Static contractual obligations win out

Unions have suffered a rebuff in the European courts in a case which highlights the inadequacy of TUPE protection on transfers to privatised companies.

The European Court of Justice (ECJ) has ruled that collectively agreed pay rises should not survive the Transfer of Undertakings (Protection of Employment) Regulations.

The decision in the case of Parkwood Leisure v Alemo-Herron brings an end to nearly three years of legal arguments.

The court ruled in favour of the employer by applying a static interpretation to collectively negotiated pay terms, meaning that employees covered by industry or sector-wide bargaining, which is incorporated into their contracts of employment, are unlikely to remain entitled to increases in pay negotiated after transfer.

While the ECJ did not rule that dynamic clauses would never be enforceable against a transferee employer, it would appear that, where the collective agreement originates from the public sector and the transferee operates in the private sector (as is often the case), the static approach is to be preferred.

The case will return to the Supreme Court for a final decision as to how the European court’s conclusions fit in with the UK’s transfer regulations and the facts of the case.

www.employeebenefits.co.uk/compliance/cjeu-rules-on-collectively-agreed-pay-rises/102568.article

http://curia.europa.eu/juris/document/document.jsf?text=&docid=139749&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=2720851