Collective Agreements

Bromley Council decided that it wanted to take control of the pay review process for its employees locally, rather than it be the subject of national negotiations, as had previously been the case. It offered new contracts of employment to its employees giving them a payment of £200 if they accepted the move to local pay and conditions. In doing so, it acted in ignorance of a provision of the law introduced by the last Labour government, which says that trade union members have the right not to have offers made to them by their employer designed to ensure that terms of their contract will not, or will no longer, be negotiated with their union. In this case of Bugden v London Borough of Bromley, the Employment Tribunal found that the clear purpose of the council’s offer to its employees was to remove them from the scope of the nationally negotiated pay agreement and therefore there was a clear breach of the law. The relevant Act prescribes an award of 8 weeks’ pay for each affected employee. Only 18 of the Council’s employees brought a claim in the tribunal, so it was lucky to get away with having to pay a total of only £64,000 by way of compensation!

Employers whose employees have terms in their contracts derived from collective agreements must not make offers to the employees to remove the collective agreements from their contracts unless they can evidence that there is some genuine business reason (other than a desire to remove the collective agreement) for the proposed change to the contract. The maximum penalty is now £3,712 per employee so it is important to take advice before removing the scope for collective agreement of terms from contracts.

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