The Advocate General’s opinion to the Court of Justice of the European Union in the important UNISON test case of Alemo-Herron v Parkwood Leisure was published yesterday. The case concerns the extent to which terms contained in collective agreements can be relied on against a new employer following a TUPE transfer.
The Claimants’ contracts of employment with the London Borough of Lewisham contained clauses to the effect that they would be entitled to the terms and conditions negotiated from time to time by the NJC for local government. Their employment then transferred twice under TUPE. Parkwood Leisure, their ultimate employer, refused to pay the Claimants NJC pay awards agreed after the transfer to it.
The dispute centres on the effect of the 2006 European case of Werhof. In that case, the Court of Justice ruled that Mr Werhof was not entitled to the benefit of future collective agreements negotiated after the date of the transfer of his employment. In other words, it rejected, in that case, a “dynamic” interpretation of Mr Werhof’s contractual rights. It also ruled that it would be contrary to the new employer’s freedom of association to require it to be bound by the outcome of collective bargaining under machinery to which it was not party.
Before the Werhof case, it was widely recognised in the United Kingdom that “dynamic” clauses transferred under TUPE. This meant that transferred employees remained entitled to the benefit of collective agreements negotiated after the date of the transfer. But Parkwood Leisure argues that the effect of the Werhof judgment is to limit that protection in the United Kingdom also so that post-transfer employers are only required to abide by the terms contained in collective agreements in force at the date of transfer.
Advocate General’s opinion
The Advocate General’s opinion is helpful in this case. It notes two important distinguishing features of the Werhof case: first, the “static” nature of the clause incorporating collective agreements into Mr Werhof’s contract of employment; and, secondly, the adoption by Germany of the facility available under Article 3(3) of the Acquired Rights Directive to limit the application of terms derived from collective agreements to one year from the date of the transfer.
The Advocate General concludes that the Acquired Rights Directive does not preclude the approach adopted in the United Kingdom up until now-ie the transfer of “dynamic” clauses. That approach also does not infringe Parkwood’s freedom of association provided that the Court in the United Kingdom is satisfied that the ongoing applicability of future collective agreements is not “unconditional and irreversible”. This is good news for the UNISON Claimants.
But there’s a catch. The Advocate General’s opinion does not say that the United Kingdom’s approach is required by the Acquired Rights Directive. The different means of primary enforceability of collective agreements, through the contract of employment, in the United Kingdom is acknowledged. But the Advocate General nonetheless indicates that it would still be open to the United Kingdom to avail itself of the option provided for under Article 3(3) of the Acquired Rights Directive of limiting the period of application for future collective agreements to one year from the date of the transfer.
That, of course, is the option favoured by the government, as spelled out in the current BIS consultation on changes to TUPE. If it is carried through, it will have the effect of reducing the status, on transfer, of contractual terms derived from collective agreements below those of other contractual terms. That upsets such balance as exists in the enforceability of collective agreements.
In the meantime, the Court of Justice more usually than not follows the opinion of its Advocate General. A judgment from the Court can be expected within the coming months.
Further information about this briefing and the Thompsons Trade Union Law Group email firstname.lastname@example.org