The collective agreement in question had been negotiated by an employers` organisation to which the contemptuous but not the buyer belonged. Three years after the date of transfer, the employers` organisation agreed on a new collective agreement with increased wage rates. The complainant worker, transferred with the company, attempted to argue that he was entitled to the wage increase under the new collective agreement (i.e. a « dynamic » construction). The ECJ objected and ruled that EU law – in particular the Acquired Rights Directive (« ARD ») – does not provide for purchasers to be bound by collective agreements other than those in force at the time of the transfer. Such an interpretation was consistent with the objective of the regime of preserving the rights and interests of workers in force at the time of the transition. Their purpose was not to protect future expectations of hypothetical rights or benefits that might result from future changes to collective agreements. In 2008, kls` activities were transferred to another company. While the workers wished to invoke the dynamic clause, the transferee argued that it was not required to apply conditions arising from amendments to the collective agreement after the date of transfer. The buyer relied on the earlier judgments of the ECJ Werhof  IRLR 400 and Alemo-Herron  IRLR 744. Last February, the Advocate General recommended that the CJEU favour the dynamic approach. However, in its decision made public last week, the ECJ rejected the Advocate General`s Opinion and found that the Directive prohibited Member States from applying the dynamic approach if the buyer did not have the opportunity to negotiate collective terms.
The ECJ found that the dynamic approach did not strike the right balance between the interests of workers and the interests of the worker. It also noted that the dynamic approach, by linking the buyer to conditions that he did not have the possibility to negotiate, had too much undermined the buyer`s freedom of enterprise, in accordance with Article 16 of the Charter of Fundamental Human Rights. This decision will be good news for private sector employers, as it offers greater security in the handling of public sector contracts. This means that new employers can more easily reward these contracts, as they have greater control over the terms of sale of workers. If you would like more information or specific advice, please contact Roger Bull or contact your usual Burges Salmon contact. In Parkwood Leisure Ltd v. Alemo-Herron, among others, the Court of Appeal considered the impact on collective agreements of Regulations 5 and 6 of the Health and Safety Transition Regulations 1981 (TUPE 1981). The Court held that, in cases where a contractual right to a salary increase is subject to contractual conditions, the buyer of a transferred undertaking is not bound by conditions collectively agreed by third parties after the transfer. In this decision, the Court refused to follow the established case-law of the United Kingdom, preferring instead to follow a decision of the Court of Justice of the European Communities (ECJ) of 2006.
In the event of a transfer, these agreements are transferred to the new employer. Former employers should take steps to understand the new employer`s intentions for collective bargaining by asking: two amendments to the TUPE regulations determine when the conditions set out in collective agreements can be changed in a transfer situation. If the amendment is a condition inserted in a collective agreement and the amendment enters into force at a time more than one year after the date of transfer and (b) after the amendment, the rights and obligations of the worker`s contract, if taken together, are no less favourable than those which were immediately preceding: modification is also allowed….