Background
Virgin Trains East Coast Ltd (VTEC) negotiated pay with three recognized trade unions—RMT, TSSA, and Unite—under a collective bargaining agreement with flexible, unstructured procedures. In October 2017, after five negotiating meetings, VTEC’s negotiator made a 3.2% pay offer that TSSA and Unite agreed to recommend; the RMT negotiator initially agreed but then reversed course and recommended rejection following member opposition. On 13 November 2017, after TSSA and Unite members voted to accept but RMT members rejected the offer, VTEC sent a letter directly to all employees offering the pay award with an opt-out option for RMT members, without further collective bargaining with RMT.
An employment tribunal found this breached section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992, which prohibits employers from making direct offers to undermine collective bargaining. Approximately 1,250 RMT members were awarded £3,907 each. VTEC’s successors (London North Eastern Railway Limited and Hitachi Rail Limited) appealed.
The Court’s Holding
The Employment Appeal Tribunal dismissed the appeal and upheld the tribunal’s judgment. The court held that VTEC breached section 145B in three respects. First, VTEC made an “offer” within the statutory meaning—the direct letter to employees proposing individual acceptance of the pay award. Second, acceptance would have the prohibited result: the employees’ pay terms would not have been determined by collective agreement. Critically, there was a real possibility that terms would have been collectively bargained if the offer had not been made, because the collective bargaining process had not been exhausted. The agreement’s provisions were flexible and unstructured, unlike the rigid procedures in the leading Kostal case; the parties were objectively close to agreement; no deadlock had been reached; and the parties subsequently resumed negotiations and ultimately reached agreement on the 2017 pay award.
Third, VTEC’s purpose in making the offer was to achieve the prohibited result. The tribunal found that VTEC’s management made a unilateral business decision to cease collective bargaining and impose the award unilaterally, not because they genuinely believed bargaining was exhausted, but because they decided they no longer wished to continue negotiating—motivated by frustration with the RMT negotiator’s reversal, desire to deliver pay by Christmas, and unwillingness to re-engage once two other unions had accepted. The court held that what matters for purpose analysis is whether the employer’s business decision was to end collective bargaining; the underlying reasons, even if understandable, are irrelevant if that purpose was achieved.
Key Takeaways
- Section 145B protects workers where employers make direct offers to circumvent or undermine collective bargaining—not merely where a formal bargaining procedure has ended.
- With flexible, unstructured collective bargaining arrangements (common in practice), the question is whether there was a real possibility of collective agreement, not whether a particular procedure was technically “exhausted.”
- An employer cannot unilaterally declare collective bargaining at an end and then rely on that unilateral decision to claim the bargaining process was exhausted.
- An employer’s purpose is determined by its business decision (to end collective bargaining), not by its underlying commercial reasons; even legitimate business rationales do not shield a decision whose purpose is to bypass collective bargaining.
- Subsequent conduct—here, resumed negotiations and achieved agreement—supports an inference that collective bargaining remained a real possibility at the time the offer was made.
Why It Matters
This decision clarifies how section 145B applies to real-world collective bargaining arrangements, which are often informal and flexible rather than rigidly proceduralized. It rejects a formal, procedural reading of collective bargaining in favor of a substance-focused approach: was there a genuine possibility of collective agreement? By confirming that employers cannot unilaterally end negotiations and then cite that decision as proof bargaining was exhausted, the judgment protects the core right to freedom of association and prevents erosion of collective bargaining through procedural gamesmanship.
The decision has significant implications for rail and transport workers, public sector negotiations, and other sectors where single-table or multi-union bargaining is common and procedures are flexible. It makes clear that employers cannot escape section 145B liability by characterizing their decision to bypass the union as a response to procedural closure when the union and collective process remain engaged and capable of reaching agreement.