ECJ likely to follow, but UK government may try and change rules
An advocate general of the European Court of Justice has backed former council workers in their interpretation of the TUPE regulations, following a reference from the Supreme Court.
Philip Davies, employment partner at Eversheds, said this might prompt the UK government to react by putting forward plans to narrow the scope of TUPE in its consultation on the issue, which ends on 11 April.
Although the opinion of Advocate General Cruz Villalon is not binding on the ECJ, Davies said it was likely that the court would follow his lead.
“The critical question posed in the case is whether public sector employees who are subject to industry or sector-wide terms, remain entitled to the benefits of increases in pay negotiated under those terms after they have transferred to the private sector,” Davies said.
In his ruling at the Supreme Court in Parkwood Leisure v Alemo-Herron and others  UKSC 26, Lord Hope said rticle 3(3) of European Council directive 2001/23/EC allowed member states to introduce laws which were more generous to workers.
The Court of Appeal unanimously backed Parkwood Leisure’s arguments that staff who previously worked for Lewisham Council’s leisure services department could not continue to benefit from a national pay agreement after they were outsourced.
Following the transfer, Parkwood refused to award the workers pay increases in accordance with collective agreements. The rises were agreed by the National Joint Council for Local Government Services, which includes the workers’ union, UNISON, but not private employers.
Advocate General Cruz Villalon said: “As we have established, in the United Kingdom, collective agreements do not have their legal basis in the law, but in individual contracts of employment, which express the free will and freedom of contract of the employee and the employer.
“Consequently, and without prejudice to the relevant assessment being carried out by the referring court in order to confirm this, all the indications are that, although dynamic clauses referring to collective agreements are transferred, they can be renegotiated and amended by the parties at any time during the term of the employment contract.
“In other words, UK law does not appear to preclude Parkwood and the employees of the transferred undertaking sitting down to negotiate and agreeing to dispense with, amend or preserve the clause.”
The Advocate General proposed that the ECJ reply to the Supreme Court that the directive did not preclude dynamic clauses referring to existing and future agreements from being transferred and that European law did not preclude national legislation requiring transferees to accept this, provided the requirement was not “unconditional and irreversible”.
Davies added that if the ECJ followed the Advocate General it seemed “inevitable” that the Supreme Court would decide in favour of the workers when it reheard the case.
Bronwyn McKenna, UNISON assistant general secretary, said: “This ruling will be a huge relief for the many thousands of people who have been transferred out from their original employer, including those who have been, or are now at risk of being privatised.
“We are now calling on Parkwood Leisure to pay our members what they are owed, and for other employers to honour any contractual pay increases owed to transferred staff, or run the risk of finding themselves in court.”