Under Section 179(1) of the Trade Union and Labour Relations (Consolidation) Act 1992, a collective agreement is presumed not to be legally enforceable unless it contains a provision stating that the parties intend it to be so. However, terms in a collective agreement relating to pay and conditions are typically incorporated into employees' contracts of employment. The Supreme Court recently addressed the question of whether a collective agreement that was not legally enforceable could nevertheless be rectified (National Union of Rail, Maritime and Transport Workers and Another v Tyne and Wear Passenger Transport Executive t/a Nexus).
In 2012 the employer, which operates the Tyne and Wear Metro, entered into a collective agreement with two trade unions whereby a bonus calculated as a percentage of basic pay would be consolidated into employees' basic salaries. A dispute subsequently arose about whether the collective agreement meant that the pay increase applied to shift allowances paid to employees for working particular shifts. A number of employees successfully argued before an Employment Tribunal (ET) that, in not paying shift allowances at the increased level, the employer had made unauthorised deductions from their wages contrary to Section 13 of the Employment Rights Act 1996. The employer's appeals to the Employment Appeal Tribunal and the Court of Appeal were unsuccessful, and permission to appeal to the Supreme Court was refused.
The employer subsequently brought High Court proceedings against the trade unions, seeking rectification of the document recording the collective agreement on the grounds that it did not accurately reflect their common intention. The Court rejected the unions' argument that the employer was prevented from bringing the claim, or that it was an abuse of process, because the issue had not been raised in the earlier proceedings. The Court held that rectification was not confined to legally binding contracts, and did not accept that the appropriate defendants to the claim were the employees into whose contracts the collective agreement had been incorporated. The unions appealed to the Court of Appeal.
The Court of Appeal allowed the appeal, finding that the fact that the collective agreement was legally unenforceable was 'an insuperable barrier' to the document's rectification. The correct target for rectification was the individual contracts of employment and the employer should therefore have brought its claim against the affected employees. The Court concluded that it would be an abuse of process for the employer to seek to rely on rectification at the remedy stage of the earlier proceedings. The employer brought a further appeal to the Supreme Court.
The Court noted that there was only one document, recording the terms of the collective agreement, and the terms of the employees' contracts of employment would change if it were rectified. The Court of Appeal had erred in holding that the claim for rectification should have been aimed at the individual contracts of employment.
The Court noted that while the document was not itself legally enforceable, it did create legal rights, and a claim for rectification would therefore not be futile. There was authority for the proposition that documents with no direct legal effect could be rectified. However, it was the employees whose rights would be affected by a successful claim for rectification and the employer should have brought its claim against them, not the unions. The appeal was dismissed.
The Court went on to rule that the employer could have raised a defence based on rectification in the earlier proceedings, finding that if such a defence had been established, the ET could have treated the document as if it had been rectified. However, it agreed with the Court of Appeal that it would be an abuse of process at this stage for the employer to make any claim intended to alter the outcome of those proceedings.
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