Background
The relevant parties to collective agreements are the employer and union, not employees themselves. However, collective agreements can become part of an employee’s contract of employment by a process known as incorporation.
In order to be capable of being incorporated, an agreement must cover issues that are suitable and appropriate for inclusion in an individual’s contract (eg, an agreement on rates of pay as opposed to collective matters).
In addition, an employee’s contract must expressly state that the collective agreement is part of his or her terms and conditions. If there is no express incorporation, there must instead be an intention to incorporate the relevant agreement into the individual contract of employment.
In Corus UK Ltd v Anderson and others, the EAT considered whether an employment tribunal was correct to rule that a collective agreement had been incorporated into employees’ contracts.
Facts
Corus UK Limited (Corus) agreed with the unions (including Amicus), with which it undertook collective bargaining, that negotiations would be devolved to three free-standing engineering businesses. One of these was North Eastern Engineering (covering Scunthorpe and Teeside) where Corus was represented by P and shift workers were represented by C, the senior negotiating officer of Amicus.
On 26 August 1999 a ‘team working agreement’, under which all workers would receive the same all inclusive rate of pay, was put to the unions for acceptance, to be implemented on 1 November 1999. The agreement was signed by management representatives and union representatives from Scunthorpe. It was the practice of the union representatives from Teeside to consult with their members prior to signature, so they did not sign at that time.
On 27 August 1999, Corus realised that the identified rate of pay in the agreement should not apply to shift workers, who should have been given a separate lower basic rate of pay. P contacted C that day to convey this. Nonetheless, at some point between 27 August and 13 September, the Teeside representatives signed the agreement.
On 13 September, P set out proposed variations to the agreement, but all attempts to resolve the issue failed. After 1 November 1999, shift workers were paid in accordance with the proposed variation rather than as set out in the agreement.
Unlawful deductions from wages were claimed by the Teeside shift workers. An employment tribunal held that the collective agreement was complete and agreed on 26 August 1999 when ‘there were probably sufficient signatures . . . to make that bargain immediately effective and for its terms to be incorporated into the individual contracts of employment’, ie before Corus attempted to amend the agreement with respect to shift workers.
Corus appealed to the EAT.
EAT’s findings
Corus’ appeal was successful.
In the EAT’s view, agreement could not have been reached on 26 August 1999 because on that date, the Teeside representatives stated that they needed to consult their members. It must have been possible for their members to reject the agreement. As such, there could be no valid agreement until those Teeside representatives signed.
Before those representatives had signed the agreement, P had made it clear that Corus could not in fact offer the same pay rate to the shift workers. This amounted to ‘a withdrawal of the offer set out in the agreement on 26 August 1999, which was therefore no longer available for acceptance’. The direct communication of this to C, a senior union officer, was sufficient notification of the change in Corus’s position.
As such, the employment tribunal had been wrong to find that a binding agreement had been reached on 26 August 1999.
Comment
This case reminds those seeking to rely on terms agreed through collective bargaining that they must be satisfied that each term has been agreed and is individually enforceable.