LRD guides and handbook February 2014

TUPE - a guide to using the law for union reps

Chapter 5

Collectively agreed terms

[ch 5: page 58]

Collective agreements by a recognised trade union with the old employer transfer automatically to the new employer under Regulation 5 of TUPE. They are treated as if they had been made with the new employer.

Unlike the position in the rest of Europe, collective agreements in the UK are not legally binding between their parties — the union and the employer (section 179 TULRCA). Instead, they are binding “in honour” and “enforced” voluntarily by good employment relations and the implicit threat of collective industrial action. Only collective terms that have been incorporated into the individual employment contract are legally binding.

The 2014 Regulations set out to fundamentally alter the position in relation to contract terms “incorporated from a collective agreement”, creating a manifestly unfair two-tier system of protection. The change is based on a misinterpretation of Article 3.3 of the Acquired Rights Directive, which allows member states to limit the period during which a transferee must continue to observe the terms and conditions agreed in any collective agreement to at least one year after transfer.

It is a misinterpretation because Article 3.3 is aimed at those member states where collective agreements are legally enforceable in their own right, and not at employment systems, such as that of the UK, under which collectively agreed contract terms enjoy the same status as any other contract term, but only as long as they have been incorporated into the employment contract.