Ineos decision: Staying on the right side of s145B of TULRCA when collectively bargaining 

June, 2022 - Shoosmiths LLP

Another instalment from the UK courts guiding employers on how to comply with S145B of TULRCA when participating in collective bargaining.


In the same month as we are contending with the largest rail strikes in 30 years, it is apt that the Employment Appeal Tribunal (EAT) in Edinburgh has issued a decision in a theme of cases involving Section 145B of TULRCA and how it can impact pay negotiations.


What the law says

As a reminder, Section 145B of TULRCA acts as a prohibition on employers making offers directly to employees which undermine collective bargaining.  It says that members of a union cannot be approached directly by an employer with any offer if it results in the worker’s terms of employment no longer being determined by the collective agreement with the union, and the employer’s sole or main purpose in making the offer was to achieve that result.


The decision of the Supreme Court in Kostal (Kostal UK Limited v Dunkley & ors [2021] UKSC 47) gave employers some comfort when it ruled that there was nothing to prevent an employer from directly making a pay award to its employees who are represented by a trade union where the collective bargaining arrangement had been followed and exhausted.


The recent case of Ineos Infrastructure Grangemouth (Ineos) (Ineos Infrastructure Grangemouth v Jones and ors [2002] EAT 82) developed this further. The headline following Ineos is that there will be circumstances where an employer falls foul of Section 145B where it imposes a pay award after having its final offer in negotiations rejected.  On the face of it, this could be considered at odds with the Supreme Court’s decision in Kostal. However, on closer reading, there are key distinguishing factors which we discuss below.


Background

The case concerned Ineos’ pay negotiations with its recognised trade union, Unite.  A protracted and acrimonious negotiation had taken place between management at Ineos and representatives of Unite.  The negotiations resulted in Unite advising that they could not recommend anything below 3% to their membership. Ineos responded with a ‘best and final’ offer of 2.8%. There was some discussion as to whether a dispute resolution procedure would be invoked to resolve the situation. Despite being fairly close in numbers, Ineos decided that negotiations were at an end and imposed the pay award of 2.8%.  That resulted in the claimants issuing claims asserting that Ineos’ intention was to undermine collective bargaining and was in breach of Section 145B.


The employees raised their action at the Glasgow employment tribunal which found in their favour. Ineos then appealed to the EAT.  The EAT agreed with the employment tribunal and we have assessed some of their key reasoning below.


When is collective bargaining at an end?

The challenge in Ineos was that there was dubiety as to when collective bargaining could be said to be exhausted. Ineos said collective bargaining was at an end, that they had made their best and final offer and that there was no way forward with the union.  This was disputed by the union.  The Employment Tribunal and the EAT both agreed with the union.  They concluded that when the situation was looked at objectively, both parties were very close together in terms of their respective positions and it was more or less likely that an agreement would have been achieved had there been further negotiation. The EAT agreed with the union that it would be ‘anti purposive’ if an employer could avoid its obligations under s145B by simply stating that any particular offer was a ‘final one’.


What was the sole or main purpose of making the offer?

The next question considered was whether the offer by Ineos achieved the prohibited result of undermining collective bargaining.  One of the factors that was fatal to Ineos’ defence was that prior to imposing the pay award, Ineos’ management sent an email saying, “the only logical conclusion is that we have to engineer a way to get rid of Unite and replace them with a different representative”. It then went on to say, in the same communication that it made to staff in imposing the pay award, that it was terminating the collective bargaining arrangement.  It therefore did not require a quantum leap to conclude that the intention of imposing the pay award was to undermine collective bargaining.


Lessons Learned

What are the lessons that can be learned from the Ineos decision?


Firstly, time and energy can be saved by having a clear and unambiguous collective bargaining process with any recognised trade union.  Both Kostal and Ineos have made clear that it will be much easier to identify when collective bargaining is officially at an end where there is an agreement in place that has a prescribed process, and that process has been followed to the end.


Secondly, when there is a collective bargaining process in place it is recommended that employers follow that fully and make sure that those involved in union negotiations are also aware of its content.


Thirdly, manage the personalities involved in negotiations.  What became clear in the negotiations between Ineos and Unite is that there had been a breakdown in the relationship between specific union members and management.  Management had asked that a particular individual not be involved because he had been so challenging to deal with, and a part of what appeared to motivate the employer to impose the pay award was that that individual had become involved in negotiations again.  This does not mean that bad behaviour has to be tolerated however this case is an example of how things can unravel when problem personalities are allowed to dominate negotiations.  


 



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