The long reach of TUPE is illustrated by this case which concerns a collective agreement incorporated into the employment contracts of the Claimants who were first transferred 13 years ago in April 2000.
The Claimants transferred from Ford in April 2000. At the time of that transfer there was a Mirrored Terms Agreement (‘MTA’) incorporated in to the Claimants’ contracts. The MTA had been negotiated between Ford and Ford’s European Works Council on 25 January 2000. It provided that “for the duration of the employees’ employment” the terms and conditions of employees who transferred from Ford would mirror those of existing Ford employees. The MTA also referred to this as “lifetime protection”. The MTA also provided that the Ford collective bargaining arrangements would continue for 6 years.
The first transfer was to Visteon UK Ltd in April 2000 and then there was a subsequent transfer to the Visteon Engineering Services Ltd (‘Visteon’) in July 2007. Ford had made a number of pay agreements with its employees over the years. Visteon had honoured those pay agreements in respect of both the employees who transferred and other employees who had subsequently joined it after the transfer. The latest Ford pay agreement was a 3-year agreement reached in 2008. Visteon refused to honour that agreement. It had reached its own collective agreement with its employees in April 2006 to last until 2008. This did not depart for the Ford pay agreement then in place. It had also reached an agreement regarding collective bargaining arrangements with Unite in 2007 to replace the Ford collective bargaining arrangements.
Visteon sought to argue that the 2006 collective agreement had replaced the MTA as the source of the terms and conditions of the claimants’ employment. It also argued that MTA terms ceased to have effect when the Ford collective bargaining arrangements expired in 2006.
The EAT held the words “for the duration of the their employment” in the MTA were perfectly clear, not ambiguous and not capable of bearing two possible meanings. They meant what they said and the Claimants were entitled to the Ford pay terms. The EAT observed that it was open to the parties to negotiate a different collective agreement but that had not been done by the date of the tribunal hearing. The fact this was a bad bargain or in the words of the ET “bears heavily on the company” and “is not good in industrial relations terms” was not enough to conclude that something had gone wrong in the drafting of the MTA
Note: For the related ongoing dispute about the loss of pension entitlements see the Visteon Pension Action Group website here