Following two preliminary meetings with Unite representatives, Kostal made a pay offer. Union members were balloted and rejected the offer. Kostal then made the same offer to its employees directly, bypassing Unite, on 10 December 2015. On 29 January 2016, Kostal made another similar offer to those employees who had not yet accepted the first offer. Kostal also said that, if no agreement was reached, "this may lead to the company serving notice on your contract of employment". In November 2016, by which time over 97% of employees had accepted one or other of the direct offers, Kostal and Unite reached a collective agreement for 2015 (on similar terms to the direct offers). In May 2016, the claimants complained to an employment tribunal that the direct offers made to them by Kostal contravened section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (the "1992 Act"). The tribunal upheld the complaints and made the statutory award of £3,800 to each claimant for each offer made to him. Kostal appealed to the Employment Appeal Tribunal (the "EAT") which, by a majority, dismissed the appeal. Kostal then appealed to the Court of Appeal, which allowed the appeal and set aside the decisions of the tribunal and the EAT. The claimants were given permission to appeal to the Supreme Court.

The Supreme Court allowed the appeal. The key provisions of the 1992 Act provide: section 145B (1) A worker who is a member of an independent trade union which is recognised, or seeking to be recognised, by his employer has the right not to have an offer made to him by his employer if – (a) acceptance of the offer, together with other workers’ acceptance of offers which the employer also makes to them, would have the prohibited result, and (b) the employer's sole or main purpose in making the offers is to achieve that result. (2) The prohibited result is that the workers’ terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union. Section 145D(2): On a complaint under section 145B it shall be for the employer to show what was his sole or main purpose in making the offers. In the words of Lord Leggatt, what an employer cannot do with impunity is what Kostal did here: make a direct offer to its workers, including union members, before the collective bargaining process which the employer has agreed (albeit in honour only) to follow has been exhausted. Lady Arden and Lord Burrows agreed that the appeal should be allowed but disagreed with the majority’s interpretation of sections 145B and 145D of the 1992 Act. Their preferred interpretation was closely aligned with that of the ET and EAT. They did not think it necessarily followed that an employer can escape liability just because the collective bargaining process has been exhausted (as where, for example, the employer has been determined to thwart the bargaining process). They considered that where an offer is made directly, and not through collective bargaining, to workers who are trade union members which, if accepted, would change one or more terms of their employment, to avoid liability it is for the employer to establish that its sole or main purpose in making the offer was a genuine business purpose.