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08 March 2017

Pay reviews and collective bargaining – A message of concern

Many employers who recognise trade unions have experienced the frustration of the annual pay review negotiations.  It is not uncommon, if those negotiations go badly, for the employer to appeal direct to its workforce when it is clear that negotiations with the trade union are going nowhere.  The recent case of Dunkley v Caustel means that approach could have a very expensive sting in its tail. 

In Dunkley, the employer had been forced into recognising a trade union in early 2015.  In the first round of pay negotiations following recognition, the employers entered into discussions with the trade union over pay but also sought to make changes to terms and conditions of employment.  There had been three meetings between the employer and the trade union, followed by a rejection of the offer in a ballot, when the employer decided to write directly to its employees.  The dispute resolution process within the collective bargaining arrangements had not been exhausted.  In the letter to the employees the employer set out that employees who signed up to the new terms by 18 December 2015 would receive a Christmas bonus, but those who did not, would not.

The Employment Tribunal found that the employer’s conduct in sending that letter and one subsequently sent in January, offering back-pay to those who signed up, were attempts to bypass collective bargaining by offering inducements which is prohibited under the relevant legislation.  The cost to the employer of those breaches is likely to be in the region of £400,000 because the penalty is £3,830 for each affected employee in relation to each breach claimed for. 

We are sure many employers will have, during frustrating pay negotiations, written direct to their employees.  Does that mean that the practice now has to stop?  It must be remembered that Dunkley is an Employment Tribunal decision and is therefore not binding on other Employment Tribunals.  It must be also assumed that the employer here was entering into trade union negotiations for the first time, but there are some useful lessons to be learnt from this case:

  • It is clear that the employer jumped too soon.  In terms of negotiations over pay and conditions, there had been very few meetings and whilst it is easy for an employer to get frustrated, it is also important not to make the mistake that the employer made in this case.  They clearly should have seen through their own dispute resolution process as set out in the collective bargaining arrangements.

  • The letters written to employees were not ideal letters and could clearly be seen as threats/inducements to those who did not sign up.  A letter written by an employer to its’ workforce after negotiations had broken down setting out the history of those negotiations and why the employer thinks it is in the best interests of the employee to accept the deal cannot, in our view, be seen as an unlawful inducement.  The approach taken by the employer and the tone of the letter is therefore key. 

We therefore do not consider that the Dunkley decision means that an employer can never write directly to its workforce.  The case does however give a sobering message to all employers in their dealings with trade unions - unforeseen and very expensive consequences can occur if the employer gets it wrong.