Welcome to Wrigleys' Employment Law Bulletin, November 2021.
Times continue to be testing for employers, particularly in the charity and education sectors. The dual demands of crisis management and strategic planning can put extraordinary pressure on leaders and managers. Our first article this month brings together the reflections of senior leaders in the most recent of our regular virtual Senior Leadership Forums. Participants shared their experience on the risks of leaders neglecting their own long-term wellbeing, the need for regular open communication between the board and the executive team, and the value of developing professional connections outside the organisation to act as an honest sounding board.
Employers working with a recognised trade union should take note of the conclusion of the Supreme Court in Kostal UK Ltd v Dunkley and others. We consider the implications of this important decision which highlights the risks of making direct offers of terms to union members where collective bargaining procedures should be followed.
There has been significant recent focus in the media on the difficulties of coping with the impact of menopausal symptoms at work. In Rooney v Leicester City Council the EAT considered whether the claimant's menopausal symptoms could be a disability under the Equality Act 2010. We consider this decision and highlight some useful guidance for employers.
We also consider the decision of the EAT in Stott v Ralli Ltd and provide guidance for employers who are first told about an employee's disability during a dismissal appeal.
This month, our Wrigleys' Essential Employment Guide to The Disciplinary Process focuses on important considerations when making the decision to suspend an employee where there are allegations of misconduct.
We will be delighted if you can join us for our next Employment Brunch Briefing - What's New in Employment Law, which takes place on 7 December. In this free webinar, we will bring together key employment case law decisions from the last 12 months, and summarise important recent and upcoming changes to legislation. Please see the link below to book your place.
"Same storm, different boat"
Article published on 16 November 2021
Reflections from our second Senior Leadership Forum.
The charity sector and the wider social economy encompasses every area of life, each with its own challenges and idiosyncrasies. Yet many senior leadership teams find that many of the same issues apply regardless of the nature of their organisation.
Wellbeing
Though an oft-repeated saying, one cannot look after other people if one does not first look after oneself. This rings particularly true for many senior leaders managing teams of staff and volunteers, but who themselves have no-one to turn to when the going gets tough. Many want to be accessible to their staff, but it must be done in a sustainable way to ensure the long term health of the individuals and the organisation.
Communication
Communication both internally and externally, and especially between senior leadership teams and their trustee boards, is key. Open communication with the board can be difficult in some circumstances, but scheduling regular meetings and getting actively involved in trustee recruitment can help. Finding 'professional friendships' - those who are in similar career positions outside of your organisation who can offer an honest sounding board - is also extremely useful.
Time management
Inboxes overflowing, the phone ringing constantly and two or three (or more) different devices and channels to juggle means the to do list can seem never ending. Needs will differ on a weekly (sometimes daily!) basis and assessing what can realistically be done helps to manage those needs. Making use of the various strategies, exercises and technology available can assist in this process, and although very personal, is an excellent start.
This article summarises some of the practical discussion points covered in our recent Senior Leadership Forum: "Same storm, different boat". The next forums will take place in January 2022. Watch this space for further details.
Employers should exhaust collective bargaining procedures before making direct offers to workers
Article published on 22 November 2021
Supreme Court confirms that offers which would temporarily take a term of employment out of collective bargaining procedures can be unlawful.
Until fairly recently, most employers and many employment lawyers were unaware of the risks of claims when making direct offers to members of a recognised trade union. The case of Kostal UK Ltd v Dunkley and others has however brought the little-known section 145B of the Trade Union and Labour relations (Consolidation) Act 1992 (TULRCA) squarely into the limelight.
We covered the Court of Appeal judgment in this case in our article from June 2019: Can employers change terms and conditions by making offers directly to workers and avoiding trade union negotiations? (available on our website). The Supreme Court has now found in favour of the claimants, allowing their appeal against the Court of Appeal decision. This decision highlights once again the significant risks for employers who seek to by-pass collective bargaining procedures.
When will a direct offer be unlawful?
Section 145B makes unlawful any direct offer by an employer to a member of a trade union which is recognised or seeking to be recognised where:
- the effect of the offer, if accepted, would be that the workers' terms, or some of those terms, will not or will no longer be determined by collective agreement (this is known as the "prohibited result"); and
- the employer's sole or main purpose in making the offer is to achieve the prohibited result.
What are the penalties for making an unlawful offer?
Awards for unlawful offers under section 145B TULRCA are very significant and are increased each year. Since April this year, claimants can be awarded £4,341 for each separate unlawful offer. This is a fixed penalty and there is no mechanism for an employment tribunal to reduce this award. Following the original decision of the employment tribunal in Kostal, the employer's liability was reported to be in the region of £400,000.
