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TUPE and Collective Agreements

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[Thanks to John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

The Supreme Court has handed down its judgment in Parkwood Leisure Ltd v Alemo-Herron and others [2011] UKSC 26, holding that the question whether Article 3.1 of the Acquired Rights Directive precludes national courts from giving a dynamic interpretation to Regulation 5 of TUPE 1981 (now TUPE 2006 Reg 4) was not acte claire and should be referred to the ECJ for a preliminary ruling.

In the Court of Appeal it had been held that, following the ECJ decision in Werhof v Freeway Traffic Systems GmbH & Co KG [2006] ECR1-2397 on the scope of article 3.1 of the ARD, Regulation 5 should be read as meaning that the transferee was not bound by any collective agreement made after the expiry of an agreement that was in force at the point of the transfer if the employer was not party to the collective bargaining machinery concerned. This is the so-called "static" interpretation. The contrary, "dynamic", interpretation, would mean that a transferee would be bound to give effect to collective agreements negotiated by a third party from time to time as long as the original contract of employment provided for this. UK case law, including Whent v Cartledge Ltd [1997] IRLR 153, supported this "dynamic" interpretation. The CA held that Whent could not stand in the light of Werhof.

Therefore the question of whether national courts may give a more generous, "dynamic", interpretation of TUPE, notwithstanding the view in Werhof about the scope of Article 3.1, was referred to the CJEU.