Under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE), the existing terms and conditions of employees have to be honoured by the new employer.
However, in Ackinclose and ors v Gateshead Metropolitan Borough Council (2005, IRLR 79), the employment appeal tribunal (EAT) has said that employees transferred back to the primary employer are not entitled to the benefit of any improved terms and conditions which come into force during the transfer period. Thompsons were instructed by the GMB.
What were the basic facts?
In 1995, Gateshead MBC transferred the schools meals service to Castle View Services, a private sector organisation. It was transferred back in January 2000. Both transfers were covered by the TUPE regulations. At the time of the original transfer, the terms and conditions of manual staff were governed by a national agreement, known as the White Book. However, in April 1999 a new agreement covering both manual and white collar workers came into force, known as the Green Book. This reduced the hours of full-time staff, so increasing their hourly rate. On transferring back to the local authority in 2000, the staff in the outsourced school meals service finally received the benefit of the improved pay rate. They then claimed that they were also entitled to it for the period between 1 April and 31 December 1999.
What did the tribunal decide?
The tribunal had to decide whether it was just the contract incorporating the White Book that had transferred over, or whether it was the whole of the national bargaining machinery. The tribunal decided it was the latter. The employers appealed this decision and the EAT set it aside, not because it thought it was necessarily wrong, but because it felt that there were other areas that the tribunal needed to explore further before reaching a conclusion. The tribunal reconsidered its decision and decided it had been wrong. It found that, as there was no evidence to support an implied term that the Green Book applied to outsourced employees, the express term of the new agreement took precedence. This stated that it applied only to "employees of local authorities or other authorities of equivalent status in the UK."
What did the parties argue?
The employees argued that, because the manual workers' National Joint Council (NJC) could agree to changes in the White Book (which were incorporated into the contracts of the school meals' employees), it also had the power to handover to the new NJC and to accept the new Green Book. This, in turn, then became part of their contracts. The employers argued that there was no such "bridge" between the old White Book and the Green Book. They pointed out that the contract did not allow for the collective bargain to be "as defined from time to time", so there was no requirement for the employer to adopt future provisions. It was not, therefore, possible to substitute a new collective bargain for an old one without the agreement of the outsourced employees. Their terms and conditions could only be varied under the old agreement.
What did the EAT decide?
The EAT agreed with the employers. It said that "the contract only made reference to the NJC Manual Workers as a negotiating body, and only made reference to their handbook (the White Book) as the relevant collective bargain.". Without any further reference or incorporation, the EAT said: "it seems to us that no successor body or successor agreement can be held to be part of the contract of employment."
Comment
Union negotiators need to be careful that collective agreements specifically allow for terms and conditions negotiated subsequent to the transfer to be incorporated into the transferred employees' terms and conditions. And when unions are consulted over TUPE transfers, they should ensure that there is an appropriate clause inserted in the transfer document.