Labour Research April 2009

Law Matters

Employer has to honour pay rises after TUPE transfer

Pay bargaining arrangements established under collective agreements can remain effective after a TUPE transfer, the Employment Appeal Tribunal (EAT) has ruled, even where the new employer derecognises the union and does not take part in the negotiations.

The London Borough of Lewisham Council employees’ contracts of employment expressly incorporated terms and conditions in the collective agreement negotiated from time to time by the National Joint Council for Local Government Services, set out in the Scheme of Conditions of Service — commonly known as the Green Book.

In 2002, the employees were transferred to leisure group CCL Ltd and in May 2004 to Parkwood Leisure Ltd. Parkwood refused to recognise public services union UNISON and refused to honour the pay increases negotiated under the collective agreement and set out in the Green Book for the period 31 April 2006 to 31 March 2008.

The EAT said that Parkwood was bound by the pay rises. Parkwood had complained that it was bound by pay rates agreed in a bargaining context in which it did not participate.

But the EAT said it is not unusual for an employer to agree with employees or a trade union that it will abide by wages set in a different forum by a third party, for example, a local authority bargaining structure, as was the case here.

Alemo-Herron and 23 others v Parkwood Leisure Ltd UKEAT/0456/08