Collective agreements, mistakes and rectification

In the Supreme Court case of the National Union of Rail, Maritime and Transport Workers and another v Tyne and Wear Passenger Transport Executive t/a Nexus, the employer failed to correct a collective agreement which would have avoided previously determined wage claims.

Background

Nexus operates the Tyne and Wear Metro. In 2012, Nexus and the Unions entered into a collective agreement to consolidate a pre-existing entitlement referred to as a ‘productivity bonus’ into the basic pay of the employees.

The employees successfully argued that their shift allowances should be calculated as a percentage uplift of their basic salary, including the productivity bonus, on properly constructing the collective agreement. As Nexus had been calculating shift allowances on an unenhanced basis, the employees’ shift allowances had been underpaid.

Nexus then sought to rectify the collective agreement, alleging a mistake in its drafting. Rectification can be used to correct a written agreement that, due to a mistake, does not accurately reflect the true intentions of the parties involved. It allows mistakes in an agreement to be corrected by the courts after a deal has taken effect.

The Unions argued that Nexus could not pursue its rectification claim as it had not previously advanced the point.  In support of the Unions’ application for strike out / summary judgment, they argued that the rectification claim was an abuse of process, barred by delay and that the court had no power to rectify the collective agreement as it was not legally binding or enforceable.

The High Court dismissed the strike-out / summary judgment applications. The Court of Appeal ruled in favour of the Unions. Nexus appealed to the Supreme Court.

Supreme Court

Dismissing the appeal, the Supreme Court ruled that Nexus cannot use rectification of the collective agreement to avoid previously determined wage claims. It would be an abuse of the judicial process to do so.

This sets the precedent that employers cannot use rectification of a collective agreement to alter legal rights that have been adopted into individual employees’ contracts of employment. To do so would be an attempt to change employees’ rights without giving them the ability to be heard.

The Supreme Court did, however, find that, had Nexus raised as a defence to the original claim that, because of a mistake, the collective agreement did not accurately express the intended effect of consolidating the productivity bonus into basic pay, the tribunal could have treated the collective agreement as rectified and dismissed the claim on that basis.

Comment

Precise drafting and clear intentions are paramount when negotiating collective bargaining agreements. Ambiguities can lead to disputes and limit the ability to amend terms later. Employers should ensure that the written terms accurately reflect the mutual understanding reached during negotiations.

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