Earlier this year, Alemo-Herronestablished that the terms of a collective agreement transfer in the form they exist as at the time of the relevant TUPE transfer. Dynamic clauses, which seek to incorporate changes to collective agreements negotiated and adopted post TUPE transfer, are not to be enforceable against transferees who do not have a right to participate in the negotiation process.
In Visteon Engineering Services, the Employment Appeal Tribunal (EAT) has somewhat muddied this principle. This case involved the transfer of employees from Ford to a friendly transferee, Visteon. Prior to the TUPE transfer, Ford entered into a collective agreement with its European Works Council which included a contractual commitment that the terms and conditions relating to pay of any employee transferring to Visteon would mirror those of Ford’s own employees. This would apply throughout the duration of a transferring employee’s employment. The EAT called this a “Mirroring Agreement”. The effect of the Mirroring Agreement was that whenever a higher pay rate was collectively agreed by Ford with its European Works Council post transfer, employees who transferred to Visteon were contractually entitled to the increase.
When Visteon failed to match new terms collectively agreed for Ford employees some six years after the TUPE transfer, the transferring employees brought claims for unlawful deductions from wage. The EAT upheld these claims. It held that Visteon was contractually obliged to mirror Ford’s terms throughout the transferring employee’s employment unless and until the collective agreement was replaced or varied (which it had not been here).
This is a surprising decision in light of Alemo-Herron. In part, this may reflect that Visteon Engineering Services was heard before the judgement inAlemo-Herron was released. It might also reflect that Visteon Engineering Servicesinvolved terms collectively agreed in advance of a TUPE transfer which very deliberately sought to pass on the benefit of post transfer pay rises to former employees of a transferor. Arguably, Ford intended this agreement to be forward thinking and “future proof”.
Guidance would be welcomed to clarify Visteon Engineering Servicesand an appeal seems likely. Pending a clarification, trade unions or other collective bodies may put pressure on transferors to enter into similar mirroring agreements as a means of bypassing the principle in Alemo-Herron. In turn, we may see transferees taking a point not argued in Visteon Engineerng Services, namely that changes to terms and conditions made in advance of a transfer and which were transfer-related are void and unenforceable against a transferee.