The Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") provides that, where employees are transferred to a new employer, that employer - also referred to as the transferee - must honour any Collective Agreement that may be in place. However, thanks to the recent decision of the Court of Appeal in Parkwood Leisure Limited v. Alemo-Herron, transferees will no longer have to adhere to collective bargaining agreements negotiated after the date of transfer when the original agreement has expired.

The EAT had previously provided an 'employee friendly' decision when it concluded that a clause in the employment contract of workers linking their pay rises to a collective bargaining agreement was binding on the transferee, even where the transferee was not party to the negotiations. UK domestic law accommodated such a decision as it allowed for a 'dynamic' rather than a 'static' approach to contracts of employment which would otherwise have failed on the principle that parties cannot be bound by contracts that they were not a party to. However, the European Court of Justice's decision in Werhof v. Freeway Traffic Systems GmbH now meant that post-transfer negotiations could be viewed differently from pre-transfer negotiations, thus causing the Court of Appeal to overturn the decision of the EAT.

In terms of TUPE, collective bargaining agreements are still binding on the transferee. How long for however, will depend on the particular collective agreement. To read the judgment in full please click here.