BET Catering Services Limited v Ball and Others EAT, 28 November 1996, unreported
The Employment Appeal Tribunal has upheld the right of staff to get a pay rise in line with a national pay agreement when they have transferred to a new employer.
The Richmond Council school meals service was contracted out to BET. The staff, UNISON members, transferred and were protected by TUPE.
The issue was whether they were entitled to pay increases in line with the national increase negotiated by the unions and local authority employers.
Each individual employee's contract incorporated the provisions of the National Joint Council for Local Authorities Services (Manual Workers) Terms and Conditions. The NJC set pay increases annually.
BET refused to pay the NJC wage increases agreed after the transfer. There had been no changes in the terms and conditions of the staff.
At the Industrial Tribunal, the argument focused on the effect of TUPE on collective agreements. The EAT rightly concentrated on the fact that the national collective agreement had been incorporated into individual contracts, so each individual's contractual right transferred with them.
BET argued that the effect of the incorporation of the NJC terms may be different after the transfer. The Tribunal should have looked at the intended consequence when the employees ceased to be in the public sector and the new employers could have no influence on the outcome of the NJC negotiations, in which they do not participate.
The EAT rejected this argument. It said there is no conceptual difficulty in an employer agreeing to, or inheriting, a system under which employees are paid wages set by reference to awards of other employers, even where the employer cannot influence those awards. Employees are entitled to the NJC terms and conditions and to pay increases and other improvements.
This is an important decision, particularly when taken in conjunction with Wilson v St Helens BC [1996] IRLR 320 in which the EAT said that employers and employees could not agree changes to contracts where the transfer was the reason for the change.
This increases the importance of making sure individual contracts or statements of terms expressly refer to collective agreements. It is also important that collective agreements make it clear that increases or improvements apply automatically to employees covered by the agreement. Section 1(1)(j) of the Employment Rights Act 1996 requires that written statements of employment particulars must include details of any collective agreements which directly affect the terms and conditions of employment.
Where employees are facing a transfer, they should check that their written particulars accurately reflect the position on collective agreements. If not, unions and employees should consider putting pressure on the present employer to make sure the written particulars clarify the position, otherwise this will lead to disputes with the new employer on whether the collective agreement is incorporated.