NEWS – 18 June 2019
Unlawful inducements – Court of Appeal ruling in Kostal v Dunkley
The Court of Appeal has overturned the decision of the Employment Appeal Tribunal whether employers can offer inducements to workers to influence their relationship with unions. Helpfully, the ruling was in favour of the employer that offers made directly to employees were not unlawful inducements to move away from collective bargaining – something of a relief to employers faced with a situation where collective bargaining has reached an impasse, and they wish to approach employees directly. That is potentially a serious problem because trade union legislation places restrictions on doing that. The case centres on a little known provision of the Trade Union and Labour Relations (Consolidation) Act 1992, section 145B, which essentially bans employers from making offers directly to union members to change their terms and conditions in order to avoid collective bargaining. In this case the employer, Kostal, wanted to change sick pay provisions, overtime rates and breaks. When an impasse was reached with the trade union, Unite, at the end of 2015, Kostal made an offer directly to the employees which was a 2% increase in basic pay and a Christmas bonus in exchange for the contractual changes, telling them that if the offer was not accepted before Christmas the employees would not receive a Christmas bonus. In January, they sent a second letter promising a 4% increase in basic pay for those who accepted the offer but with the threat of dismissal to any employee who refused. The union, Unite, was not impressed. They brought claims on behalf of 56 of their members on grounds that the letters were unlawful inducements. The tribunal agreed and, on appeal, so did the EAT. It is that EAT decision that has been overturned by the Court of Appeal. That decision was unanimous, however Unite has said it is seeking to appeal to the Supreme Court so this may not be the last word on this. So what do we take from the Court of Appeal’s decision? Well certainly the case does give more flexibility to employers when collective bargaining results in deadlock. However, a few words of caution – this from Euan Smith:
Euan Smith: “So there are a few things that we would suggest to employers that they bear in mind here when they are faced with this kind of impasse. I think it is essential to review your collective bargaining agreements to see what is going to be the subject of bargaining and what is excluded from the scope of collective bargaining. When you do your collective bargaining it will be absolutely essential to exhaust that process before any attempt is made to try to negotiate with individual. When you do, if you do get to that point of making offers to individuals, you shouldn't really be offering anything other than has already been offered via the union, so it should be the same offer that you are making, and most importantly at all times you need to be very clear about why you are making this offer to the individuals – make sure that what you are saying is that it is a business imperative that you need this particular change to happen, you need them to accept the change. That will help mitigate the perception, perhaps, of the union and the tribunal eventually that the purpose behind this is really just to evade collective bargaining."
IR35 – planning for the new regime
Last week we released our quarterly Insights programme on the subject of IR35. These are the tax changes to the off-payroll working rules that will be coming into force next year, on 6 April 2020. The changes will make engagers, the end users, responsible for determining whether IR35 applies to services they receive from individuals working through personal service companies. The purpose of the programme is to provide help with some of the more strategic decisions that will help you minimise the impact of this new regime which is, of course, hugely significant on so many levels for so many employers. Key to this is planning properly and in good time. Here is Claire Scott with her advice on this:
Video – Insights programme on IR35
FAQ – how should a witness prepare for cross examination?
Finally to our FAQ slot which this time round is on tribunal procedure, specifically how witnesses should prepare for what can be a stressful and difficult experience. Emma Malczewski gives her view on this:
Emma Malczewski: “In terms of how to prepare for a tribunal hearing there are some really fundamental things that witnesses can do to put themselves in the best position. So firstly go over your witness statement again, every line, consider it carefully. If you realise that you made a mistake in your witness statement and something is now wrong just get in touch with your legal representative because they will be able to advise you on what can be done, it's never the end of the world, everything can be resolved. Sometimes this can be by way at the beginning of your witness evidence, you basically just say I made a mistake, this line actually is wrong, so that is very important. Other preparation, you will often have a look at other people's witness statements so you can see the full picture of what was going on at the time, if needed. Often you will be provided with a copy of the claimant's witness statement in advance so you can see what the claimant is saying about your involvement and whether you agree with that or disagree. The bundle - the bundle is a very important document and that will be in front of you at the tribunal hearing itself. Sometimes the bundles can span to quite some length, several lever arches or even more than that. The person advising you will be able to flag which pages are your pages because those are the ones that will be referred to in your witness statement generally so in advance do make sure that you have read over those once again and re-familiarised yourself with those documents from that time. I think finally the other tip that I often think if I had to be a witness what I would do is consider whether there are any tricky questions I think I might be asked personally. We can't advise you on what those might be, or tell you how to answer questions in any way at all, but I think sometimes if you can just take a step back from preparing your own statement and looking at your documents and think about which bits of this am I actually worried about and give some thought to how you might respond to questions on those points, that can be really valuable."
For now from me that’s the news. Good bye.
- Link to case report: Kostal UK Ltd v Dunkley & others (Court of Appeal)