In the case of Ineos Infrastructure Grangemouth Ltd v Jones and others and Ineos Chemicals Grangemouth Ltd v Arnott and others the EAT held a pay increase imposed by the employer when collective bargaining was at an impasse was an unlawful inducement under TULRCA. We take a look at the case and what it means for employers with recognised trade unions.
The case concerned a breakdown in pay negotiation where the relationship between the employer and the union had clearly become difficult. Following a series of pay negotiation meetings, the employer made a best and final offer for a pay increase which the union presented to its members but did not put to a vote. Amid strained relations, the union confirmed the offer was not acceptable and requested further discussions.
The employer believed negotiations were at an end following the union's rejection of the offer. It wrote to staff confirming implementation of the pay increase and terminated the collective bargaining arrangements with the union.
It is unlawful for an employer to make an offer to members of a recognised trade union where acceptance of the offer would have the result that a term or terms of the worker's employment would not (or would no longer) be determined by collective agreement (known as the "prohibited result"). An employer does have a defence if it can show that the sole or main purpose of that offer is not to avoid the workers' terms of employment from being determined by collective agreement.
The EAT, dismissing the appeal, held that the pay increase was an unlawful inducement. It considered the Supreme Court's decision in the case of Kostal which set out the proper legal test for claims of unlawful inducement under TULRCA. The issues to be considered were:
Was there an offer?
The EAT held that the word ‘offer’ should be given its ordinary meaning and that the pay increase letter to staff was a statement of intention to vary employees contracts as to pay, which was accepted by the employees continuing to work. It was not a "unilateral obligation" as argued by the employer. There was clearly an offer, which would appear uncontroversial.
Did the offer achieve the Prohibited Result?
The EAT said the key findings of the Tribunal demonstrated that the prohibited result was clearly achieved.
What was the employer's purpose in making the offers?
The EAT acknowledged that given the collective bargaining agreement did not contain any mechanism for dispute resolution and in light of the decision in Kostal, the employers’ purpose in making the offer becomes very relevant. The Tribunal had concluded that the employer did not wish to use the arrangements agreed with the union for collective bargaining. An internal email from the employer made this clear. It indicated that the purpose of the unilateral offer was to get rid of the union and replace it with a different representative body. The Tribunal also found that when the offer was made the employer did not wish to use the arrangement agreed with the union nor to enter into the arrangements proposed by the union for collective bargaining. Their termination of the collective bargaining agreement was clear evidence of this. The EAT considered that achieving the prohibited result was the employer's sole or main purpose in making the offer.
It is clear from this and the Kostal case that an employer will need to be confident it has exhausted the collective bargaining process before making any offers directly to staff. Given the findings of facts in the case, in particular, that the parties believed they were close to agreement and the employer wanted to remove the union, the decision was not surprising. We would expect that in most collective bargaining processes the intentions of the parties may be far less obvious.
The case demonstrates yet again that such cases are very fact specific and an appeal outcome is heavily dependent on the facts as found by the Employment Tribunal. It highlights the importance of presenting evidence clearly and being able to demonstrate the thought processes at the time decisions were made during the collective bargaining process, including the purpose behind those decisions.