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 75).




Even if an employment contract names the relevant collective agreement, not all its provisions will create legally binding contract terms. For example, 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. Only terms that are “apt for incorporation” are treated as binding contract terms. 




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 that would reasonably have been available to the parties when agreeing the contract. “Background” here 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 generally irrelevant. 




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 Bevan [2013] UKEAT/0262/13/BA). 




A good example is the case of Anderson v London Fire & Emergency Planning Authority [2013] EWCA Civ 321. In this case, read literally, the wording of a three-year pay deal suggested that in the final year, the employer was completely free to choose between two different pay awards. The Court of Appeal said that since the collective agreement represented 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 a completely free rein to decide the pay award in the final year. Instead, the judges interpreted the agreement by adding the words “whichever is the greater” to the text, to spell out what the parties must obviously have intended.




Only terms in a collective agreement that are “apt” (i.e. suitable) for incorporation into the individual employment contract will it be legally enforceable. 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, the use of 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 for a court to be able 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. 




• Is it a collective procedure or an individual right? Every individual step in a collectively agreed process such as a job evaluation procedure may not be legally enforceable. However, the end result of that process, for example, a regrading and the right to higher pay and/or back pay, may well be legally enforceable (see Simpson v 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 new smoking ban was a change to a non-contractual working practice, so when 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 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, as a result of modifications to the Transfer of Undertaking (Protection of Employment) Regulations (TUPE), made in 2014. See Chapter 12: Business Transfers, page 444.




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 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 their right to have their terms negotiated through collective bargaining (see Chapter 5).