Collective agreements

July 30th, 2012 by James Goudie KC

In Anderson v London Fire & Emergency Planning Authority, UKEAT/0505/ 11/SM, the EAT considered whether a term in a Collective Agreement with respect to the third year of a three year pay deal was apt to be incorporated in the contracts of employment of the Authority’s employees, and, if so, how that term should be interpreted. The Authority’s Collective Agreement with the Trade Unions gave the employer two options for the pay increase in the third year. It did not state which took precedence. The EAT held that the term had been incorporated.

The term was not insufficiently certain, either because it provided for a pay increase to be determined partly by reference to a sum to be agreed between third parties, or because it provided for the paying party to choose between two alternative methods of calculation.

The EAT however upheld the ET’s dismissal of the employees’ claims. The ET did not err in holding that the subjective intentions of the parties to the Collective Agreement were irrelevant when considering its interpretation. Nor did they err in having regard to the wording of the Collective Agreement rather than the negotiations which led up to it, even if paying the higher of the two options had been discussed. Nor was it material that the Union negotiator told the ET that he would not have agreed that management could choose the pay increase option which was most advantageous for them.

The EAT regarded the meaning of the relevant provision of the Collective Agreement as being clear. “Or” meant what it said. The Authority fulfilled their contractual obligation by paying in accordance with one alternative. The Authority was not obliged to pay whichever alternative would give the higher increase.

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