] UKEAT 0108_17_1312 (13 December 2017) URL: https://www.bailii.org/uk/cases/UKEAT/2017/0108_17_1312.html Cite as: [2017] UKEAT 108_17_1312, [2018] IRLR 428, [2020] ICR 1062, [2018] ICR 768, [2018] WLR(D) 64, [2017] UKEAT 0108_17_1312 |
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UKEAT/0109/17 |
At the Tribunal | |
On 14 & 15 November 2017 | |
Before
THE HONOURABLE MRS JUSTICE SIMLER DBE
PRESIDENT
MS K BILGAN
MISS S WILSON
APPELLANT | |
RESPONDENT |
Transcript of Proceedings
JUDGMENT
For the Appellant | MR ANDREW BURNS QC (One of Her Majesty's Counsel) and MS GEORGINA HIRSCH (Of Counsel) Instructed by Gunnercooke LLP 53 King Street Manchester M2 4LQ |
For the Respondent | MR STUART BRITTENDEN (Of Counsel) Instructed by Thompsons Solicitors Coverdale House 15 East Parade Leeds LS1 2BH |
SUMMARY
Section 145B of the 1992 Act
(i) what is the proper interpretation and reach of s.145B of the 1992 Act;
(ii) if the Employment Tribunal erred in law in its construction of the "prohibited result", whether the Employment Tribunal erred in law in finding that the Respondent's sole or main purpose in making the offers was to achieve the prohibited result;
(iii) in relation to remedy, whether on a proper construction of the Respondent's conduct and/or the legislation the Tribunal was wrong to make two awards of £3,800 each as opposed to a single award of £3,800 to the affected Claimants in this case.
THE HONOURABLE MRS JUSTICE SIMLER
(i) what is the proper interpretation and reach of s.145B(2) of the 1992 Act;
(ii) if the Employment Tribunal erred in law in its construction of the "prohibited result" whether the Employment Tribunal erred in law in finding that the Respondent's sole or main purpose in making the offers was to achieve the prohibited result;
(iii) in relation to remedy, whether on a proper construction of the Respondent's conduct and/or the legislation the Tribunal was wrong to make two awards of £3,800 each as opposed to a single award of £3,800 to the affected Claimants in this case.
The Tribunal judgments
"7.1 Formal negotiations will take place between the parties on an annual basis. At this time the company and union will also agree to a member verification check with ACAS prior to negotiations commencing.
7.2 Negotiations will commence normally in October and with a normal effective date of 1st January.
7.4 Any matters related to proposed change of terms and conditions of employment will be negotiated between the Company and the Union."
"(b) During the procedural process, there will be no sanctions of any kind applied nor change imposed by either party…".
"if this was not paid in December, it could not and would not be paid in 2016, therefore it would be lost to employees and they would be left with either the 2% on basic or 4% on basic depending on whether their basic salary was greater or less than £20K…"
Mr Coop then stated that he could not recommend the offer, and would give his members a 'free vote', neither recommending acceptance nor rejection, in a forthcoming ballot.
"Therefore, I am writing to inform you that I now intend to write to each and every individual employee at Kostal UK in order to offer the company pay increase and term and condition changes.
I am doing this because otherwise we will run out of time to pay a "Christmas bonus" prior to Christmas in December's pay. Please be aware that any employee who rejects the pay offer will not receive the Christmas bonus and it cannot be paid at a later date even if we subsequently achieve an agreement between us".
"Unfortunately, the above offer was rejected by a ballot of Trade Union members.
Therefore, the Company has made the decision to write to every individual employee of Kostal UK in order to offer the above to each person directly.
We are doing this due to the short timeframe in order to pay a Christmas Bonus, which can and will only be paid in December's pay.
Therefore…failure to sign and return [by no later than 18 December 2015] will lead to no Christmas bonus and no pay increase this year."
"However, the company does wish to reward our employees for their efforts in 2015 and therefore wish to offer the pay increase to each individual employee."
