Background
The case of London North Eastern Railway Limited v Jiwanji & Ors ("Jiwanji") arose from a 2017 pay dispute involving Virgin Trains East Coast, the predecessor employer of the claimants. Following unsuccessful negotiations with the RMT union, the employer communicated a pay award directly to employees, giving the RMT members the option of opting out of it. Around 1,250 employees subsequently brought claims under the Trade Union and Labour Relations (Consolidation) Act 1992 ("TULR(C)A"), alleging unlawful inducement to bypass collective bargaining.
TULR(C)A provides that a worker who is a member of an independent trade union that is recognised (or seeking recognition) by their employer has the right not to receive direct offers relating to their terms and conditions. This applies where acceptance of the offer results in the workers' terms not, or no longer being determined by a collective agreement negotiated by or on behalf of the union ("the prohibited result"). In addition, the employer's sole or main purpose in making the offer must be to achieve the prohibited result. There is, though, nothing to prevent an employer from making a direct offer to employees if it has followed and exhausted the collective bargaining procedure, or if the sole or main purpose of the offer was not to achieve the prohibited result.
The employment tribunal found that the direct offers to RMT members with the opt-out amounted to an unlawful inducement to give up collectively bargained terms. The employer had made "a unilateral business decision" to treat collective bargaining as at an end, but it had not genuinely believed the collective bargaining process had been exhausted. As at the time the offer was made, there remained a realistic chance that the terms would have been agreed via the collective bargaining process.
The EAT judgment
Before the EAT, the employer challenged both the finding that the offers achieved the prohibited result, and that the sole or main purpose in making the offers was to achieve that result. The EAT confirmed that the question of whether there was a "real possibility" at the time of an offer being made that the terms would still have been determined by collective agreement was a question of fact for the employment tribunal. Given the tribunal's findings of fact on that point, the EAT could not overturn them. The EAT also held that the fact that two other unions involved in the collective bargaining had agreed a deal at the point the offer was made to RMT members did not evidence that the process with RMT had been exhausted. The employment tribunal had also been entitled to find that the employer had taken a business decision that it did not wish to carry on using the agreed collective bargaining procedures. Its sole or main purpose in making the offer was therefore to achieve the prohibited result.
What does this mean for employers?
The cost of bypassing collective bargaining before the process is truly exhausted is high, currently £5,993 per claimant, although at the time of this case it was £3,907 per claimant. This is a mandatory amount that a tribunal must award, and it has no discretion to lower it. With approximately 1,250 claimants, the respondent's liability in this case is just under £4.9 million, although that rises to over £6 million once interest is taken into account. These are costs that few employers can meet.
Employers should ensure that collective bargaining procedures are exhausted before making any direct offer to workers. The more unstructured a collective bargaining procedure is, the more difficult it will be to recognise when that point is reached. Before a decision is taken to approach the workers directly, employers should ensure that all agreed stages of negotiation have been completed. This should be supported by a clear and defensible assessment that the collective bargaining process has genuinely been exhausted. Given the potential costs involved in getting it wrong, it is recommended that legal advice is taken.
The future
While currently the cases on unlawful inducement to bypass collective bargaining may not seem relevant to the many organisations that do not recognise an independent trade union, an increase in union activity is anticipated. October sees the next significant tranche of rights and duties being brought into effect by the Employment Rights Act 2025. That includes the duty on employers to inform workers of their right to join a trade union, strengthened trade unions' rights of access to the workplace and simplification of the trade union recognition process. Measures to simplify trade union recognition took effect in April 2026, while 2027 will see the introduction of electronic and workplace balloting for recognition (and derecognition) ballots. While the impact of these provisions will vary by sector, workforce demographics and existing employee relations arrangements, an increase in trade union membership, recognition and influence is anticipated.
