Rectification of Collective Agreements
In this article, our Consultant, Paul Scholey discusses collective agreements.
Tyne & Wear Passenger Transport Executive (trading as Nexus) -v- National Union of Rail, Maritime and Transport Workers
In Tyne & Wear Passenger Transport Executive (trading as Nexus) -v- National Union of Rail, Maritime and Transport Workers, the Court of Appeal has been considering the effect of an alleged mistake in a collective agreement concluded by the RMT Union on behalf of its members, and Nexus (operator of the Tyne & Wear Metro).
In 2012, an agreement made between the employer and the unions made changes to pay arrangements, under which a productivity bonus became part of employees’ basic salaries.
Nexus’ case was that the bonus element was not part of any calculation of shift allowance.
Many employees brought claims against Nexus alleging that their shift pay had been underpaid.
A tribunal agreed: the agreement in 2012 had not redefined shift allowance, so it should have been increased to reflect incorporation of the bonus.
Nexus tried a different tactic: it applied to the High Court for an order for ‘rectification’ of the agreement. That is a remedy available to parties to a contract where the contact has been entered into by mistake.
This case has now reached the Court of Appeal, which found against Nexus.
The Court of Appeal said simply this: since collective agreements between trade unions and employers are (by virtue of the Trade Union & Labour Relations (Consolidation) Act 1992) binding in honour only, i.e., not legally enforceable, Rectification was not available to the employer. Rectification would only be available where the Court was concerned with a legally binding contract.
Nexus then wanted to argue that it should be able to seek rectification of the individual contracts of employment of its employees which had been varied by the 2012 Agreement. Those contracts were of course regular employment contracts and hence, legally enforceable.
Unluckily for Nexus, the Court of Appeal has decided that it is, in effect, too late now for them to seek to rectify the individual contracts.
This is a significant win for the members concerned, but our prediction is that it is not likely to find itself often repeated. Employers now will recognise that the rectification avenue they must take, relates to the individual contracts of employment rather than the collective agreement with the union. It does represent an interesting and unusual application of the law of contract in relation to trade union members and variation of terms of employment.
