The case of Alemo Herron v Parkwood Leisure Ltd has now been heard by the Supreme Court, which has made a reference to the Court of Justice of the European Union.

The case concerns a group of employees who brought claims for unlawful deduction of wages.  They were initially employed by a local authority, and were transferred to a private sector employer under TUPE.   Their contracts of employment provided that their "terms and conditions of employment will be in accordance with collective agreements negotiated from time to time by the National Joint Council for Local Government". The employees argued that after their transfer, their private sector employer was bound by the provisions of collective pay agreements negotiated in the local authority sector, even where the collective agreement was negotiated after the date of transfer.

The employees were unsuccessful in the Employment Tribunal and Court of Appeal, although they were successful in the Employment Appeal Tribunal.  The issue vexing the Supreme Court was that the provisions of TUPE appear more generous than the European Directive it implemented.  Therefore whilst previous decisions of the European Court of Justice have held that employers are not bound by collective agreements negotiated post-transfer, the Supreme Court has asked the European Court of Justice whether TUPE can be interpreted more generously and whether employers can be bound by collective agreements to which they have never been party.

There is likely to be significant delay before the Court of Justice considers the question, but the decision will be of interest to all public sector employers, and those in the private sector contracting with them.