Employer loses appeal in Dunkley v Kostal UK Ltd at the Employment Appeal Tribunal

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Earlier this year I reported this Employment Tribunal case sending a small shock wave through Employee Relations by finding that an employer (Kostal UK Ltd) acted unlawfully by making offers to individual employees in order to resolve a dispute on pay. This was held to be a prohibited inducement under s145(b) of TULRA 1992 to prevent the workers’ terms and conditions or any of those terms being determined by collective bargaining.


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This strategy is (or has been) a common way in which employers have closed disputes over pay. UNITE, who brought the case, have publicised it on their website and have used references to it in other Trade Union disputes over pay around the North and Midlands. The remedy is only one of the worrying aspects of the case. Each breach attracts a fine of £3,907 per worker. No reduction for contribution or conduct on the part of the Trade Union is applicable. The bill for Kostal UK Ltd is around £418,000 as two breaches for each union member were identified by the Tribunal.

The company appealed against this decision and yesterday the decision of the EAT was published. The appeal was dismissed on a majority decision. In a detailed judgment, which can be found here, the EAT held that the original decision was correct, in that an offer or inducement made to individual employees even if it does not result in an end to collective bargaining for the future is a prohibited act which falls foul of s145(b)

The majority found that original Employment Tribunal ‘made no error in construing the prohibited result. It made unassailable findings of fact and neither judgment is flawed by error of law.’ The small shock wave is now significantly bigger! My advice to employers is worth repeating.


You must position yourself correctly:

  1. If you have reached stalemate in your Trade Union negotiations over pay or terms and conditions changes, it really needs to be an impasse. All stages of your procedure need to be followed and exhausted. If you have no formal procedure agreement, every effort should be made to involve the outside Union officials or indeed ACAS for that matter.

  2. All communications to the workforce or the Trade Union must reflect this. There must be no doubt that you are at the end of the road and it is a genuine impasse. Any indication that you are trying to by-pass the Union will be risky.

  3. Do not make an offer to individual employees. A general implementation of the pay award may be a better strategy, but any course of action must be accompanied by communications reflecting the ‘last resort’ nature of your actions and your intention to maintain and participate in all aspects of collective bargaining now and in the future. For example: “The door remains open to further discussions to help resolve the current situation”.

  4. If the dispute involves changing terms and conditions, then further advice may be needed. This is uncharted territory for most companies and indeed employment law experts, so some care must be taken to avoid the significant liabilities attached to these claims.


How we can help

Chris Harries is a Barrister and EEF’s National Head of Employee Relations. Chris provides advice, guidance and practical support on the employee relations arrangements and employee disputes to organisations of all sizes and across all sectors.  

As a trusted advisor at the negotiation table, EEF has the expertise and sector-specific experience to help. Here are a few advantages of working with us:

  • Unrivalled expertise and experience of operating in sectors influenced by the trade union dynamic

  • Best in class training provision from qualified tutors who understand the issues that matter to you, delivered on-site or at dedicated locations throughout the UK

  • Industry and policy insight that that keeps you ahead of the pack

  • Leading employment law consultants in UK manufacturing and engineering industry

  • Strong regional footprint with offices and consultants around the country allowing easy access to any workplace


To find out how our Employee Relations experts can support your business, call 0808 168 5874 or email HRenquire@eef.org.uk


National Head of Employee Relations

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