By Sara Meyer & Hilary Larter
|Published 11 August 2026
In this case, the EAT held that an employer that made a direct pay offer to approximately 1250 trade union members after their union rejected a collectively negotiated pay deal had breached section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (s145B). The fixed statutory award of £3,907 per claimant meant a total liability of almost £5 million for the employer.
Under s145B, an employer is prohibited from making offers to workers who are members of a recognised trade union where:
When considering a s145B claim, the tribunal is required to take into account any evidence that the employer did not wish to use the agreed collective bargaining arrangements.
In Kostal UK Ltd v Dunkley (which we covered here), the Supreme Court held that in order for offers to be capable of having the prohibited result, at the time the offers were made there must have been a real possibility that the terms in question would have been determined by collective agreement if the offers had not been made. Whether or not this is the case must involve consideration of whether collective bargaining processes had been exhausted. An employer that genuinely believes collective bargaining has been exhausted cannot be said to have the prohibited purpose.
The claimants were employed by Virgin Trains East Coast Ltd (VTEC). A collective bargaining agreement provided for negotiations with the RMT and three other recognised trade unions through a Joint Committee.
In 2017, pay negotiations took place via the Joint Committee between VTEC, the RMT and two of the other unions. After five negotiation meetings, on 17 October 2017 the parties agreed that the unions would recommend a pay offer to their members. The members of two unions voted to accept. However, having encountered resistance from members, the RMT representative changed his stance, and RMT members subsequently voted to reject the offer.
On 13 November 2017, the day the RMT ballot result was announced, VTEC wrote directly to the entire workforce announcing that the pay award would be paid in December, but offering RMT members an opportunity to opt out.
The claimant RMT members brought employment tribunal claims for breach of s145B. By the time the claims were heard, their employment had transferred to the respondents.
The tribunal upheld the claims. It held that when the offer was made, the collective bargaining process had not been exhausted and there remained a realistic chance that the relevant terms would have been collectively bargained. The tribunal also found that VTEC had not held a genuine belief that collective bargaining was at an end. It had taken a unilateral business decision that it no longer wished to participate in collective bargaining and its purpose in making the offer had been to impose the pay award. The tribunal therefore ordered the respondents to pay the statutory award to each of the approximately 1250 claimants. At the time of the events in this case, the award was £3,907 per claimant, so the respondents' total liability was £4,883,750.
The EAT dismissed the respondents' appeal.
Unlike in Kostal, the collective bargaining agreement in this case was unstructured and flexible. When considering whether acceptance of the offers would have had the prohibited result, the tribunal was therefore correct to engage in a broad factual analysis of whether the collective bargaining process had been exhausted. The tribunal had made the following factual findings which supported the conclusion that there had been a real possibility of collective agreement when the offer was made:
On the prohibited purpose issue, the tribunal had to identify VTEC's subjective belief at the time that it made the offer, and had been entitled to focus on evidence that VTEC had decided it no longer wished to participate in collective bargaining. Its factual finding on this point was not challenged, and it was not open to the respondents on appeal to introduce a new argument that VTEC's underlying business reasons for that decision, including its dissatisfaction with the conduct of the RMT's representative and a desire to implement the pay award before Christmas, should have been treated as its "purpose". Employers will always have business reasons for seeking to bypass collective bargaining. If those reasons were determinative of whether an employer making an offer had the prohibited purpose, an employer could never be found to have breached s145B (unless it was unwise enough to characterise its business reason as limiting or ending collective bargaining).
This case illustrates the risk for employers of making a direct offer to their workforce where collective negotiations have not resulted in agreement, in the absence of clear evidence that the collective bargaining process has been exhausted. It may be harder for employers to defend s145B claims where the collective bargaining agreement is flexible and unstructured, as a tribunal will take a broad view of the facts as a whole when considering whether collective bargaining has been exhausted.
If an employer does proceed to direct offers where there is still some realistic prospect that a collective agreement could have been reached, it will only be able to defend a s145B claim if it can demonstrate that its sole or main purpose was not to achieve the prohibited result. As the EAT warned in this case, an employer's underlying business reasons for acting will not be determinative.
Where possible, employers should ensure that collective bargaining procedures are clearly defined and specify when they will be considered to be exhausted, so they can identify when making a direct offer will no longer contravene s145B. Confirmation from the trade union that they consider the collective bargaining process to be concluded would also be valuable.
(1) London North Eastern Railway Ltd and (2) Hitachi Rail Ltd v Jiwanji and Others
