Summary and implications
Is a TUPE-transferee bound by terms of employment that are collectively negotiated following the transfer, but where it is not a party to the negotiations? To anyone not too familiar with TUPE, the answer must be "surely not". However, this issue was far from clear and was only clarified by the Court of Justice of the European Union (CJEU) earlier this month ( Alemo-Herron v Parkwood Leisure Limited (Parkwood)). It held that a transferee is not bound under TUPE by post-transfer collectively agreed terms when it cannot participate in the negotiation process.
The question focuses on whether TUPE should be given a "static" interpretation (transferee only bound by pre-transfer terms) or a "dynamic" one (in respect of transferring employees, the transferee is bound by post-TUPE negotiated changes, even where it is not a party to the negotiations). At the end of the day, the "static" view won.
The decision is important to clients involved in public to private sector transfers, in particular outsourcing. The next step is for the Supreme Court to apply the decision to the facts in Parkwood.
The likely implications of the decision include the following:
- Public to private sector transfers may appear more appealing, now transferees have certainty as to the terms which will apply to transferring staff on a long-term basis.
- We may see an increase in pre-transfer renegotiations of collective agreements to ensure that transferring staff benefit from changes, in an attempt to limit the impact of Parkwood on transferring staff.
- To comply with the duty to inform and consult, it may be necessary to tell transferring employees that they will not be subject to post transfer changes to terms of employment agreed between the transferor and the relevant union.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
