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Direct Pay Offer Made When Union Negotiations Were At An Impasse Was Unlawful Inducement – Employee Rights/ Labour Relations

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An employer cannot engineer an end point to collective
bargaining, to enable it safely to make a direct pay offer to
employees without it being an unlawful inducement to bypass
collective bargaining, simply by describing the last offer rejected
by the union as its “best and final” offer. A tribunal
may still conclude that continued collective bargaining could have
reached agreement, particularly if the parties were close to
agreement and therefore the bargaining process was not exhausted.
In these circumstances the direct offer would be the cause of the
term not being collectively agreed and therefore an unlawful
inducement, the penalty for which is currently £4,554 per
offer per affected employee.

As established last year by the Supreme Court in Kostal v Dunkley, a unionised
employer’s direct offer of new terms to workers will not be an
unlawful inducement to opt out of collective bargaining only if the
collective bargaining process has been exhausted. The Scottish EAT
recently applied this test in the case of Ineos Infrastucture
Grangemouth Ltd v Jones,
where ‘acrimonious’
negotiations had reached an impasse after the union rejected what
the employer described as its “final and best” pay offer.
There was no structured agreement setting out clearly when the
collective bargaining process would be exhausted and the tribunal
had heard unchallenged evidence that the parties were close to an
agreement and had contemplated further rounds of negotiation. It
was therefore open to the tribunal to conclude on the facts that an
objective observer would regard it as more, rather than less,
likely that agreement would have been achieved by further
collective bargaining, and that negotiations were not at an end at
the time of the offer.

The ruling emphasises the benefits of having a clearly
delineated collective bargaining process, to avoid uncertainty and
argument as to whether the process has been exhausted on the

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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