gold plating

As aficionados of the European Court of Justice (CJEU) will tell you, it’s rare that the full judgement of the court does not follow the opinion of the Advocate General, but Mark Alemo-Herron and Others v Parkwood Leisure Ltd is just such a case. The icing on the cake is that the court held that a narrow interpretation should be taken of the Acquired Rights Directive and that it should not be taken to permit the transfer of “dynamic” contractual rights, that is, contractual rights which vary according to collective negotiations. The facts which gave rise to the decision are pretty typical: the London Borough of Lewisham outsourced its leisure services to Parkwooda and Mr Alemo-Heron and his colleagues, whose contracts incorporated the National Joint Council collectively negotiated terms and conditions, were transferred to Parkwood, who as a private sector undertaking could not participate in the NJC.

In holding that a member state would not be allowed to insist on a the transfer of dynamic terms, the CJEU commented that protection of employee rights was not the sole purpose of the Acquired Rights Directive. The ARD, it said,

seeks to ensure a fair balance between the interests of those employees, on the one hand, and those of the transferee, on the other. More particularly, it makes clear that the transferee must be in a position to make the adjustments and changes necessary to carry on its operations

Permitting a dynamic interpretation would saddle such a private sector employer with terms and conditions it could not influence and seriously reduce its contractual freedom “to the point that such a limitation is liable to adversely affect the very essence of its freedom to conduct a business”

Meanwhile the Government has announced a significant watering down of its proposed TUPE reforms. Having made much of its intention to remove “gold-plating” (i.e. going further than is required) from Regulations implementing EU Directives, and repeatedly citing TUPE as a prime example, this is a significant climbdown. In particular it has shelved plans to repeal “service provision changes” which were previously described as being too extensive and exceeding European requirements. However does intend to clarify the Regulations by providing that the new service provider must carry out “fundamentally and essentially” the same service as that performed by the transferor.

Among other relatively minor changes transferors have 28 rather than 14 days to disclose “employee liability information” and in place of work changes following transfers any resulting redundancies will not be automatically unfair. Further, businesses with fewer than ten employees can engage in direct consultation with employees rather than through appointed representatives.