Where have you made this assumption?
My original post was about compensating from union funds, somebody who has been unfairly dismissed.
There is no law that says an employer has to act in a reasonable manner to there employees. There is no law to say that an employer has to reinstate an employee who has been unfairly dismissed.
If a union was to formulate a procedure to investigate an unfair dismissal and make its own judgement and either compensate or not, I believe that it would not be unlawful, or above the law as you put it.