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Unlawful collective bargaining inducements are costly for employer

10 January 2018

Automotive supplier Kostal UK Ltd has been ordered to pay £420,000 in compensation. This comes after the Employment Appeal Tribunal heard the first appeal of Kostal UK Ltd v Dunkley and others under s145B of Trade Union & Labour Relations (Consolidation) Act (TULRCA) 1992. This regarded provisions preventing employers unlawfully offering inducements to employees to give up collective bargaining rights. Such ‘inducements’ may involve the implication or threat of negative outcomes if the worker does not agree. 

Collective bargaining between Kostal and Unite broke down in December 2015. After Kostal’s proposed pay deal and related changes to terms and conditions were rejected in a consultative ballot in December 2015, they wrote to all employees directly saying that a failure to agree to the new terms would lead to no Christmas Bonus and no pay increase.

In January 2016, employees who had not accepted the proposals received a further letter from Kostal, which said that the changes would not be implemented without their express agreement, but that in the event that no agreement was reached, their contract of employment could be terminated.

Whilst a collective agreement was ultimately reached, 57 employees brought claims alleging that Kostal had offered unlawful inducements to waive collective bargaining under s145B (relying on both letters as offers).


The Employment Tribunal ruled that both offers amounted to unlawful inducements, contrary to section 145B of the TULRCA 1992 and awarded the prescribed amount of £3,800 per employee per offer. The total awards exceeded £420,000 in compensation. The EAT has upheld that decision and set the first legally binding precedent on this piece of Trade Union Law.

Under section 145B of TULRCA, it is 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 case of Kostal UK Ltd v Dunkley and others serves as a costly reminder to employers of what can happen if they attempt to bypass collective bargaining to negotiate directly with employees on pay and terms and conditions of employment.