{"id":313,"date":"2013-08-20T08:59:17","date_gmt":"2013-08-20T08:59:17","guid":{"rendered":"http:\/\/www.tayloremmet.co.uk\/blogsite\/?p=313"},"modified":"2013-08-20T08:59:17","modified_gmt":"2013-08-20T08:59:17","slug":"tupe-transfers-and-collective-agreements-in-public-sector-outsourcing","status":"publish","type":"post","link":"https:\/\/www.tayloremmet.co.uk\/blogs\/tupe-transfers-and-collective-agreements-in-public-sector-outsourcing\/","title":{"rendered":"TUPE transfers and collective agreements in public sector outsourcing"},"content":{"rendered":"

\"\"<\/a>In Alemo-Herron and others v Parkwood Leisure Ltd<\/span><\/i> the European Court of Justice (ECJ) has held that the Acquired Rights Directive precludes UK courts from adopting a “dynamic” rather than a “static” interpretation of TUPE. What this means is that where transferring employees’ contracts provide that their terms are to be determined in accordance with collective agreements negotiated by local authorities and trade unions on a national or local level, a private sector transferee cannot be bound by post-transfer<\/i> collectively agreed terms if it is unable to be involved in the negotiating process.<\/p>\n

In light of the ECJ’s ruling, the Court of Appeal’s previous decision that the “static” approach to TUPE is correct will stand. This should mark the end of a long running piece of litigation and it is worth briefly reviewing how the law has developed in this area, as it is crucial to organisations contracting with the private sector.<\/p>\n

In Whent and others v T Cartledge Ltd [1997]<\/span><\/i>, employees’ contracts stated that their remuneration, hours and holidays would be in accordance with certain collective agreements. Following a TUPE transfer, the EAT held that the agreements were incorporated into the employees’ contracts of employment. In its view, the employees were entitled to the benefit of later pay rises set by the collective agreements, even though the new employer was not party to them. This so-called “dynamic” approach to TUPE protection was adopted in a number of other domestic cases.<\/p>\n

However, in Werhof v Freeway Traffic Systems Gmbh & Co KG [2006]<\/span> <\/i>the ECJ held that the Directive does not require such a “dynamic” approach. The transferee in Werhof<\/i> was bound by the collectively agreed terms in force at the date of transfer, but not by subsequent collectively agreed terms which it had no part in negotiating . This is known as the “static” approach to protection under the transfer rules.<\/p>\n

In the latest case the employees were originally employed by the London Borough of Lewisham in its leisure service department. Their contracts provided that their “terms and conditions of employment will be in accordance with collective agreements negotiated from time to time by the National Joint Council for Local Government” (the NJC).<\/p>\n

In 2002, the employees transferred under TUPE to a private company and continued to receive pay increases in line with the relevant collective agreement. In 2004, the employees transferred again, to Parkwood Leisure Ltd (Parkwood). The NJC then negotiated a new collective agreement relating to rates of pay for the period from 1 April 2004 to 31 March 2007 (the 2004 agreement). Parkwood was not a party to the negotiations and declined to abide by the NJC terms. The employees brought claims for unlawful deductions from wages, arguing that, as a result of TUPE, Parkwood was obliged to increase their pay in line with the 2004 agreement. The employment tribunal dismissed the claims but the EAT allowed the employees’ appeal. The Court of Appeal overturned the EAT’s decision.<\/p>\n

The employees appealed to the Supreme Court, which decided to make a reference to the ECJ. In essence, the court asked whether the Directive (and EU law generally) prohibits, permits or requires the transfer of “dynamic” contractual clauses, under which transferees can be bound by terms agreed in future collective agreements without being a party to the relevant negotiations.<\/p>\n

The ECJ held that the Directive precludes a member state from providing:<\/p>\n

“in the event of a transfer of an undertaking, that dynamic clauses referring to collective agreements negotiated and adopted after the date of transfer are enforceable against the transferee, where that transferee does not have the possibility of participating in the negotiation process of such collective agreements”.<\/p>\n

This decision will come as a relief to the many private and third sector organisations who contract with the public sector and who would struggle with the uncertainty and cost of having to honour, potentially indefinitely, future pay awards arising from collective bargaining mechanisms within which they do not, and are unable, to participate.<\/p>\n

In a consultation paper on TUPE, which was published in January 2013, the UK government proposed to amend the regulations to provide that a transferee and an employee can agree contractual changes in the same way as an employer and employee are able to if no relevant transfer has taken place. This proposal seems contrary to established European law. The government intends to publish its response to the consultation “by September”.<\/p>\n","protected":false},"excerpt":{"rendered":"

In Alemo-Herron and others v Parkwood Leisure Ltd the European Court of Justice (ECJ) has held that the Acquired Rights Directive precludes UK courts from adopting a “dynamic” rather than a “static” interpretation of TUPE. 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