Collective agreements

Collective agreements set out agreed terms with trade unions or staff associations which allow the negotiation of important terms and conditions of employment. Typical terms of collective agreements include how negotiations take place, which employees are covered by the agreement, and what terms and conditions will be covered by the agreement.

What legal status does a collective agreement have?

They are only legally binding on the parties if it is in writing and it is stated to be legally binding. Some of the terms of a collective agreement (eg. as to rates of pay) may specifically be stated to be subject to the current collective agreement between employer and trade union. However, if the collective agreement is incorporated into an employee’s contract of employment – it may be binding. To what extent it may be binding, if at all, depends.

The question that often arises is – what is the status of the collective agreement itself – if not expressly incorporated into the worker’s contract?

What’s the law?

Under the Trade Union and Labour Relations (Consolidation) Act 1992, a collective agreement must cover one of the seven topics specified in the legislation as follows:

  • terms and conditions of employment or the physical conditions of work
  • engagement, non-engagement, termination or suspension of employment or the duties of employment of one or more workers
  • allocation of work or duties between workers or groups of workers
  • discipline
  • membership or non-membership of a trade union
  • facilities for union officials
  • machinery for negotiation or consultation and other procedures, including trade union recognition.

In reality, it’s unusual for the terms of such an agreement to be legally binding per se, but they may be enforced by the individual employee if incorporated into an employment contract. This reflects the legal position that the employment contract is between the employer and the employee only.

Each employee has a binding contract of employment with the employer (ideally in writing) and both employer and employee are bound by the terms of the employment contract – which may expressly incorporate terms of a collective agreement.

When is a collective agreement term incorporated?

A term of the agreement is typically incorporated by the employment contract expressly referring to the relevant term/condition of the collective agreement. The Employment Rights Act 1996 specifically requires an employee’s particulars of employment to include the details of “any collective agreement which directly affects the terms and conditions of the employment including, where the employer is not a party, the persons by whom they were made”.

In some situations, the collective agreement can cross refer to individual employees’ contracts of employment and thus be incorporated in that way.

However, not all terms in a collective agreement can be incorporated. Terms that are particular to the employee (hours, rates of pay, sick pay, annual leave, etc) can be incorporated, whereas collective terms are not, for instance, in relation to general redundancies. The wording must, therefore, be carefully considered by the parties before finalising the terms of a collective agreement.

What’s the court’s approach to collective agreements?

The courts have interpreted the issue of incorporation of the terms of collective agreements narrowly. For instance, in the 2010 case of Malone and Others v British Airways Plc, provisions in a collective agreement relating to crewing levels, which were incorporated into individual contracts of employment, were not enforceable. This was even though the employees’ contracts of employment stated that their employment would be governed by the terms of collective agreements.

The Court found, among other things, that the collective agreement failed to expressly provide for the relevant section of the collective agreement to be legally binding – though it did in other sections; and the employment contracts did not expressly incorporate the relevant parts of the collective agreement. The Court also found no intention to give legal enforceability to crewing level to the individual crew members.

In addition, a general reference within an employment contract to a collective agreement may well not be enforceable if it does not specify the particular agreement at issue.

Furthermore, a major factor is whether the term is apt for consideration (in the above case, the term in relation to crewing levels was not).