Worrall and others v Wilmott Dixon Partnerships Ltd 2010 AER84

This case concerned the enforceability of a provision – clause 3.2 – in collective agreement with the employer which provided that an employee electing to take voluntary redundancy would be entitled to an increase of 5 years’ service in calculating his pension. This provision was contained within the employer’s Personal Handbook. A number of TUPE transfers took place and subsequent legislation amended the Superannuation Regulations so that by 2006 that provision was abolished being replaced with the power to add a payment of up to 104 weeks’ pay.

Mr Worrall applied for voluntary redundancy and sought the additional 5 years’ service. His employer refused and his grievance was unsuccessful. He therefore brought a test case for breach of contract on behalf of 45 other employees relating to the enforcement of the provision in the collective agreement. The EAT held that clause 3.2 had not been incorporated into Mr Worrall’s contract by reference and therefore his employer had no obligation to grant him and his fellow employees the extra years.

On a TUPE transfer an incorporated Collective Agreement is frozen at the transfer so the transferred employees cannot benefit from future changes to the original agreement. However if legislation affects the original agreement then it also affects the transferred agreement. In this case the 2006 Regulations would have deprived Mr Worrall of an enhanced pension under clause 3.2 if that clause had been incorporated into his contract.

Key point: Under TUPE all collective agreements relating to the transferring employees transfer to the Buyer under Regulation 5. The effect of this is that Buyers are only bound by the terms in force at the date of the transfer, not by any subsequent changes or new collective agreements to which they are not a party. They will however be bound by legislative changes that have an effect on the terms of a transferred collective agreement.