European Court chooses ‘static’ approach to effect of TUPE on collectively agreed pay terms

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In Alemo-Herron v Parkwood Leisure Limited the claimants’ contracts provided that their terms and conditions were ‘in accordance with collective agreements negotiated from time to time’. Prior to a TUPE transfer a series of pay increases had been agreed by the negotiating body (made up of local authority employers and trade unions). These were honoured by the transferee.

A subsequent collective agreement entered into after the transfer provided for pay increases going forward. The issue was whether the transferee, which did not recognise the union and was not a party to the collective negotiations that took place after the transfer, was bound by the new pay rates contained in that agreement, over which it had no control.

The issue is particularly relevant in situations where employees who have traditionally been subject to collective bargaining (typically the public sector) subsequently transfer to employers who do not recognise unions or bargain collectively…

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