"he had distributed a letter on Friday 11 December 2015 to all our employees because the pay offer had been rejected by TU members…".
Mr Coop made a proposal that if the Respondent took out the provision about changing breaks he would guarantee to get the pay offer through. There was a discussion about a further ballot of the membership which subsequently took place. The Respondent did not accept this proposal.
"individual employees directly because we wanted to give the majority of employees the opportunity to be paid the Christmas bonus in their December pay. 77% of employees have already signed their acceptance including Trade Union representatives and members…"
The Notice urged employees to agree to the changes by 18 December and reminded them that they would not receive their bonus if they failed to do so.
"However, my final point is to quote the Unite letter – 'Mr Johnson needs to listen to the voice of the workers' – I believe that I have and that 91% of them have spoken, perhaps the Trade Union should follow their own advice and listen to the majority and not the minority."
"The relevant circumstances are, in summary, that negotiations forming part of collective bargaining, reached stage 3 in December last year with no agreement. We have made it clear that our parent company in Germany insists that payment of any Christmas bonus happens in December, and cannot be carried over into the New Year. This has been the case for many years. Therefore, we decided to write to the employees directly, clarifying that if they did not sign to accept their new terms, they would not be able to take the benefit of a Christmas bonus…
In my letter dated 15 January 2015, I made it clear that it was never the company's intention to induce people to opt out of collective bargaining. The only reason for making the offer to members was so that the Christmas bonus would be payable before the end of the year. If it was not accepted, the bonus would not be payable at a later date. There was absolutely nothing in the offer to staff that stated, or even implied, that acceptance of the offer would involve an agreement that there would no longer be subject to collective bargaining".
"Also on 29 January 2016 the Respondent wrote letters to those employees who had as of that date not accepted the pay proposal. A sample of such a letter appears at pages 106 to 107. The letter noted that "unfortunately you rejected our offer". Reference was made to the three proposed changes to terms and conditions and an explanation was given as to why those were considered to be necessary. The recipients were invited to a meeting on 2 February 2016 with an HR officer or alternatively invited to return the then current letter accepting the offer no later than 4 February 2016". The letter went on to state as follows:
"Please be aware that the proposed changes will not be implemented without your express agreement and the consultation process will be full and open. However you should be aware that in the event that no agreement can be reached between the parties, this may lead to the company serving notice on your contract of employment".
No reference was made to that action being followed immediately by re-engagement on the new terms.
The letter went on:
"In consideration for your agreement to the proposed changes, the company is willing to pay a 4% increase in your basic salary backdated to 1 January 2016".
"save for the by then irrelevant issue of the Christmas bonus, the collective agreement endorsed the pay proposals which the Respondent had put forward in November 2015 together with the three changes to terms and conditions".
"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.
It follows that we prefer the interpretation of the provision sought by the Claimants which has the result that both the December 2015 and January 2016 offers would, when accepted have the prohibited result."
"Although the burden of proof has not been debated in detail before us we take the approach that the Claimants need to establish a prima facie case that the employer had an unlawful purpose and if they do that the provisions of section 145D(2) come into play so that it is for the employer to show what his sole or main purpose in making the offers was. On the basis of our conclusions above we are satisfied that a prima facie case has been established.
It was common ground before us that section 145D(4) was not felicitously drafted or, as Mr Brittenden put it was "a bit of a hash". For one thing it is not entirely clear which way evidence of the three matters referred to might point.
The Respondent's case is that their sole or main purpose – at least in relation to the December 2015 offer – was to ensure that employees did not lose their Christmas bonus. As Mr Brittenden points out, that is the only reason pleaded in the ET3 and we cannot discern any other reason from the Respondent's evidence. It follows that in relation to the second offer – made at a time when the recipients of that letter would already have "lost" their Christmas bonus the Respondent has not shown any benign reason.
