UK: Collective Agreements Negotiated After A TUPE Transfer Will Not Bind Transferee Employers

The European Court of Justice (the "ECJ") has handed down its judgment in a key, long-running TUPE case – Alemo-Herron v Parkwood Leisure Ltd.

The decision is good news for employers who regularly inherit employees via 'TUPE transfers', especially where those employees were originally employed in the public sector or in sectors that are heavily unionised. Thanks to this ECJ ruling, the new employer will not be bound by the terms of any collective agreement which is negotiated after the transfer and to which it is not a party.


Lewisham Borough Council contracted out its leisure services to CCL Limited, a private undertaking which, two years later, sold this business to Parkwood Leisure Ltd. Both of these transfers constituted relevant transfers for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). Parkwood Leisure therefore 'inherited' employees from CCL Limited, which had itself inherited those employees from Lewisham Borough Council.

In accordance with TUPE, the employees transferred to the new employer each time with their existing terms and conditions. These terms included an express reference to an NCJ collective agreement, meaning that the terms of that agreement were incorporated into the employees' contracts of employment, and were therefore legally enforceable. Any pay rise would be carried out by reference to the collective agreement.

Issues arose

The enforceability of the collective agreement was undisputable when the employees were employed by Lewisham Borough Council. Nor was there any issue when the employees moved to CCL Limited, because at the time of that transfer, the NJC agreement for 1 April 2002 to 31 March 2004 was still in force. The terms and conditions (and pay structures in particular) had been negotiated before the transfer to CCL Limited, and were binding on CCL Limited.

The issue arose, however, once the employees had moved to Parkwood Leisure from CCL Limited in May 2004. The NCJ agreement in question had expired by this point, and a new one had not yet been negotiated. It was not until June 2004, after the transfer of employees from CCL Limited to Parkwood Leisure, that a new NCJ agreement was finally negotiated, to apply retrospectively from 1 April 2004.

Parkwood Leisure was not a party to this new collective agreement, and was not able to participate in its negotiations. It considered that the terms of the agreement were not binding on it, and refused to apply those terms when carrying out pay reviews.

This in due course led to claims from the affected employees, seeking to enforce the terms of the new collective agreement against Parkwood Leisure.

Difficult questions

This case has been thoroughly debated in the courts – having now been considered by an Employment Tribunal, the Employment Appeal Tribunal (EAT), the Court of Appeal (CA), the Supreme Court and now the ECJ.

The question is clearly not an easy one – where employees' terms and conditions transfer to a new employer under TUPE, and those terms expressly incorporate the terms of collective agreements "as negotiated from time to time", should the new employer only be bound by those collective terms that have been negotiated and are in force before and at the time of the transfer (the "static" approach)?

Or, do the terms and conditions of the transferring employees mean that new/updated collective agreements (negotiated after transfer) will also bind the transferee employer, even if that employer is unable to participate in those negotiations (the "dynamic" approach)?

On the one hand it seems manifestly unfair to transferee employers if they are obliged to operate by reference to terms of a collective agreement in which they did not have any say, and which did not even exist at the time of the transfer. On the other hand, the purpose of TUPE is to safeguard employees and their interests.

Each successive decision in this case has found in favour of a different party, and the issue was ultimately referred to the ECJ.

The relevance of Werhof and the question for the ECJ

It its judgment, the CA referred to the ECJ case of Werhof v Freeway Traffic Systems, which had similar facts. The CA followed the "static" approach taken by the German courts in that case, which the ECJ had permitted. Collective terms negotiated after the transfer would not bind the transferee employer.

The Supreme Court, however, questioned whether Werhof necessarily assisted it in reaching its own decision. It therefore asked the ECJ to consider whether, in light of the Acquired Rights Directive and the Werhof judgment, a Member State is:

  • Allowed to adopt the "dynamic" approach when determining this question
  • Required to use the "dynamic" approach, or
  • Actually prohibited from adopting the "dynamic" approach

It's all a balancing act

As the ECJ pointed out, the "dynamic" approach is of course more favourable to employees. However, the ECJ went on to find that the purpose of the Acquired Rights Directive (transposed into UK law by TUPE) is not solely to safeguard the interests of employees, but instead to "ensure a fair balance between the interests of those employees, on the one hand, and those of the transferee, on the other".

The ECJ also found that the Acquired Rights Directive makes clear that the transferee employer must be able to make changes necessary to carry on its business after the transfer. Imposing a public sector agreement on a private sector employer who was not able to influence its terms would considerably fetter the transferee's ability to conduct its own business as it needs to. The "fair balance" between the competing interests of the employer and employee would therefore be undermined if the "dynamic" approach were permitted.

The ECJ also went on to consider the Charter of Fundamental Rights of the European Union, of which Article 16 ensures a freedom to conduct business (including a freedom to contract). The Acquired Rights Directive must be interpreted in accordance with this Charter, and the "dynamic" approach (binding employers, as it does, to the terms of an agreement to which they were not party and into which they had no input) would seriously restrict such freedoms.

Conclusion of the ECJ

Taking all this into account, therefore, the ECJ held that Member States must be precluded from taking the "dynamic" approach.

This means that, where negotiations for collective agreements for transferring employees are concluded after the transfer, the new collective terms will not bind the transferee employer, if that employer was unable to participate in the negotiation of such agreements.

What does this mean for employers?

This is a sensible decision and good news for private sector employers. Such employers will still need to be aware of collective agreements which are in force at the time of transfer; however – these will continue to bind the transferee employer until their termination or expiry. Such terms may remain in force for a number of years, and may in particular restrict the new employer's ability to determine salaries, etc., as it sees fit. Any change to such terms will be void, unless made for an economical, technical or organisational reason entailing changes in the numbers or functions of the workforce.

Prospective transferee employers must therefore always carry out full and detailed due diligence, analysing in particular the scope and duration of any collective agreement. Such advice does not just apply to transferees who are inheriting employees directly from public sector employers; as Parkwood Leisure discovered, it is possible to inherit public sector employees through a chain of transfers by private sector employers.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.