In the first reported judgment of its kind in England, the High Court has confirmed that rectification can be granted to remedy a collective agreement that was wrongly recorded (Tyne and Wear Passenger Transport Executive t/a Nexus v National Union of Rail, Maritime and Transport Workers and another [2021] EWHC 1388 (Ch)).

Collective agreements and rectification

Collective agreements facilitate and record the standard terms agreed between a trade union and employer, which then filter down into individual employees’ contracts of employment. Collective agreements are a key feature of industrial relations in many jurisdictions. In England, unless otherwise expressly recorded, a collective agreement is presumed to be unenforceable as against the trade union (section 179(1), Trade Union and Labour Relations (Consolidation) Act 1992).

Rectification is an equitable remedy that allows a court to correct an instrument which incorrectly records what the parties had agreed. The remedy is not confined to enforceable agreements (Marley v Rawlings and another [2014] UKSC 2). However, there is no reported case law in England where a court has considered the question of rectification of a collective agreement, even an enforceable collective agreement.

Unlawful deduction claim

Tyne and Wear Passenger Transport Executive, trading as Nexus, operates the Tyne and Wear Metro. RMT and Unite are recognised by Nexus as authorised collective bargaining trade unions (the unions). Nexus approached the High Court to seek rectification of a collective agreement concluded with the unions in 2012 (see “Collective agreements and rectification”). The collective agreement sought to increase employees’ basic pay by consolidating productivity bonuses into basic pay. According to the unions, the effect of the collective agreement was that shift allowances would be calculated on the new consolidated pay figures, whereas Nexus’s position was that shift allowances should be calculated on the pre-consolidated pay figures.

In 2015, members of the unions brought a claim to an employment tribunal arguing that Nexus’s failure to pay shift allowances on a consolidated basis amounted to an unlawful deduction under section 13 of the Employment Rights Act 1996. The tribunal upheld the unlawful deduction claims (Anderson and others v Tyne and Wear Passenger Transport Executive t/a Nexus 2500752/15/ET). That decision was upheld by the Employment Appeal Tribunal and the Court of Appeal (UKEAT/0151/16; www. practicallaw.com/w-013-3564; [2018] EWCA Civ 2084).

Estoppel

As a result of the decision in Anderson, Nexus approached the High Court to seek rectification of the collective agreement. The unions argued that Nexus was estopped from seeking rectification as it was effectively relitigating the same action that had been decided in the tribunal and confirmed by the Court of Appeal in Anderson. The unions also argued that it was not possible to seek rectification in respect of an unenforceable collective agreement. The parties agreed that these points should be decided by way of a preliminary issue. The unions also brought an application for summary judgment and strike out on substantially the same basis.

The court held that this was not a case of cause of action estoppel. Here, Nexus was seeking rectification of the collective agreement and that cause of action arose as against the unions. Anderson was about the construction of the collective agreement and arose between Nexus and the individual members of the unions, who were the claimants in those matters. The unions also failed on issue estoppel as no common issues were established between Anderson and this case.

Rectification permissible

On the point of rectification, the court considered that there is no reason to refuse rectification of a document which is unenforceable but has legal consequences for the parties concerned. Accordingly, there is no legal barrier to rectifying a collective agreement, even if it is unenforceable. As there was no reported case law on the rectification of collective agreements in England, the court considered Canadian case law where rectification had been granted, albeit in the case of enforceable collective agreements. The court inferred from this case law that rectification of a collective agreement is, in principle, possible and, having held that the remedy was not limited to enforceable agreements, concluded that an unenforceable collective agreement can be rectified as a matter of English law. The unions have applied for permission to appeal.

Wider implications

The outcome of this case breaks new ground by providing a methodology to remedy a collective agreement that was wrongly recorded. In the context of this particular case, the effect of the error was adverse to the employer and favourable to the unions. However, the remedy of rectification is ultimately an equitable and neutral one. It is now open to other employers or other unions to seek rectification of collective agreements that do not accurately record what the parties agreed. The implication is that both unions and employers now have a remedy to avoid being held to the terms of an incorrectly recorded collective agreement.

Given the number of UK workers covered by collective agreements, the ruling is significant for both employers and employees. According to government statistics, in 2020, 6.56 million workers were members of a trade union, which is 23.7% of the national workforce. Of the four million workers in the public sector, 90% are subject to collective agreements against only 20%, or 2.56 million, employees in the private sector.

This article first appeared in the July 2021 issue of PLC Magazine” - http://uk.practicallaw.com/resources/uk-publications/plc-magazine