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TUPE and collectively agreed terms
Collective agreements made by a recognised union with the old employer transfer to the new employer under regulation 5. They are treated as if they had been made with the new employer, so any transferred employees continue to benefit from the terms in that agreement (except in respect of occupational pensions).
There has been an on-going debate as to whether protection of collectively agreed terms is “static” or “dynamic”, in other words, whether transferred employees are only entitled to enforce the pay and conditions specified under the collective agreement as it was at the time of the transfer, or alternatively whether TUPE protection entitles transferred employees to the benefit of any later changes to the collective agreement negotiated between their previous employer (for example the local authority that used to employ them) and the union after the transfer.
This debate is the subject of a case supported by UNISON: Parkwood Leisure Ltd v Alemo-Herron [2010] EWCA Civ 24 which has been referred to the European Court of Justice (ECJ) to decide. Earlier this year, the Advocate-General to the ECJ (the AG) published his Opinion on the case. Although the ECJ is not obliged to follow the AG’s opinion, it nearly always does so. Here are the facts of the case:
Mr Alemo-Herron and his colleagues were council employees at London Borough of Lewisham in the leisure services division. Their jobs were outsourced to Parkwood Leisure, a private sector company. Their contracts contained an express contract incorporating the terms of a collective agreement on pay negotiated by the National Joint Council for Local Government Services (NJC). When new pay rates were negotiated after the transfer date, Parkwood refused to pay these, arguing that since it was not a party to the collective agreement, was not involved in the negotiation and did not recognise unions, it did not believe it should be bound.
The employees brought claims for unlawful deduction from wages. The question before the Court was whether TUPE provides only “static” protection for transferred terms and conditions — in other words, whether transferred employees can only enforce the conditions under the collective agreement as it was, frozen at the transfer date, or alternatively whether the collective agreement continued to have “dynamic” effect, so that TUPE protection entitled them to the benefit of later collectively agreed pay increases.
The AG has confirmed that the Directive does not prevent a member state adopting a dynamic interpretation of terms derived from collective agreements, freely agreed between the parties. But equally, the AG suggested that there is nothing to stop member states legislating for a static interpretation.
Parkwood Leisure Ltd v Alemo-Herron [2010] EWCA Civ 24 and Opinion of the Advocate General, 19 February 2013