(3 min read)
The recent first-instance decision in Adams v Walsall Housing Group Ltd shines a light on a possible defence for employers to claims for unlawful inducement under s145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The employer was found not to have made an offer in breach of s145B TULRCA because the Tribunal found that the employer's sole or main purpose was not to circumvent collective bargaining, even though the collective bargaining process had not been exhausted.
What was the Tribunal looking at?
Section 145B(1) TULRCA prohibits employers from making direct offers to employees in circumstances where:
- acceptance of the offer, together with other workers' acceptance of offers which the employer also makes to them, would have the result that the workers' terms of employment would not (or would no longer) be determined by collective bargaining; and
- the employer's sole or main purpose in making the offers is to achieve that result.
Since the case of Kostal UK Ltd v Dunkley, the focus in case law has largely been on the first part of s145B(1) and the consensus has been that employers must in practice establish that collective bargaining has been exhausted in order to successfully defend a claim under s145B TULRCA.
In Adams v Walsall Housing Group Ltd, the employer had made two direct "offers" to its employees while collective bargaining was still ongoing:
- A one-off payment, which the employer said had to be made at that time because the business' financial year was ending and the budget would not be carried over to the following year; and
- A later pay rise of 3.1%, which the employer said was the minimum amount that it was going to agree through collective bargaining.
It was accepted by the employer that collective bargaining was ongoing at the time the offers were made. The employer relied solely on the argument that its sole or main purpose in making the offers was not to circumvent collective bargaining. The Tribunal found in the employer's favour on both counts.
In making its decision, the Tribunal distinguished between the two offers and was more clearly persuaded that the first offer (the one-off payment) was not made with the sole or main purpose of avoiding collective bargaining. There was a clear imperative for the employer to make that offer before the end of the financial year, after which point there would have been no budget for that payment. Interestingly, one of the two unions bringing the claim did not even argue that this payment was made in breach of 145B TULRCA.
The Tribunal was less persuaded in respect of the second offer but ultimately preferred the argument put forward by the employer.
It is also interesting to consider whether the surrounding context of the cost of living crisis played a part in the decision, providing further support for the employer's argument that it was trying to do the right thing by its employees in making offers outside collective bargaining. Ultimately, the Tribunal's decision is a subjective one, and it is possible to see how a different Tribunal on a different day may not have sided with the employer, particularly in respect of the second offer.
What does the decision mean for employers?
Employers should be cautious before relying on this decision, which turns on its specific facts and may yet be appealed. The decision does not change the starting point for employers, which is that direct offers to employees risk breaching s145B TULRCA and that there should be a clear collective bargaining process which is exhausted before direct offers are made.
However, where there are compelling reasons to make a direct offer to employees (such as where budget will be lost if not paid out by a specific date), it appears that well-intentioned employers may be able to do so without breaching s145B TULRCA. That said, employers should be cautious about doing so, and we suggest taking legal advice before making any direct offers while collective bargaining is ongoing.
