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TUPE and collective agreements

Posted on 13th November 2013
Case law

Under TUPE, the terms of collective agreements can transfer from the outgoing employer (transferor) to the incoming employer (transferee). In this case the European Court considered whether the transferee is bound by subsequent changes to the collective agreement.

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it would adversely affect the freedom of Parkwood to conduct its business if Parkwood were bound by a collective agreement when it was not involved in its negotiation

Alemo-Herron and others v Parkwood Leisure Ltd

The facts

In 2002 leisure services were transferred from Lewisham Borough Council to a private company, CCL Ltd (CCL). Later, in May 2004, CCL sold the leisure business to Parkwood Leisure Ltd (Parkwood).

The employment contracts with the Council included a term giving the employees the benefit of the terms and conditions in a collective agreement negotiated by the National Joint Council for Local Government Services. The contracts, including this term, transferred to CCL and then Parkwood under TUPE.

The collective agreement was renegotiated in June 2004 (after Parkwood took over), including a pay increase backdated to 1 April 2004 (before Parkwood took over). The question was whether Parkwood were bound by the new agreement.

The decision

The European Court decided Parkwood were not bound by the new collective agreement. It decided that it would adversely affect the freedom of Parkwood to conduct its business if Parkwood were bound by a collective agreement it was not involved in its negotiating.

In practice

This case is significant for all organisations involved in TUPE transfers, particularly if public sector employers are involved. It will provide comfort to transferees who, until now, were unsure if they would only be bound the collective agreement in force at the time of the transfer (the static approach), which is now the case, or subsequent changes to the collective agreement (the dynamic approach). The caveat, and it is important, is that the static approach will only apply if the transferee is not involved in the negotiation of the new collective agreement. Some transferees may be bound by collective agreements varied after the transfer takes place where they were involved in its negotiation.

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