Kostal v Dunkley

The background of Kostal v Dunkley in light of the Court of Appeal ruling in Kostal’s favour.

What happened?

Unite was the recognised trade union for collective bargaining purposes at Kostal. Unite and Kostal failed to reach agreement on the firm’s proposed pay offer for 2016. Kostal had proposed a 2% increase in basic pay plus an additional 2% for those earning less than £20,000, along with a substantial Christmas bonus, payable at Christmas 2015. In return, it sought various things such as a reduction in sick pay for new starters and a reduction in Sunday overtime. Unite didn’t recommend the offer to its members and in a subsequent ballot, 80% of those balloted rejected the offer.

What did Kostal do?

Kostal then wrote to every employee setting out the pay offer in identical terms. The letter explained that if the offer was not accepted by 18 December, employees would not receive the Christmas bonus, even if a revised offer was subsequently agreed with Unite. The following January, Kostal wrote to employees who had not accepted, this time offering a 4% increase in basic pay if they agreed to the proposed changes in terms and conditions, and threatening dismissal if they did not.

Unite and Kostal v Dunkley

Several employees (all Unite members) brought tribunal claims alleging that each letter constituted an unlawful inducement contrary to s. 145B. The tribunal upheld the employees’ claims and awarded compensation of £3,830 for each unlawful inducement (i.e. a total of £7,660 per claimant and circa £433,000 in total).

Kostal appealed, arguing that it had never intended to induce its employees to opt out of collective bargaining. Rather, it wanted to inform them that they would lose their Christmas bonus if they did not agree to the changes in time.

Its purpose therefore in making the offers was not to achieve the ‘prohibited result’. (A collective agreement was eventually reached on pay and amended terms and conditions on 3 November 2016, by which time the issue of the Christmas bonus was no longer relevant.) Kostal also appealed against the award, arguing that the tribunal shouldn’t have made two awards per claimant.

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