Employment Flash - 2nd February 2010

---

A tranferee's liability for collective agreements to which it was not a party is limited to the agreement applicable on transfer but not subsequent agreements...

Parkwood Leisure Ltd v Alemo-Herron [2010] EWCA Civ 24

A Council contracted out its leisure services to CCL. CCL transferred that part of its business to P. TUPE applied to both transfers. A's contract contained the term: "During your employment with the Council your 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 Services..."

Negotiations took place subsequent to the transfer to P but P were not a party to such negotiations. A claimed that his contract entitled him to the benefit of an increase in pay rates pursuant to this 2nd agreement; P begged to differ.

A relied on Whent v T Cartledge Ltd [1997] IRLR 153 which decided in relation to regulation 5(1) TUPE that a transferee on conventional contract principles could be bound by collective agreements made subsequent to the transfer where the employment contracts incorporated the results of such negotiations as part of their terms.

P relied on Werhof v Freeway Traffic Systems GmbH [2006] IRLR 400 where the ECJ decided that article 3(1) of the Acquired Rights Directive was intended to bind the transferee as regards the application of a collective agreement in force at the time of the transfer to the terms and conditions of the employees employment contracts but there was no indication that it was intended to bind the transferee in relation to amended terms and conditions as a result of a collective agreement made subsequent to the transfer.

Although the Court of Appeal was keen on A's approach to regulation 5(1) it decided that: (i) 5(1) does no more than implement article 3(1); (ii) the effect of 3(1), following Werhof, is that in principle a transferee is bound by the application of a collective agreement in force at the time of the transfer but is not bound by the effects of any subsequent agreement to which it was not a party; (iii) Whent was therefore wrongly decided.