Kostal UK Ltd v Dunkley & Ors [2021] UKSC 47 (26 October 2021)
Citation:Kostal UK Ltd v Dunkley & Ors [2021] UKSC 47 (26 October 2021).
Subjects invoked: 8. 'Associations'.46. 'General agency'.
Rule of thumb:If a person appoints a legal representative are you allowed to bypass the legal representative and speak directly to the person to negotiate? The Court held that where a trade union is in negotiations with an organisation over a new employment contract, the organisation is not allowed to make any employment contract offers to any members of the trade union directly – they have to go through the trade union to make any representations to the employee. The Court further affirmed that where this is not done, then the trade union members will be entitled to damages for stress and inconvenience of £3,800. This precedent could perhaps be applied more broadly inductively.
Background facts:
This case invoked the subjects the law of associations, particularly trade unions, and also general agency law.
The material facts were that Kostal, an engineering company, were in negotiations with Unite union who were negotiating a new employment contract for Dunkley and 56 others who were members of their Union and employees of Kostal. Unite made accounting arguments over a prolonged negotiation period to Kostal as to why they were entitled to more money. After negotiations with Unite, Kostal decided to make an improved employment contract offer to every single employee in Kostal, including Dunkley and other Unite members.
Judgment:
The Court held that this was a breach of trade union law, and so Dunkley and the 56 other Unite members were each entitled to damages of £3,800 each for the distress and inconvenience of this.
Ratio-decidendi:
Lord Leggatt Ratio-Decidendi 70-72 ‘ 70. … the Company agreed when it entered into the Recognition Agreement to conduct annual pay negotiations with Unite and to follow the procedure … before making or proposing any change to terms and conditions of employment outside that process. The offers made directly to employees dishonoured that agreement because they were made before the process had been exhausted. Furthermore, the Company’s behaviour, potentially at least, treated less favourably employees who were not prepared to relinquish their right to have the agreed procedure for collective bargaining followed... In these circumstances the Company’s conduct can fairly be characterised as a disincentive or restraint on the use by the claimants of union representation to protect their interests. The relevant use was the exercise of their right to be represented in collective bargaining conducted in accordance with the Recognition Agreement. Conclusion 71. I conclude that, on the proper interpretation of section 145B of the 1992 Act… there was a real possibility that the terms in question would have been determined by collective agreement. That must ordinarily be assumed to be the case where there is an agreed procedure for collective bargaining in place which has not been complied with. 72. … the collective bargaining process outlined in the Recognition Agreement was still continuing when the first and second offers were made by the Company directly to the claimants. In those circumstances … the offers were made in contravention of section 145B…’
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.