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Rectifying mistakes in a Collective Agreement

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The case of Tyne and Wear Passenger Transport Executive t/a Nexus v National Union of Rail

A Collective Agreement is negotiated between an employer and a union. The agreement is not generally legally enforceable. However, the terms that have been agreed will often be incorporated into the employees’ contracts of employment. The case of Tyne and Wear Passenger Transport Executive t/a Nexus v National Union of Rail, Maritime and Transport Workers and another concerned the question of whether an employer could seek rectification of a Collective Agreement in which terms had been mistakenly framed in such a way as to have led to unintended consequences for the employee’s pay. 

Case facts

Nexus had agreed changes to the Collective Agreement which included the consolidation of a productivity bonus into the employees’ basic salary. Nexus had not intended this to change the calculation of shift allowance. However subsequent proceedings brought by employees for unlawful deductions from wages succeeded. Nexus claimed in the High Court for rectification of the Collective Agreement to include words to state the incorporated bonus should not be taken into account for the calculation of shift allowance. The unions disputed that Nexus had the right to bring the claim.

The High Court decision

The High Court held that that the claim could proceed. The argument put forward by the unions that Nexus was trying to again contest the findings made in the earlier judgment was rejected. Those proceedings had determined the proper construction of the Collective Agreement. However, that did not prevent Nexus from later claiming that the agreement was reached on the basis of a mistake. That was not an argument which would have been appropriate to consider in those earlier proceedings as it was the unions, not the employees, who had been responsible for negotiating the Collective Agreements.

 

Key takeaway points

The equitable remedy of rectification is rarely considered in the context of changing employment terms. Nexus had unusually launched these proceedings for rectification as it claimed that there was a common or unilateral mistake as to the effect of the consolidation of the bonus into basic pay. The fact that terms and conditions were collectively agreed had complicated an issue that might otherwise have been dealt with by way of dismissal and re-engagement. Whilst that approach may always carry a risk of unfair dismissal claims bypassing the collective bargaining process could have made it much more costly.

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