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The Employment Appeal Tribunal (EAT) has held in Ineos Infrastructure Grangemouth Ltd v Jones and ors that an employer's imposition of a pay award, at a time when pay negotiations with the recognised trade union were at an impasse, amounted to an unlawful inducement under section145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992). 

Section 145B prohibits employers from inducing their workers to bypass collective bargaining in certain circumstances.     

The EAT found that the tribunal has been entitled to find that the employer's unilateral variation of employees' terms as to pay, which was accepted by the employees continuing to work, constituted an "offer" for the purposes of s.145B. It was also entitled to find that the employer's making of this offer achieved the result of bypassing the collective bargaining mechanism.

IIG Ltd recognised the Unite trade union for collective bargaining in respect of employees at its Grangemouth site. Pay negotiations were instituted in June 2016 and five meetings took place between November 2016 and March 2017.  After various proposals were not accepted, IIG Ltd eventually made a "final and best" offer of 2.8% which Unite presented to its members but did not recommend for acceptance and did not put to a vote. The members authorised Unite's negotiating team to return to talks and seek an improved offer but IIG Ltd took the view that it had done all that it reasonably could in the negotiations and that its only option was to make the pay award unilaterally.  It accordingly sent out a communication on 5 April 2017 to employees stating that "we will implement our pay increase as described in our latest offer". It also stated that it was terminating the collective bargaining agreement with Unite in light of the "unsatisfactory" way in which it had conducted the negotiations.  Affected employees brought "unlawful inducement" claims under s.145B TULR(C)A.

The employment tribunal upheld the claims finding that the 5 April communication was in the nature of an offer, and that it had the "prohibited result", namely that the employees' pay was determined by acceptance of the offer and not by collective bargaining. On appeal the EAT agreed. It found that, following the final meeting between IIG Ltd and Unite, the parties were close to agreement, such that an objective observer would regard it as more, rather than less, likely that agreement would have been achieved by further collective bargaining.  

Take note: The decision in Ineos Infrastructure follows that of the Supreme Court in Kostal UK v Dunkley where it was held that, where there is a recognised union, an employer can only make a direct offer to workers in relation to a matter falling within the scope of a collective bargaining agreement if it has exhausted the agreed collective bargaining procedure. The EAT's decision underlines the importance of the employee establishing that it is absolutely certain that the collective bargaining process is at an end before making offers to employees.  If an employer breaches s.145B then each affected employee is entitled to an award of £4,554.