Employment Cases Update

Alemo-Herron v Parkwood Leisure Ltd Case C-426/11

Date published: 25/02/2013

Preliminary ruling by the Advocate General after a request by the Supreme Court in a case where the central issue was whether collective agreements that are negotiated from time to time can bind an employer following a transfer of employment.

The claimants were former local authority workers who were transferred to the private sector in 2002. Up to that date their contracts of employment had included clauses whereby their pay and conditions were negotiated by the National Joint Council for Local Government Services (NJC). The respondents, as a private enterprise, could not be members of that body and so did not participate in any subsequent negotiations but paid in line with negotiated pay rises until 2004. In 2004 a new deal covering 2004 to 2007 was agreed and this claim arose specifically for increased pay between 1 April 2006 and April 2008 which the claimants said had not been paid. At the ET their claim was dismissed but the EAT remitted the claim back to the ET, though given the important issues involved also gave permission for this appeal. The Court of Appeal LJ allowed the employer's appeal following the decision in Werhof but the Supreme Court referred it for a preliminary reference to establish  whether Article 3(1) of the Directive precludes national courts from giving a 'dynamic' interpretation to Regulation 5 of TUPE in the circumstances of this case.

In this judgment the Advocate General notes the Supreme Court's uncertainty over the effects of Werhof and distinguishes this case as the new employer was in the private sector. He then analyses the Directive and the Werhof judgment observing that 

"Werhof did not make a general ruling to the effect that it is incompatible with the directive to preserve the effects of dynamic clauses referring to future collective agreements. Werhof merely rejects an interpretation whereby the directive would require Member States to give dynamic protection even where the contract contains a static clause"

and accordingly at [41] he concludes.

"I therefore conclude that Article 3(3) of Directive 2001/23 must be interpreted as not, in principle, precluding Member States from allowing dynamic clauses referring to existing and future collective agreements that are freely agreed between the parties to a contract of employment to be transferred as a result of the transfer of an undertaking."

He then addresses the issue of whether the employer's rights had been breached as they could not join in the process for collective bargaining they had inherited. He finds that national legislation that requires the transferee to accept the existing and future terms and conditions agreed by a collective bargaining body is not precluded as long as the requirement is not "unconditional and irreversible". The national court will have to assess whether this particular case breaches that test.

Read the judgment here