Changes to terms incorporated from a collective agreement

Where a transfer took place on or after 31 January 2014, changes to contract terms incorporated from a collective agreement are no longer a breach of TUPE, as long as:

• any variation takes place more than one year after transfer; and

• the contract terms, when considered together, are no less favourable to the employee than those in place immediately before the transfer.

This change does not give the employer a free hand to make changes to collectively agreed terms. Instead any change must be by agreement. Negotiation can begin at any time but the change cannot take effect until one year after the transfer date.

Reps should also note that:

• to avoid a breach of TUPE, any change must be “no less favourable overall”;

• a term that is “less favourable overall” will be void and a dismissal for refusing to agree that term will be automatically unfair;

• any inducement to abandon collectively agreed terms is likely to infringe section 145B of the Trade Union and Labour Relations Consolidation Act 1992 which carries a fixed penalty (see page 112);

• only terms “incorporated from a collective agreement” are caught by this provision. Many other terms with a collective dimension should not be caught. These include, for example, terms fixed by external pay review bodies, terms derived from established custom and practice, from employer policies or staff handbooks and terms incorporated from statutory instruments, policy or guidance, even if originally negotiated by a trade union.

The new law may also not cover terms derived from a collective agreement but written out in full in a member’s individual contract terms, or terms imposed on employees following a failed collective negotiation (see, for example, Cabinet Office v Bevan & Others [2013] UKEAT/0262/13/BA). However, this remains to be tested in litigation.

This change to the law is open to attack as an infringement of the right to freedom of association in Article 11 of the European Convention on Human Rights (the right to bargain collectively), as well as other international laws and conventions ratified by the UK government to support collective bargaining (see Chapter 5).