Rail companies London North Eastern Railway (LNER) and Hitachi Rail are facing an estimated £6 million compensation bill, plus interest, after a significant judgment from the Employment Appeal Tribunal (EAT) last week. The EAT upheld claims brought by over 1,200 members of the National Union of Rail, Maritime and Transport Workers (RMT), confirming that their employers had unlawfully attempted to bypass established collective bargaining procedures by directly approaching workers with pay offers. This ruling reinforces the critical principle of collective bargaining in UK industrial relations and sends a clear message to employers about the legal and financial consequences of undermining trade unions.
The core of the dispute originated in 2017 during the tenure of Virgin Trains East Coast, which operated the East Coast rail franchise at the time. Virgin Trains East Coast had put forward a pay offer to three key unions: the RMT, the Transport Salaried Staffs’ Association (TSSA), and Unite. While TSSA and Unite subsequently accepted the company’s proposed pay deal, RMT members, following a ballot, rejected the offer. Instead of engaging in further negotiations with the RMT to reach a mutually agreeable resolution, Virgin Trains East Coast took the controversial step of writing directly to the RMT’s members. This communication presented them with the option of "opting out" of the original pay offer if they chose not to accept it, effectively presenting the offer directly to individual employees rather than through their elected union representatives. The RMT union swiftly argued that this direct approach constituted an unlawful attempt to circumvent collective bargaining rules and deliberately exclude the trade union from its rightful role in the negotiation process.
A Chronology of the Dispute and Legal Precedents
The path to this EAT ruling has been protracted, marked by changes in rail franchise ownership and the crucial influence of a landmark Supreme Court decision.
- 2017: The Genesis of the Dispute: Virgin Trains East Coast presents a pay offer to RMT, TSSA, and Unite. RMT members reject the offer in a ballot. Virgin Trains East Coast then directly approaches RMT members, bypassing the union.
- 2018: Franchise Transfer: Following changes to the East Coast rail franchise, the employees involved in the dispute were transferred. London North Eastern Railway (LNER) and Hitachi Rail subsequently became the respondents in the legal proceedings, inheriting the liabilities associated with the original actions of Virgin Trains East Coast.
- September 2022: Initial Employment Tribunal Ruling: An Employment Tribunal confirmed that the direct offer made to RMT employees by Virgin Trains East Coast was an unlawful inducement. The tribunal ruled that this action contravened section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992. However, the tribunal had deliberately paused its final decision and awaited the outcome of a pivotal case at the Supreme Court: Kostal UK Ltd v Dunkley and Others.
- 2021: The Kostal v Dunkley Supreme Court Landmark: This case proved instrumental in shaping the legal landscape for collective bargaining. Automotive components manufacturer Kostal UK had made an offer on pay and bonuses directly to Unite union members, which was rejected by the union. Kostal then approached employees directly, setting a deadline for acceptance to receive a bonus. After being initially overturned by the Court of Appeal, the Kostal case reached the Supreme Court, which unanimously upheld the union’s appeal. The Supreme Court’s ruling unequivocally affirmed that employers cannot bypass collective bargaining processes to make direct offers to employees if there is still a "real possibility" of reaching agreement through union negotiations. This decision set a powerful precedent, making it significantly harder for employers to circumvent unions legally.
- Last Week: Employment Appeal Tribunal Upholds Claims: Armed with the clarity provided by the Kostal judgment, the EAT proceeded to uphold the claims against LNER and Hitachi Rail. This decision finalized the liability for the compensation of 1,235 workers who had been individually approached, setting the stage for the £6 million payout.
The Legal Framework: Protecting Collective Bargaining
The legal protections at the heart of this case derive from several crucial provisions. Central to the ruling is Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992). This section makes it unlawful for an employer to make an offer to a worker that would have a "prohibited result" if accepted, where the employer’s sole or main purpose in making the offer is to achieve that result. A "prohibited result" includes situations where the worker’s terms of employment will not (or will no longer) be determined by collective agreement. Essentially, it aims to prevent employers from undermining collective bargaining by making direct offers to workers to bypass the union.
Furthermore, the legal framework for these protections extends to broader human rights principles. As highlighted by Neil Todd of Thompsons Solicitors, these safeguards originate from provisions on the freedom to negotiate under Article 11 of the European Convention on Human Rights (ECHR). Article 11 guarantees the right to freedom of association, including the right to form and join trade unions for the protection of one’s interests. The European Court of Human Rights has interpreted this as encompassing the right of trade unions to engage in collective bargaining. The UK, as a signatory to the ECHR, is bound to uphold these rights, which are incorporated into domestic law through the Human Rights Act 1998. This international dimension underscores the fundamental nature of collective bargaining rights, elevating them beyond mere statutory provisions to core human rights.
