Government proposals for TUPE and collective agreements

In a proposal described by public services union UNISON as “illegal, impractical and unworkable”, the government suggests limiting the period during which terms derived from collective agreements must be honoured to just one year after the transfer date (Consultation para. 7.49 2013).

In other words, the government suggests giving a lower status to an employee’s contract terms where these have been collectively agreed by a union, whether as to wages, holiday, hours, overtime and so on, than to equivalent contract terms entered into between an employer and an individual employee without union involvement.

The government seeks to derive legal support for this proposal from Article 3(3) of the Acquired Rights Directive. This provision allows member states to limit the period for observing terms and conditions agreed in a collective agreement as long as that period is not less than one year. However, by relying on this provision of the Directive, the government disregards the difference between the status of collective agreements under UK law and in other European jurisdictions. Unlike the UK, where collective agreements are binding “in honour” only unless incorporated into an individual contract of employment (see Chapter 3: Starting work and the employment contract), in most European jurisdictions collective agreements are legally binding upon the parties themselves, i.e. the union and the employer.

The government suggests that any change to a collectively agreed term after one year should not be “less favourable overall than the terms applicable before the transfer”.