Incorporation of collective terms



In most straightforward cases, it is obvious which terms of a collective agreement have been incorporated into the individual employment contract because the contract names the collective agreement. However, sometimes the collective agreement is not mentioned, in which case the relevant collective term can only have been incorporated by implication, for example, through custom and practice (see page 79).





Even if an employment contract names the collective agreement, not all its provisions will create legally binding contract terms. Only terms that are apt (suitable) for incorporation into the employment contract will be treated by the courts as binding on the parties — the employer and each individual employee. 


In Kaur v MG Rover [2005] IRLR 40, a statement in a collective agreement that there would be no redundancies was judged by the Court of Appeal to be only “aspirational” and not a binding contract term. Similarly, in Prison Officers’ Association v Ministry of Justice [2018] EWHC 3672, status quo provisions in a National Dispute Resolution Procedure (NDRP) were judged not apt for incorporation into prison officers’ terms and conditions. The high court ruled that the NDRP was an “understanding” between the union and the Secretary of State which both parties had chosen not to make legally binding. It was not designed to give rights to individual officers. 





As with all contracts, when interpreting a collective term what matters is the objective meaning of the chosen words to a reasonable informed outsider with all the background knowledge reasonably available to the parties when they agreed the contract. “Background” includes “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” (Wood v Capita Insurance Services Limited [2017] UKSC 24).
The private beliefs and intentions of negotiators and the previous negotiations of the parties are not relevant. 








Words in a collective agreement are not given their literal meaning. Instead the agreement’s industrial context must be considered. “Just as in the commercial context, regard must be had to business common sense, so in the context of employment relations regard must be had to industrial common sense” (Cabinet Office v Beavan [2013] UKEAT/0262/13/BA). A good example is the case of Anderson v London Fire & Emergency Planning Authority [2013] EWCA Civ 321. A literal reading of the three-year pay deal in dispute in this case suggested that in the final year, the employer had a completely free hand to decide between two different pay awards. The Court of Appeal noted that the collective agreement was an attempt to secure a three-year pay deal. It was “fanciful” and “flouting industrial common sense” to imagine that both sides intended to give the employer complete freedom to decide the pay award in the final year. Instead, the judges read the additional words “whichever is the greater” into the text, to spell out what the parties must obviously have intended.





Here are some of the factors courts and tribunals consider when deciding whether a collective term is apt for incorporation and therefore contractually binding on employer and employee: 





• Choice of language: if the parties use language that clearly shows an intention to create binding legal obligations, such as “the employer will pay”, the term is more likely to be legally binding. By contrast, aspirational language such as “should” or “ought” has the opposite effect. The location of the term within the document can also be important.




• Certainty: The language must be clear enough to work out what the parties must have intended to agree.





• Workability: This is important. Courts often test collective terms by asking what would happen in practice if they created a binding contractual obligation owed to (or by) individual workers. Here are two good examples: 





◊ In Malone and Others v British Airways PLC [2010] EWCA Civ 1225, the court decided that a promise in a collective agreement that the BA flight crew complement would never drop below a fixed number was not intended as a legally enforceable obligation because this would have given individual crew members the legal right to ground the plane by refusing to fly even if the crew complement met minimum safety standards. 





◊ In George v Ministry of Justice [2013] EWCA Civ 324, a court decided that a promise in a collective agreement that prison officers could take time off in lieu (TOIL) within five days of performing extra hours was not intended to be legally enforceable because it would have given individual officers the legal right to insist on taking TOIL even in an emergency, or regardless of cover. 





• Collective procedure or individual right? Each step in a collectively agreed process such as a job evaluation procedure may not be legally enforceable (although there is nothing to stop the parties agreeing expressly that an agreed procedure is legally binding). However, the end result, such as a regrading that triggers the right to higher pay and/or back pay, is likely to be legally enforceable by individual employees (see Simpson v London Borough of Hackney and others [2012] UKEAT/0104/12/DM). 





• Work rules: Work rules regulating day-to-day working practices are not normally legally binding. For example, in Dryden v Greater Glasgow Health Board [1992] IRLR 469, a newly introduced smoking ban was a change to a non-contractual working practice, not a change to employees’ contract terms. As a result, when Mr Dryden resigned in protest, his claim for constructive dismissal failed, because there was no breach of contract.





Once collectively agreed terms have been incorporated into the employment contract, future changes to those terms that are agreed in negotiations (for example, new pay rates) normally bind all the employees in the bargaining unit whose contracts contain the relevant term. This is the case even if they do not like what has been negotiated, especially if there is a substantial delay before they voice their objections (Henry v London General Transport Services [2002] IRLR 472). 





The position is more complicated where collective terms are changed after a TUPE transfer. See Chapter 12: Business Transfers, page 458.





If a workplace rep has apparent authority to negotiate, the employer can reach a deal at workplace level even if the procedures say that a full-time official should be informed of any deals concluded (Harris v Richard Lawson Autologistics [2002] IRLR 476). However, if a change has not been agreed by all recognised unions, the term may not be universally incorporated:


Once a change is incorporated into an employee’s contract, it becomes a binding contract term. Neither side can revert to the previous contractual arrangement without further agreement, which should be reached through collective bargaining. For example, in Sparks and Others v Department for Transport [2016] EWCA Civ 360, the Court of Appeal ruled that the trigger points for disciplinary action in a negotiated absence management procedure were contractual. This meant that they could only be changed by agreement with the recognised unions. 





Once incorporated, the contract term will continue to exist independently of the collective agreement even after the collective agreement has fallen away, until it is changed by agreement (Gibbons v Associated British Ports [1985] IRLR 376).





It is a breach of section 145B, Trade Union and Labour Relations (Consolidation) Act 1992, to offer members an inducement (such as a one-off payment) to give up collectively agreed terms, or to give up their right to have their terms negotiated through collective bargaining (see Chapter 5).