Broader Impact and Implications
The EAT’s decision carries substantial weight, not only for the rail sector but for the entire landscape of industrial relations in the UK.
- Financial Ramifications: The £6 million compensation, plus interest, represents a significant financial penalty for LNER and Hitachi Rail. For 1,235 workers, this averages approximately £4,858 per individual, a substantial sum that underscores the cost of unlawful inducement. Beyond the direct compensation, the companies will also bear considerable legal costs incurred over years of litigation. This serves as a stark financial deterrent for any employer contemplating similar actions in the future.
- Strengthening Trade Union Authority: This ruling, coming on the heels of the Kostal judgment, significantly bolsters the authority and position of trade unions in collective bargaining. It reaffirms that unions are the legitimate and legally recognized representatives of their members in pay and conditions negotiations. Employers can no longer assume they can sidestep unions simply because a prior offer has been rejected. This strengthens the hand of unions in demanding fair and robust negotiations.
- Setting a Clear Precedent: The combined force of Kostal at the Supreme Court and this EAT ruling creates an exceptionally strong legal precedent. It clarifies the boundaries of acceptable employer conduct during pay negotiations and reduces ambiguity around Section 145B. This clarity will likely lead to greater caution among employers and encourage more respectful and genuine engagement with collective bargaining processes.
- Employee Empowerment and Confidence: For the 1,235 RMT members involved, the victory is a powerful affirmation of their rights and the effectiveness of union representation. It can foster greater confidence among union members across various sectors that their collective voice, when channelled through their union, is legally protected and capable of achieving justice. It underscores the principle that workers, collectively, possess greater leverage and protection than when approached individually.
- Shaping Future Industrial Relations: This decision is likely to influence how employers approach industrial relations in the future. It could lead to a renewed emphasis on building constructive relationships with unions, understanding that genuine dialogue and negotiation are not just good practice but a legal imperative. It might also encourage employers to invest more in early conflict resolution mechanisms to prevent disputes from escalating to costly legal battles.
- Potential for Further Legal Action: While the EAT has made its ruling, LNER’s spokesperson indicated they are "reviewing to consider our next steps." This statement leaves open the possibility of a further appeal to the Court of Appeal, though given the strength of the Kostal precedent, such an appeal would face significant legal hurdles. Any further legal challenge would prolong the process and potentially increase costs for the companies involved.
Official Responses and Commentary
The legal teams and union representatives involved have welcomed the EAT’s decision as a victory for workers’ rights.
Thompsons Solicitors, who represented the RMT members and also played a pivotal role in the Kostal ruling, issued a strong statement. Neil Todd, partner and head of the Thompsons Trade Union Law Group, emphasized the reinforcement of a fundamental principle: "This ruling reinforces the principle that – if there is a genuine chance of reaching agreement through collective bargaining mechanisms – employers should not walk away from negotiations and impose terms on workers." He continued, "This is an important victory for workers and for the fundamental right to be represented by a trade union in collective negotiations under the agreed processes in place. In this case, the employer chose not to adhere to those processes and faces serious consequences for not doing so." Todd further underscored the broader legal underpinnings, noting that these protections "derive from provisions on the freedom to negotiate under Article 11 of the European Convention on Human Rights." He concluded by reiterating the firm’s commitment: "Strong trade unions are essential to securing fair pay, improved terms and conditions and dignity at work. We are proud to have secured this outcome for more than 1,200 RMT members."
Eddie Dempsey, General Secretary of the RMT, echoed this sentiment, highlighting the resilience of workers in the face of corporate challenges. He stated, "This case shows that workers can win against the most determined employer that wants to impose deals and ignore basic workers’ rights." His words reflect a renewed sense of empowerment within the union movement, emphasizing that legal avenues can effectively challenge employers who seek to undermine established industrial relations norms.
In response to the judgment, an LNER spokesperson conveyed the company’s disappointment. "We are disappointed by the judgment, which we are reviewing to consider our next steps," the spokesperson said. This measured response indicates that the company is assessing its options, which could include an appeal to a higher court, though the legal landscape, particularly following Kostal, presents a formidable challenge to overturning such a ruling.
The Employment Appeal Tribunal’s decision marks a significant moment for workers’ rights and the integrity of collective bargaining in the United Kingdom. By upholding the claims of RMT members and penalizing the direct approach taken by their former employer, the EAT has sent an unequivocal message that bypassing trade unions is a legally impermissible act with substantial financial repercussions. This ruling, buttressed by the Supreme Court’s Kostal precedent, solidifies the legal framework protecting collective negotiations and reinforces the vital role that strong trade unions play in ensuring fair terms, conditions, and dignity for employees across the nation. The £6 million compensation serves not only as redress for the affected workers but as a powerful warning to all employers to engage genuinely and respectfully with their workforce’s chosen representatives.