With regards to the Christmas bonus reason, it has to be borne in mind that that was introduced into the negotiations by the Respondent, that is as a bargaining tool. In those circumstances we consider that it is somewhat disingenuous for the Respondent to say that it made an offer to save the relevant employees from the consequences of a threat which it had made. We also bear in mind that whilst Mr Johnson's evidence was consistently that under no circumstances would be parent company allow the Christmas bonus to be paid other than within December of the relevant year, we note from the General Notice introduced on day two of our hearing that because of concerns about the outcome of these proceedings the Respondent indicated that it might not be in a position to determine pay or bonus entitlements in either December or January – therefore indicating that December was not a deadline.
Looking at any evidence we might have in the category of section 145D(4), Mr Brittenden has fairly accepted that a case of union hostility has not been made out.
Although the pay negotiation with which we are concerned was the first under the relevant recognition agreement we do not think that that circumstance comes within section 145D(4)(a) as that speaks of recent changes to arrangements agreed with the union for collective bargaining rather than the introduction of a collective bargaining regime.
As far as section 145D(4)(b) is concerned we find that even accepting the Respondent's explanation for Mr Johnson's statement that "the offer will be the offer" that does not indicate a lack of willingness to enter into meaningful negotiations. It says no more in our judgment than simply 'we do not want protracted negotiations.'
It is however significant that the contemporaneous correspondence shows that the making of the first offer was an immediate reaction to the rejection at ballot of the Respondent's proposal.
Further we agree with Mr Brittenden that the Respondent's true intentions can be gleaned from its publication via general notices of the percentage of employees who had already signed their acceptances "including trade union representatives and members"(page 81).
On the facts before us it is plain that having found the ballot result "disappointing if not unexpected" (Mr Johnson's email to Mr Coop of 9 December 2015 page 79) the Respondent took the conscious decision to by-pass further meaningful negotiations and contact with the union in favour of a direct and conditional offer to individual employees who were members of that union. We therefore agree with Mr Brittenden that it was "exceptionally improbable" that the Respondent did not intend to circumvent the collective bargaining process when it made the offers.
It follows that we find that both the December 2015 and January 2016 offers if accepted had the prohibited result and that that was the main purpose of the Respondent making those offers."
The relevant legislative framework
145B Inducements relating to collecting bargaining
(1) A worker who is a member of an independent trade union which is recognised, or seeking to be recognised, by his employer has the right not to have an offer made to him by his employer if -
(a) acceptance of the offer, together with other workers' acceptance of offers which the employer also makes to them, would have the prohibited result, and
(b) the employer's sole or main purpose in making the offers is to achieve that result.
(2) The 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.
(3) It is immaterial for the purposes of subsection (1) whether the offers are made to the workers simultaneously.
(4) Having terms of employment determined by collective agreement shall not be regarded for the purposes of section 145A (or section 146 or 152) as making use of a trade union service.
(5) A worker or former worker may present a complaint to an employment tribunal on the ground that his employer has made him an offer in contravention of this section.
Accordingly, the right is conferred on a worker who is a member of a recognised independent trade union (or one seeking recognition). The worker is not protected if he or she is the only recipient of the offer. There must be other workers (at least two) targeted by the offers.
32. Section 145B must be read with s.145D which provides relevantly:
145D Consideration of complaint
(1) …
(2) On a complaint under section 145B it shall be for the employer to show what was his sole or main purpose in making the offers.
(3) On a complaint under section 145A or 145B, in determining any question whether the employer made the offer (or offers) or the purpose for which he did so, no account shall be taken of any pressure which was exercised on him by calling, organising, procuring or financing a strike or other industrial action, or by threatening to do so; and that question shall be determined as if no such pressure had been exercised.
(4) In determining whether an employer's sole or main purpose in making offers was the purpose mentioned in section 145B(1), the matters taken into account must include any evidence –
(a) that when the offers were made the employer had recently changed or sought to change, or did not wish to use, arrangements agreed with the union for collective bargaining,
(b) that when the offers were made the employer did not wish to enter into arrangements proposed by the union for collective bargaining, or
(c) that the offers were made only to particular workers, and were made with the sole or main purpose of rewarding those particular workers for their high level of performance or of retaining them because of their special value to the employer.
