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Industrial relations update: five new cases

Despite the surprise result, the general election outcome probably means ‘business as usual’ for industrial relations law.

Despite the surprise result, the general election outcome probably means ‘business as usual’ for industrial relations law. The manifestos of the main parties were quiet on industrial relations, with the notable exception of Labour which proposed a number of significant changes including repeal of the Trade Union Act (which came into force earlier this year), the roll-out of sectoral collective bargaining, and allowing trade unions guaranteed access to workplaces. Although the party surpassed expectations on election night, it is unlikely that these proposals will come to fruition in the immediate future.

However, there is still much to report, with a flurry of recent cases tackling tricky industrial relations issues. We’ll talk you through our top five below:

Argos v Unite the Union (High Court)

Injunctions to restrain industrial action

In a high profile decision last month, the High Court rejected an application by high street retailer Argos to stop a planned strike.

Argos operated a number of distribution centres, some operated by the union and others by another company, Wincanton Logistics. Although Argos had agreed to transfer employees’ existing terms and conditions, the union was concerned about how long these would be preserved following the TUPE transfer (for example if there was a further transfer or change of location in future).  The union balloted for strike action on this basis, also seeking confirmation that relocation packages would be offered to transferring employees and voluntary redundancy made available to employees who did not wish to transfer.

For strike action to be lawful it must be carried out ‘in contemplation or furtherance of a trade dispute’. Argos argued that the union had ‘engineered’ a dispute where none existed (as it had been agreed that employees would transfer on their existing terms and no further outsourcing was planned).  The company argued that the union was therefore acting unlawfully by ‘inducing’ the employees to break their contracts (by taking non lawful strike action) and applied to stop the strike taking place.

The High Court rejected this application finding that the union was likely to prove that the dispute between the parties was about the current terms and conditions governing the employees’ contracts. The fact that the dispute was also motivated by other concerns did not stop it from relating “wholly or mainly” to terms and conditions of employment and the strike could go ahead.

Lidl v CAC and GMB (Court of Appeal)

Collective bargaining: 'fragmented' bargaining units

In another unsuccessful application brought by an employer, the Court of Appeal has rejected an attempt by the supermarket Lidl to prevent the GMB union being recognised for collective bargaining at one of its warehouses.

The Central Arbitration Committee held that a group of Bridgend warehouse operatives, constituting 1.2% of Lidl’s total UK workforce, was an appropriate bargaining unit. Lidl issued judicial review proceedings against the decision of the CAC but the High Court rejected the claim. Lidl took the case to the Court of Appeal. The employer argued that it was not appropriate to create such a small bargaining unit containing such a small proportion of their UK employees. It pointed to a provision in the Trade Union and Labour Relations (Consolidation) Act 1992 which requires the CAC to take into account “the desirability of avoiding small fragmented bargaining units within an undertaking”.

The Court of Appeal agreed with the decision of the CAC. It held that this statutory provision was intended to avoid fragmentation of collective bargaining (i.e. negotiating with more than one union), rather than prevent a situation where a union is recognised in respect of only a small pool of employees and no union is recognised in respect of the remainder (which was the case at Lidl).

Lidl's concern that only a very small proportion of staff at the same grade and location were in the bargaining unit fell instead to be considered under a separate and more general statutory requirement to take into account the need for the proposed bargaining unit to be compatible with effective management. The CAC had considered this and was satisfied that the small bargaining unit proposed was appropriate and workable.

The Trade Union and Labour Relations (Consolidation) Act 1992 allows the CAC quite broad discretion to decide the appropriateness of a proposed bargaining unit. This is because the CAC is considered to have specialist expertise in this area. In general Courts will be reluctant to interfere with the CAC’s decision making.

Dunkley and others v Kostal UK Ltd (Employment Tribunal)

Bypassing recognised Trade Union was an 'unlawful inducement'

The Trade Union and Labour Relations (Consolidation) Act makes it an offence for an employer to offer employees an ‘inducement’ which, if accepted, would result in them giving up any or all of their collective bargaining rights. The employee must bring a claim within three months of the offer (or the last in a series of similar offers) being made.

An employer will only be in breach of this provision if their ‘sole or main purpose’ in making an offer was to induce employees away from collective bargaining and the burden is on the employer to show what its ‘sole or main purpose’ was. If an employer is found to be in breach, a Tribunal will make a ‘declaration’ to that effect and a mandatory award to each claimant employee.

