Kostal UK Ltd v Dunkley and Others
| Jurisdiction | England & Wales |
| Judge | Lord Leggatt,Lord Briggs,Lord Kitchin,Lady Arden,Lord Burrows |
| Judgment Date | 27 October 2021 |
| Neutral Citation | [2021] UKSC 47 |
| Court | Supreme Court |
Lord Briggs
Lady Arden
Lord Kitchin
Lord Leggatt
Lord Burrows
Appellants
Oliver Segal QC
Stuart Brittenden
(Instructed by Thompsons Solicitors (Leeds))
Respondent
Andrew Burns QC
Georgina Hirsch
(Instructed by Gunnercooke LLP (Manchester))
Heard on 18 May 2021
(with whom Lord Briggs and Lord Kitchin agree)
This case is the first occasion on which appeal courts have had to consider the proper interpretation of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (the “1992 Act”), one of a group of provisions added to the 1992 Act by amendment in 2004. Its object, broadly stated, is to penalise offers made by employers to workers who are trade union members which, if accepted, would have the result that one or more terms of their employment will not (or will no longer) be determined by collective bargaining.
Pursuant to section 145B(5), a worker (or former worker) may present a complaint to an employment tribunal on the ground that their employer has made an offer in contravention of section 145B. The complaint must normally be presented within three months from when the offer was made or, where the offer is part of a series of similar offers to the complainant, the date when the last of them was made: see section 145C(1) of the 1992 Act. If the tribunal finds that the complaint is well-founded, the worker is entitled to be paid a lump sum award by the employer in respect of the offer complained of: see section 145E(1)-(3). At the time of the offers made in this case, the amount of the award was fixed at £3,800.
The 57 claimants (and appellants) are members of Unite the Union (“Unite”) and are employed as shop floor or manual workers by the respondent, Kostal UK Ltd (which I will refer to as “the Company”). The Company manufactures electromechanical and electronic products for the automotive industry.
Following a ballot of workers in November 2014 which showed significant support in favour of recognising Unite for the purpose of collective bargaining, the Company and Unite entered into a Recognition and Procedural Agreement on 16 February 2015. The stated purpose of this agreement was to establish trade union recognition and representation within the Company and establish a framework for consultation and collective bargaining (clause 1.2). The agreement gave Unite “sole recognition and bargaining rights” (clause 2.1). By clause 3.1, the Company and Unite accepted that “the terms of this agreement are binding in honour upon them but do not constitute a legally binding agreement”.
Clauses 7.1 and 7.2 of the Recognition Agreement stated that formal negotiations would take place between the parties on an annual basis and that negotiations would commence normally in October “with a normal effective date of 1st January”. Clause 7.4 stated that “any matters related to proposed change of terms and conditions of employment will be negotiated between the Company and the Union”. Appendix 1 outlined a procedure that “will be followed in order to deal with collective issues which if not resolved, could lead to a dispute between the parties” and stated that “[d]uring the procedural process, there will be no … change imposed by either party”. The procedure has four stages. The first three stages involve meetings between trade union representatives and management. Stage 4 is described as follows:
“Failing agreement at Stage 3 the matter, by joint agreement, may be referred to ACAS for conciliation. … If the parties do not agree to refer the matter to ACAS the procedure is exhausted.”
On a fair reading of the Recognition Agreement, the Company undertook — albeit not as a legally enforceable obligation — not to make any change to any of its workers' terms and conditions of employment before it had first engaged in collective bargaining about the matter with Unite and exhausted the process outlined in Appendix 1.
The first pay negotiations after the Recognition Agreement was signed commenced in October 2015. Following two preliminary meetings with Unite representatives, the Company tabled a pay offer on 24 November 2015. The offer comprised: a 2% increase in basic pay; an additional 2% increase for those earning less than £20,000 payable from 1 April 2016; and a Christmas bonus to be paid in December equating to 2% of basic pay. As part of the same package, the Company sought a reduction in sick pay for new starters, a reduction in the Sunday overtime rate and consolidation of two separate 15 minute breaks into a single 30 minute break (which would comply with the Working Time Regulations 1998).
