Employment Law | ECJ Upholds ‘Static’ Interpretation Of Collective Agreements on TUPE

Earlier this month the European Court of Justice (ECJ) published its decision in the case of Alemo-Herron and others v Parkwood Leisure, almost a year after the initial hearing, and delivered a much anticipated ruling.

The decision was that employees who transfer to a new organisation under TUPE -Transfer of Undertakings (Protection of Employment) – regulations are not entitled to benefit from collectively agreed terms, where such terms are agreed after the date of transfer and where the transferee employer is not a party to collective negotiations.

The case involved employees of a local authority who had been transferred to a private company in 2004. They argued that they should automatically be entitled to the pay rise that they would have been awarded if their employment had not been transferred.

However, an employment tribunal in the UK in 2008 rejected their claims, deciding that the acquired rights directive, on which TUPE is based, only transfers ‘static’ contractual obligations.

The battle then escalated through the Court of Appeal, the UK’s Supreme Court and finally to the European Court, where the judges found in favour of the private company.

Their ruling hinged on the argument that, to impose contractual changes on employers who are not a party to the negotiations, would limit the “very essence of its freedom to conduct a business”.

Unions in the UK will be dismayed by the decision but private employers who take over public sector employees will now have freedom from subsequent public sector pay deals.

The case will now return to the UK Supreme Court for it to apply the legal interpretation provided by the ECJ to the specific circumstances of the case.

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Mackrell Turner Garrett Solicitors in London