Mrs Badger and 33 fellow employees of food manufacturer Framptons were made redundant in December 2004. The employees submitted they were entitled to enhanced redundancy payments, the terms of which were set out in a series of collective agreements, the last of which was in 2000. Unlike the previous agreements, the 2000 agreement had a termination date of November 2002.
The collective agreement had been expressly incorporated into the employment contracts of weekly-paid staff. Although the contracts for monthly-salaried staff did not expressly refer to the agreement, the employees contended that they had, for many years, been treated in precisely the same way and should be given the same rights. The employer argued that the 2000 agreement had ended before the redundancies so the terms no longer continued to be part of the employment contracts.
The tribunal and the EAT found in favour of the employees. The parties had by their conduct kept the 2000 agreement in force, even after November 2002. The terms for the weekly-paid employees had continued to be incorporated into their contracts and those contractual terms were not affected by the termination of the agreement itself. The agreement had been applied over the years to the salaried staff in the same way as to other staff. The enhanced redundancy rights were contractually conferred on all employees.
In its judgment, the EAT set out useful reminders about the relationship between collective agreements and individual contracts:
- The rights and obligations set out in a collective agreement can bind employer and employee by being incorporated into the individual’s contract of employment.
- The incorporation can operate expressly or by implication. However, terms that are too vague or aspirational or whose purpose is solely to regulate the relationship between the collective parties cannot be incorporated.
- A collective agreement may continue to operate even when the agreement itself has been brought to an end.