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Collective Agreements and TUPE

A recent case (Parkwood) considered whether a transferee in a TUPE transfer is only bound by the terms of a collective agreement which is in force at the time of the transfer (the “static approach”) or whether they are also bound by any subsequent collective agreements or any subsequent amendments to the original collective agreement which arise after the transfer date (the “dynamic approach”).

Parkwood was referred by the Supreme Court to the Court of Justice of the European Union (CJEU). The Advocate General has now issued his draft opinion on the matter. The Advocate-General has recommended that the CJEU find that EU Law does not prohibit the dynamic approach to being taken and it is for the UK to decide whether to allow the dynamic approach to be taken. The Advocate-General reached that view, taking into account factors such as the fact that in the UK collective agreements principally derive from contractual arrangements and can therefore be readily re-negotiated post transfer. On that basis the Advocate-General determined that allowing a dynamic transfer of collective agreements would not be detrimental to transferees.

Although it remains to be seen if the CJEU will follow the Advocate General’s opinion, it is likely that it will do so, which in turn will likely result in the Supreme Court confirming that UK law should adopt the dynamic approach to collective agreements on TUPE transfers. Whilst, on the face of it, that approach will result in transferees in TUPE situations being liable to implement collectively agreed terms which they have not been party to, it seems likely that transferees in that scenario will try to renegotiate any transferring collective agreements.

We now await the CJEU’s decision.

The Advocate-General’s opinion is available here.

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