One-off or forever more?
A key question which arose as this case went through various stages of appeal was whether the prohibited result occurs where an offer, if accepted, only temporarily takes a term out of the collective bargaining procedure. Or was it confined to situations where the offer, if accepted, would take the term of employment out of collective bargaining procedures completely, so that it would not be included in future bargaining rounds.
For example, could it be unlawful for an employer to offer individual workers a 5% pay rise to avoid this year's collective pay negotiations, when it was clear that future bargaining rounds would include collective agreements on pay? Or would the offer only be potentially unlawful if acceptance meant pay levels would not be decided by collective bargaining in future rounds?
The Supreme Court decision
The Supreme Court has now determined this question in its recent judgment: Kostal UK Ltd v Dunkley and others.
Offer entailing a temporary removal of term from collective agreement can be unlawful
The Supreme Court has clarified that offers can be unlawful even where the effect of acceptance would only be a temporary removal of the term from collective bargaining. There is no need for the offer to involve workers giving up the right to have the term or terms determined by collective agreement in future.
Prohibited result occurs if there is a real possibility that the term would otherwise have been determined by collective agreement
Giving the leading judgment, Lord Leggatt concluded that offers made directly to a worker will lead to the prohibited result where "had such offers not been made, there was a real possibility that the terms in question would have been determined by collective agreement." In other words, a tribunal must consider whether the term in question "might well" have been decided by collective agreement if it were not for the direct offer.
Going further, Lord Leggatt made clear that where there is an agreed collective bargaining procedure in place for deciding the term in question, and this procedure has not been complied with, it must ordinarily be assumed that the term would have otherwise been determined by collective agreement and the prohibited result would have occurred.
Collective bargaining procedures should be exhausted
Lord Leggatt highlighted that there is nothing to prevent an employer from making an offer directly to its workers if the employer has exhausted the agreed collective bargaining procedure. In that case, it cannot be said that there was a real possibility that the matter would have otherwise been determined by collective agreement.
In the Kostal case, the employer made direct offers to workers during the collective bargaining process and before the final stage of that procedure (which involved reference to Acas for conciliation). It was clear in this case that the agreed procedure had not been exhausted before the offers were made.
Key considerations for employers
What is an "offer" under Section 145B?
Lord Leggatt also made clear that the content of the offer is not relevant to consideration of whether acceptance of the offers would lead to the prohibited result.
Quite misleadingly, section 145B TULRCA is headed "Inducements relating to collective bargaining". However, there is no need for the offer to be an inducement, in the sense of an attractive offer designed to lure workers away from union representation and collective bargaining. An offer of terms which are less generous than those currently in place could be found to be an unlawful offer if acceptance of it would lead to the prohibited result.
Employers who are seeking to agree less favourable terms and conditions with their workforce, where there is an agreed procedure to negotiate terms with a recognised trade union, should therefore be aware of the risk of section 145B claims and take legal advice before making direct offers to their staff.
Has the collective bargaining procedure been exhausted?
This case highlights the importance of following any agreed procedural steps in the collective bargaining process. It is of course possible that talks may stall and the two sides may reach an impasse. However, the procedural agreement may well provide for this situation, for example by including a referral to Acas or another external body. In that case, the procedure should be followed through.
If the procedure has been followed in full, and a failure to agree under the procedure has been declared, employers will be in a better position to show that any subsequent direct offers to the workforce were not unlawful.
The employer's sole or main purpose in making the offer
The question of whether acceptance of the offers would lead to the prohibited result is only the first of the two key stages in establishing whether an offer was unlawful or not. The second step is that the employer's sole or main purpose in making the offers was to achieve that result (in short to avoid the term being determined by collective agreement).
Although not a key element of the Kostal appeal, it is likely that an employer's defence of claims under section 145B will focus on evidencing that their sole or main purpose in making the offers was not to achieve the prohibited result, but to achieve some other purpose.
The minority judgment of the Supreme Court gave its view that the sole or main purpose of an employer will not be to achieve the prohibited result where it has a genuine business purpose in making the offers.
In order to minimise the risks of claims, employers should ensure that they are very clear about the genuine business reasons (unrelated to collective bargaining) which lie behind their decision to make direct offers to workers when the terms would otherwise be decided through collective agreement.
If employers make direct offers to staff before exhausting the collective bargaining procedure, it may assist them to have evidence of the time critical nature of the genuine business reason for making those offers. However, there continues to be a risk that a tribunal would find that the principal reason for such offers was to avoid collective bargaining.
Because of the significant potential awards and the costs of defending claims, we strongly recommend that employers seek legal advice if they are considering making offers to members of a recognised union outside collective bargaining procedures.
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