PCS Commercial Sector has provided us with the following information further to circular CSA/MB/12/13 dated 15 July 2013:
On 18 July, the Court of Justice of the European Union (ECJ) handed down a long-awaited judgment in a Unison supported case – Parkwood Leisure Ltd –v- Alemo-Herron & Others (2013) C-426/11.
The case judgment has significant repercussions and all commercial sector members should be made aware of the details.
Case Background
Alemo-Herron and others were former employees of the London Borough of Lewisham who worked in the council's leisure department until 2002. Their employment contracts entitled them to pay increases in accordance with collective agreements negotiated from time to time by unison with the National Joint Council for Local Government Services (the NJC). Following an outsourcing exercise in 2002, they transferred to a private company, CCL Ltd., under TUPE.
In May 2004, they were transferred again under TUPE to Parkwood Leisure Ltd.
In June 2004, a new agreement was reached with the NJC that awarded a pay increase to relevant employees for the period of April 2004 to March 2007. As only public authorities can participate in the NJC, Parkwood was not a party to the negotiations for the new agreement and declined to comply with the new NJC terms.
The employees subsequently brought claims for unlawful deductions from wages, arguing that, under TUPE, the contractual terms incorporating the NJC collective agreement had transferred to Parkwood, and, therefore, Parkwood was obliged to increase the employees' pay.
Court Judgement
The case has been running for a number of years with both parties appealing earlier decisions of the courts. However, the ECJ has now ruled in favour of the employer and held that employees who TUPE transfer to a new organisation 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 - or in other words - the employer was not bound by the collective pay agreement following a transfer of employment.
Analysis
The judgement will be welcomed by transferee employers, particularly those who have received employees from the public sector.The judgement has been described as ‘explicitly political’ in so much that it marks a fundamental shift away from the concept of TUPE as a framework to protect employees towards being a protection of employers.
The court went further in stating that the legislation was not only aimed at safeguarding the interests of employees on a transfer but instead aimed at ‘balancing’ those interests against the needs of the new business and referred to the pre-standing collective agreements as impinging on the ‘freedom’ of employers to conduct business.
Repercussions
The government recently concluded a consultation on TUPE (to which PCS provided a submission via the TUC) and one of the government’s proposals is to change TUPE so that protected terms and conditions derived from collective agreements would be limited to one year from the transfer, after which time the new employer would be able to vary.
Unions are opposed to this proposal (which surprise surprise is welcomed by the various employers’ interest groups) on the basis that the removal of these basic protections for issues such as pay and conditions would have serious implications for workers. Our experience has been that where employers have broken away from collectively agreed terms and conditions this rapidly expands ‘two-tier’ workforces with the associated increased inequality, low pay and ‘race to the bottom’ for workers that follow.
The most important lesson to be learned from this - is that it is vital that we have strong union membership to protect collective bargaining - terms and conditions and secure agreements with any new company rather than relying on TUPE.
If you want more information about this issue or have any feedback or comments to make – please speak to your Branch Secretary or the local PCS rep who gave you this circular or to:-
PCS Commercial Sector
Phone: 020 7801 2667/2884
Fax: 020 7801 2888
Email: commercialsec@pcs.org.uk