145E Remedies
(1) Subsections (2) and (3) apply where the employment tribunal finds that a complaint under s.145A or 145B is well-founded.
(2) The tribunal –
(a) shall make a declaration to that effect, and
(b) shall make an award to be paid by the employer to the complainant in respect of the offer complained of.
(3) The amount of the award shall be [£3,830] (subject to any adjustment of the award that may fall to be made under Part 3 of the Employment Act 2002).
(4)…
(5)…
(6)…
"1. Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests.
2. No restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are necessary to a democratic society in the interests of national security or public safety, for the prevention of disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others…"
"41. The Court observes at the outset that although the essential object of Article 11 is to protect the individual against arbitrary interference by public authorities with the exercise of the rights protected, there may in addition be positive obligations to secure the effective enjoyment of these rights. In the present case, the matters about which the applications complain – principally, the employers' de-recognition of the unions for collective bargaining purposes and offers of more favourable conditions of employment to employees agreeing not to be represented by the unions – did not involve direct intervention by the State. The responsibility of the United Kingdom would, however, be engaged if these matters resulted from a failure on its part to secure to the applicants under domestic law the rights set forth in Article 11 of the Convention (see the Gustafsson v Sweden judgment of 24 April 1996, Reports of Judgments and Decisions 1996-11, para. 45)…
47. In the present case, it was open to the employers to seek to pre-empt any protest on the part of the unions or their members against the imposition of limits on voluntary collective bargaining, by offering those employees who acquiesced in the termination of collective bargaining substantial pay rises, which were not provided to those who refused to sign contracts accepting the end of union representation. The corollary of this was that United Kingdom law permitted employers to treat less favourably employees who were not prepared to renounce a freedom that was an essential feature of union membership. Such conduct constituted a disincentive or restraint on the use by employees of union membership to protect their interests. However, as the House of Lords judgment made clear, domestic law did not prohibit the employer from offering an inducement to employees who relinquished the right to union representation, even if the aim and outcome of the exercise was to bring an end to collective bargaining and thus substantially to reduce the authority of the union, as long as the employer did not act with the purpose of preventing or deterring the individual employee simply from being a member of a trade union.
48. Under United Kingdom law at the relevant time it was, therefore, possible for an employer effectively to undermine or frustrate a trade union's ability to strive for the protection of its members' interests. The Court notes that this aspect of domestic law has been the subject of criticism by Social Charter's Committee of Independent Experts and the ILO's Committee on Freedom of Association. It considers that, by permitting employers to use financial incentives to induce employees to surrender important union rights, the respondent State 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 unions and the individual applicants."
"193. In July 2002 the European Court of Human Rights delivered its judgment in the case of Wilson & the National Union of Journalists, Palmer, Wyeth & the National Union of Rail, Maritime & Transport Workers, Doolan & others v United Kingdom [2002] IRLR 568 ("Wilson and Palmer") (a summary of the judgment can be found at http://www.echr.coe.int/Eng/Press/2002/july/WilsonandOthersjudepress.htm). The Court concluded that UK trade union law was incompatible with Article 11 of the European Convention on Human Rights (freedom of association) in that where a trade union was recognised by an employer for the purposes of collective bargaining about the terms and conditions of a group of employees, the law did not prevent the employer from offering inducements to the employees in the group to persuade them to surrender their collective representation and have their terms settled instead by negotiations between each individual employee and the employer. The Government believes that the principle underlying the decision of the Court extends beyond the facts in Wilson and Palmer and is applicable to a number of other comparable circumstances. The purpose of sections 29 to 32 is therefore to secure that these provisions deal not only with the facts in Wilson and Palmer but also with the other circumstances considered by the Government to be comparable."
