For those with unionised workforces, what do you do if there's a mistake in a collective agreement which isn't expressly intended to be legally binding?
The Court of Appeal (overturning a High Court decision) says that an agreement that is not legally enforceable cannot be rectified. This follows the long-running case of Tyne and Wear Passenger Transport Executive (t/a Nexus) v RMT [2022] EWCA Civ 1408.
The issue in the case was a collective agreement with the RMT which provided for a productivity bonus within basic pay. A dispute arose as to the effect of this on the calculation of shift allowances (which provided for a percentage uplift on basic pay). The employer argued the bonus should not be taken into account and claims were then presented in the Employment Tribunal by the affected employees for unlawful deductions from wages. The proceedings went as far as the Court of Appeal, with findings in favour of the employees at each stage.
Before a remedy hearing had taken place, the employer went to the High Court seeking rectification of the collective agreement to make it clear the bonus did not apply to the shift allowance. It stated that payment of the enhanced shift allowance did not correspond to the common intention of the parties and the agreement should be rectified for 'common mistake'. Alternatively, the enhanced shift allowance did not correspond to the employer's own intention, which the RMT knew, or ought to have known. Importantly, this was the first time that the employer had relied on mistake as a defence.
While the High Court accepted the employer's arguments and allowed the claim, the Court of Appeal overturned its decision, finding that the courts have no power to order rectification of a collective agreement that has no legal effect.
So, what can an employer do? The answer is not necessarily to give a collective agreement express legal effect. This can give rise to more issues than might solve. In the present case, the Court of Appeal commented that it was the individual employee contracts (into which the collective agreement was expressly incorporated) that required rectification. That would make the correct defendants the employees, rather than the union.
It would hardly be in the spirit of good workplace relations to take legal action against a mass of your own employees (albeit in principle the representative action procedure under the Civil Procedure Rules permits a rectification claim to be brought against representative employees). Further, the employees were not a party to the collective agreement itself and, evidentially, cannot necessarily speak to the parties' intentions when it was entered into. The thought of an employer seeking to change terms and conditions would be a daunting and somewhat dangerous mission.
The best advice is to ensure a collective agreement is properly drafted at the outset so that there is no ambiguity and its application is clear. The next best advice is to run any mistake argument at first instance. But then, as I believe Arthur Conan Doyle said, it is easy to be wise after the event.
Want to hear more from us? 
