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ARTICLE · 12 MARCH 2010

TUPE - Employment Law Update

Bird & Bird
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'Static' interpretation of wage-fixing clause in transferring employees' contracts.

United KingdomEmployment and HR
Bird & Bird'S Labour & Employment Group
Bird & Bird'S Labour & Employment Group

Originally published March 2010

'Static' interpretation of wage-fixing clause in transferring employees' contracts

In Parkwood Leisure v Alemo-Herron and others the Court of Appeal has resolved a long-running argument about the effect of a TUPE transfer on contract terms and conditions which are negotiated under a collective agreement.

The basic rule under TUPE is that employees should transfer on their existing contract terms and the transferee employer is legally bound by them. However, the effect of TUPE on a relevant collective agreement is that, although it also transfers, it can be terminated immediately by the transferee. But what if the contract provides that terms and conditions (including pay) will be in accordance with a collective agreement negotiated from time to time by a third party (typically a committee with members drawn from various employers and trade unions)?

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