Employment Lawyers Say Judgment Clarifies Collective Bargaining Rights

Employment lawyers at Irwin Mitchell say the Supreme Court’s judgment in Kostal UK Ltd v Dunkley and others (handed down 27 October 2021) provides long awaited clarification for both employers and unions on collective bargaining rights and, in particular, whether an employer can approach its staff directly to try to agree changes to their terms of employment where negotiations have reached an impasse.

Expert Opinion

"Overturning the Court of Appeal’s decision, the Supreme Court ruled that employers can make direct offers to staff to agree changes to terms and conditions but only where an employer has first followed, and exhausted, the agreed collective bargaining procedure. As Kostal had made a direct offer to its staff whilst the collective bargaining process was still ongoing, the Supreme Court held that it had acted unlawfully and found in favour of the union-backed employees.

“The financial consequences for employers in getting this matter wrong can be huge (over £400k for Kostal in this case). As such, following this decision, it’s advisable that employers revisit and review any collective bargaining agreements in place to ensure that these are clear and, in particular, define when the collective bargaining process will be taken to be exhausted - for example, giving prescribed timescales or the ability for a party to declare this.

“The outcome is, arguably, a position of compromise between employers and unions – ensuring that unions do not have an effective veto in collective bargaining and that employers (and, likewise, unions) follow and exhaust any collective bargaining agreement in place before an employer can directly approach its employees.

“Where an employer has genuinely participated in, and exhausted, an agreed collective bargaining process, it feels fair that it should be given a final opportunity to reach out to its employees to try to overcome any impasse.

“Ultimately however, whilst, in principle, it may sound straightforward that a direct offer can be made where a collective bargaining procedure has been exhausted, in practice, it will be incredibly fact sensitive and the arguments both for and against whether this point has been reached (and so whether any direct offer is permitted or not) will be complex. We recommend that legal advice is sought in this situation, and also in advance of this situation so that any collective bargaining/recognition agreement anticipates this eventuality.” Elaine Huttley - Partner

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