"3.12. The Government also confirms that the law should explicitly prohibit inducements or bribes being made to trade union members to forego union rights. These were the particular employer behaviours that gave rise to the Wilson and Palmer cases, and they should be made unlawful. The Government intends to make it unlawful for an employer to make an offer to an individual with the main purpose of inducing that person to relinquish rights to belong (or not to belong) to a union, rights to engage in trade union activities or the proposed right to use union services. In addition, offers should be made unlawful whose main purpose is to induce a group of workers, who belong to a recognised union, to accept that their terms of employment should be determined outside collectively agreed procedures. The result is that it would be unlawful for an employer to offer an inducement to the union members in such a group to have their terms of employment determined outside the framework set by any existing collective bargaining arrangements. This limits the scope of employers to offer individualised contracts. To avoid inflexibility however, the law should allow employers to make offers where the sole or main purpose of the inducement is unconnected with the aim of undermining or narrowing the collective bargaining arrangements. In particular, the law should give room for employers and individuals to enter individualised contracts designed to reward or retain key workers."
Parliamentary Materials
(i) During the Employment Relations Bill Deb, 5 February 2004, c102 the Minister, Mr Sutcliffe said:
"Proposed new section 145B deals with inducements to forgo collective union entitlements. It creates a right for members of recognised unions not to be offered inducements by their employers with the sole or main purpose of ensuring that any or all their terms of employment will no longer be determined by collective agreement. The new section deals with the circumstances that gave rise to the Wilson and Palmer cases, in which Mr Wilson and others employed by Associated Newspapers were offered £1,000 to enter individualised contracts that could not be negotiated by their union."
(ii) Further reliance is placed on a passage where Mr Sutcliffe accepted amendment to the Bill (HC Deb, 16 September 2004, c1478):
"The Joint Committee on Human Rights has drawn attention to the fact that new section 145B, which would be inserted by clause 28, provides rights to the members of recognised unions only. It considers that, in cases where a union is seeking recognition, new section 145B needs to provide comparable protections to ensure that members have the right not to be offered inducements by the employer for the purpose of securing that their terms will not be determined by collective agreement in the future.
"Having looked at the arguments put forward and having consulted the stakeholders, we concluded that the Joint Committee's analysis is correct. So to ensure our compliance with the judgment of the European Court of Human Rights, we believe that the scope of new section 145B should be extended. Lords amendments Nos. 34, 35 and 38 make the necessary changes to clause 28."
Issue one: the proper interpretation of s.145B of the 1992 Act
The Employment Appeal Tribunal's analysis
Issue two: the application of s.145B(2) to the facts found in relation to sole or main purpose
"We also bear in mind that whilst Mr Johnson's evidence was consistently that under no circumstances would the parent company allow the Christmas bonus to be paid other than within December of the relevant year we note from the General Notice…because of concerns about the outcome of these proceedings the respondent indicated that it might not be in a position to determine pay or bonus entitlements in either December or January – therefore indicating that December was not a deadline."
In other words the evidence about the absolute inability to make payments of the Christmas bonus at any time other than in December of the relevant year, was not accepted by the Employment Tribunal.
(i) the Tribunal considered it significant that the contemporaneous correspondence showed that the making of the first offers on 10 December 2015 was "an immediate reaction to the rejection at ballot of the Respondent's proposal": paragraph 8.3.
(ii) The Tribunal accepted the Claimants' contention that the Respondent's true intentions could be gleaned from the General Notices published which included the percentage of employees who had already signed acceptances, "including trade union representatives and members:": see paragraphs 5.16 and 5.22. This must have been intended to weaken Unite's negotiating position.
(iii) The Tribunal regarded it as plain that having found the ballot result disappointing if not unexpected, the Respondent took the conscious decision to bypass further meaningful negotiations or contact with the union in favour of a direct and conditional offer to individual employees. That led the Tribunal to view as exceptionally improbable the possibility that the Respondent did not intend to circumvent the collective bargaining process when it made the offers.
Issue three: the remedy appeal
Conclusion