In this case, an Employment Tribunal held that an employer’s attempt to bypass a recognised trade union by negotiating directly with individual employees was an unlawful inducement.

The respondent in this case, Kostal UK Ltd, had in place a recognition agreement with Unite establishing a framework for collective bargaining. The agreement provided that formal pay negotiations would take place annually and that any proposed changes to terms and conditions of employment would be negotiated with the union. In 2015, the company proposed a package of changes for the following year including pay increases and a Christmas bonus along with a number of detrimental changes to terms and conditions (e.g. reducing sick pay entitlement for new starters and reducing the Sunday overtime rate). This package was rejected in a consultative ballot in December 2015, with only 20.8% voting in favour (with an 80% turnout). The company subsequently wrote to all employees directly to offer the same package, stating that if employees did not agree to all new terms they would forfeit the Christmas bonus. The company subsequently wrote again to employees referring to dismissal as a possible outcome if agreement could not be reached.

The Employment Tribunal found that the company’s actions were prohibited under this provision. The sole or main purpose of the direct offer to employees was to bypass collective bargaining. The Tribunal did not accept the employer’s arguments that it had been seeking a temporary solution to an impasse and that it’s sole or main purpose was to make sure that as many employees as possible received a Christmas bonus. The Tribunal found that it was “exceptionally improbable” that the company did not intend to circumvent the collective bargaining process when it made the offers.

This case is a reminder that it is not permissible for an employer to abandon collective negotiation when it is not satisfied with the result of a ballot and approach employees directly to strike deals. However, it is important to note that there is currently a great deal of uncertainty as to how broadly the concept of ‘purpose’ should be construed as there has not been a  binding appeal level decision on this issue. Whilst this case can be taken into account by other Tribunals, they do not have to follow it.

Hartley v King Edward VI College (Supreme Court)

Calculating strike pay

If a teacher takes part in lawful strike action, how much pay is their employer entitled to deduct? In the case of Hartley v King Edward VI College the Supreme Court has handed down a Judgment which all employers must now consider before stopping pay when strike action occurs. It held that a sixth form college should only have deducted 1/365 of salary per day of strike action, as the teachers were engaged on an annual contract and performed work throughout the year. The college’s approach of deducting 1/260 of salary per day (based on a five day working week) was not correct.

This is a very fact-specific decision applicable to college teaching staff, but it is possible that this decision may have implications outside the education sector for employees whose days and hours of work are not ascertainable, or whose core contracted hours are not reflective of how work is done. The Judgment is also a reminder that contracts of employment can set out the days for which salary accrues and such a clause will override the default position.

A more detailed explanation of this decision can be found here in a previous legal update.

Gnahoua v Abellio London Ltd (Employment Tribunal)

Nominal compensation for breach of right to be accompanied

An Employment Tribunal has awarded nominal compensation of £2 for a breach of an employee's right to be accompanied.

In doing so, the Tribunal has applied the Employment Appeal Tribunal's decision in Toal v GB Oils Ltd which stated that, provided that the companion comes within one of the permitted categories (an employed trade union official, a certified trade union official or a colleague), the employee has an unfettered right to be accompanied by their chosen companion. However, Toal had also suggested that nominal compensation of £2 was an option for Tribunals in cases where the employee had not suffered any loss or detriment.

In this case, Abellio had a policy of refusing to permit two brothers (who were PTSC union officials) to accompany employees at disciplinary or grievance meetings. This was because an Employment Tribunal, in separate proceedings by one of the brothers against Abellio, had awarded £10,000 in costs against both brothers for vexatious conduct. This conduct had involved falsifying the date on which a witness statement was prepared. Abellio therefore took the view that the brothers had attempted to obtain substantial compensation from it using dishonest means and so banned them from acting as companions. In this case, Abellio refused to permit Mr Gnahoua to be accompanied by one of the brothers.
However, while this breached his rights, the Tribunal found that he had not suffered any loss or detriment. For example, the Tribunal found that Abellio had conducted Mr Gnahoua's disciplinary hearing in a considerate and thorough fashion, going through his arguments and taking into account his long service.

Paul McFarlane (paul.mcfarlane@weightmans.com) is a Partner in the Employment, Pensions and Immigration Team based in London. Paul is an expert in industrial relations law and is also chair of the Employment Lawyers Association legislative and policy committee. If you have any questions please contact Paul or speak to your usual Weightmans advisor.