Background
To answer the question, when is a collectively agreed term incorporated into a contract of employment, you start by looking at intentions of the employer and employee as shown in the individual contract.
Then you consider whether the provision of the collective agreement is apt to be a term of the contract. Not every term of a collective agreement will be apt - because, for example, it is too vague or because its purpose is solely to regulate the relationship between the collective parties.
Facts
In Martland, the contract of employment said “Any terms agreed in the course of collective negotiations between CIS and the trade union … will have been incorporated into and form part of this agreement”.
The collectively agreed severance terms at issue were precise, unambiguous and intended to regulate the relationship between the employer and the individual employees rather than the employer and the trade union. On that basis, arguably they should be contractual terms.
Did it make a difference that the collective agreement, headed “Redundancy Process”, stated “This process is not intended to form part of individual contracts”?
Potentially it could, said the EAT, not because the terms of the collective agreement trump the individual employment contract. Rather it is the individual contract of employment itself which, properly construed, allows the parties to the collective agreement to deny contractual effect to its terms.
Frequently, the collective agreement says nothing about which provisions should be incorporated and which should not. In those circumstances the only issue will be whether the term in the agreement is apt for incorporation.
But where the collective agreement purports to determine that question – for example, as in this case by stipulating what is not to take effect as a contractual term - that determination will, at least in the normal case, have to be respected.
Comment
On the facts of this case, however, it was only the ‘process’ or procedure for handling the redundancies that was intended to have no contractual effect. The severance terms were different. It would require very clear and unambiguous language to deny contractual effect to terms that were as manifestly apt for incorporation as the severance terms were in this case.
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