The offer was put to a ballot of union members on 3 December 2015. Of the 80% of union members who took part in the ballot, 78.4% voted to reject the offer.
On 10 December 2015, the Company wrote to its employees to make the same offer to them directly. The letter stated that, if they did not accept the offer by 18 December 2015, they would not receive the Christmas bonus for 2015. A further pay negotiation meeting took place on 14 December 2015 at which no agreement was reached. By the end of December, the Company and Unite had reached Stage 4 of the procedure set out in Appendix 1 to the Recognition Agreement and had agreed to refer the matter to ACAS.
By January 2016, according to the Company, 91% of eligible workers had accepted the direct offer made on 10 December 2015. On 29 January 2016, the Company wrote to employees who had not accepted it, making a similar offer (including an amount equivalent to the Christmas bonus backdated to 1 January 2016). The letter stated that, if no agreement was reached, “this may lead to the company serving notice on your contract of employment”.
On 3 November 2016, by which point over 97% of employees had accepted individual offers from the Company, a collective agreement between the Company and Unite was reached for 2015, substantially in accordance with the offer put forward by the Company in November 2015 (but without the 2015 Christmas bonus).
On 11 May 2016 the claimants presented complaints to an employment tribunal that the offers made to them directly by the Company contravened section 145B. The tribunal upheld the complaints and made the statutory award of £3,800 to each claimant in respect of the first offer made on 10 December 2015 and an additional award of £3,800 to each claimant who also received the second offer made on 29 January 2016. The total award was £421,800. The tribunal found as a fact that, after its offer in the negotiations with Unite had been rejected in the ballot of union members, the Company had taken the conscious decision to by-pass further meaningful negotiations and contact with the union in favour of making direct offers to individual employees.
The Company appealed to the Employment Appeal Tribunal (Simler J (President) sitting with two lay members). The appeal tribunal, by a majority, dismissed the appeal: see [2018] ICR 768. The Company then appealed to the Court of Appeal. For reasons given by Bean LJ (with whom Singh and King LJJ agreed), the Court of Appeal allowed the Company's appeal and set aside the decisions of the employment tribunal and Employment Appeal Tribunal: see [2019] EWCA Civ 1009; [2020] ICR 217. From that decision, the claimants now appeal to this court.
The issue in this appeal is whether the pay offers made by the Company on 10 December 2015 and 29 January 2016 directly to workers who were members of Unite were offers which, if accepted by all the workers who received them, would have the “prohibited result”, as defined in section 145B(2) of the 1992 Act. It is not disputed that, if that condition was satisfied, the Company's sole or main purpose in making the offers was to achieve that result, with the consequence that the making of the offers contravened the right protected by section 145B(1).
Although the meaning of the relevant statutory provisions must be discerned first and foremost from the language used, they need to be situated in their legal and historical context in order to understand the mischief which they were designed to address. I will therefore begin by outlining the legislative history. It is common ground between the parties that the elements of this history which I will mention are admissible as an aid to interpretation.
Section 145B and related provisions were inserted in the 1992 Act by section 29 of the Employment Relations Act 2004. It is not in dispute that a principal purpose of their enactment was to bring UK law into line with article 11 of the European Convention on Human Rights (“the Convention”) as interpreted by the European Court of Human Rights in Wilson and Palmer v United Kingdom (2002) 35 EHRR 20; [2002] IRLR 568.
The claimants in Wilson and Palmer were members of trade unions recognised by their employers for collective bargaining purposes. In each case the claimants were offered a pay increase if they agreed to sign personal contracts under which they relinquished their rights to be represented by the union in negotiations over pay and other terms of employment and agreed that these matters would be determined individually rather than by collective bargaining. Those employees such as Wilson and Palmer who refused to sign such contracts did not receive the same benefits. In tribunal proceedings the claimants complained that their employers' conduct infringed their rights under what is now section 146(1)(a) of the 1992 Act not to have action (short of dismissal) taken against them as...
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