On 13 November 2024 the Supreme Court handed down judgment in Tyne and Wear Passenger Transport Executive t/a Nexus v National Union of Rail, Maritime and Transport Workers and Unite the Union [2024] UKSC 37.
This is an appeal arising out of a claim by Nexus (which operates Newcastle Metro) to rectify a collective agreement concluding the 2012 pay negotiations between Nexus and the trade unions recognised by Nexus for the purposes of collective bargaining (RMT and Unite).
In this judgment the Supreme Court has:
Background
The parties
Nexus operates Newcastle Metro. This litigation relates to the terms and conditions of employees in Grades 1 to 3 who work on Newcastle Metro. Nexus recognised RMT and Unite (together “the Unions”) for the purposes of collective bargaining. This is litigation relating to the pay deal agreed by Nexus and the Unions in the 2012 pay negotiations.
The 2012 pay negotiations
In the 2012 round of pay negotiations, Nexus offered to consolidate a payment referred to as a “productivity bonus” in basic pay. The Unions agreed and this agreement was recorded in a collective agreement incorporated into the individual contracts of employment of members of the workforce.
Following the 2012 pay negotiations a dispute arose about the calculation of shift allowances. The Unions considered that shift allowances should be calculated as a percentage uplift on basic pay including the productivity bonus which had now been incorporated into basic pay. Nexus continued to calculate shift allowances by references to basic pay not including the incorporated productivity bonus.
The Anderson Litigation
On 19 June 2015 Mr Steven Anderson and 79 other members of the RMT (“the Anderson Claimants”) brought claims in the Newcastle Employment Tribunal under section of the Employment Rights Act 1996 for unauthorised deductions from wages in respect of Nexus’s failure to pay shift allowances calculated by reference to basic pay incorporating the productivity bonus.
Nexus defended these claims (before the Employment Tribunal) on the basis that the contract properly construed should be read to mean that the now incorporated productivity bonus should be excluded before calculation of shift allowances. The Anderson Claimants were successful in the Employment Tribunal. The Court of Appeal (in a decision heard with another appeal and reported under the name Agarwal v Cardiff University [2019] ICR 433) dismissed Nexus’s appeal and upheld the Employment Tribunal’s construction of the collective agreement (incorporated into the Anderson Claimants’ contracts of employment).
The claim for rectification
On 20 May 2020 Nexus issued a claim for rectification in the High Court. Rectification is an equitable remedy, which (in very general terms) may be granted if a court is satisfied that the written record of an agreement does not reflect the intentions of the parties to that agreement. Neither Nexus nor the Unions (in the High Court or on appeal) were able to point to any previous instance of an attempt to rectify a collective agreement.
Nexus accepted (as it was bound to do following the Court of Appeal’s judgment reported as Agarwal) that properly construed the collective agreement meant that shift allowances should be calculated on the basis of basic pay incorporating the productivity bonus. Nexus argued that the collective agreement should be rectified so that shift allowances were calculated on the basis of basic pay without incorporating the productivity bonus.
Nexus brought a claim against the Unions to rectify the collective agreement (which all parties accepted was not a legally enforceable contract under section 179 of the Trade Union and Labour Relations (Consolidation) Act 1992).
The rectification claim in the High Court and in the Court of Appeal
The High Court considered a trial on a preliminary issue (cause of action estoppel and/or issue estoppel) and an application by the Unions for strike-out and summary judgment: Tyne and Wear Passenger Transport Executive t/a Nexus v National Union of Rail, Maritime and Transport Workers and another [2021] EWHC 1388 (Ch).
The matter went on appeal to the Court of Appeal: Tyne and Wear Passenger Transport Executive (t/a Nexus) v National Union and Rail, Maritime and Transport Workers and another [2023] ICR 148.
The Court of Appeal dismissed Nexus’s rectification claim on the basis that it was legally defective, because it was not possible (in principle) to rectify a collective agreement. Nexus appealed this issue (and various other issues) to the Supreme Court.
The Supreme Court judgment
Rectification of a collective agreement
The Supreme Court has dismissed Nexus’s rectification claim against the Unions. The collective agreement is not a legally enforceable contract and does not create rights as between Nexus and the Union. In this context the Supreme Court held:
Claims under section 13 of the Employment Rights Act 1996
Nexus had paid members of the workforce in line with Nexus’s interpretation of the 2012 collective agreement. The Anderson Claimants and other members of the workforce have brought claims for unauthorised deductions from wages (under section 13) in respect of this shortfall.
The Supreme Court (in the course of determining a point relating to estoppel) considered the question of whether it was possible in principle for a party to argue that a contract of employment should be rectified when that party was making a claim for unauthorised deductions from wages.
In determining a claim under section 13, an Employment Tribunal must determine whether those wages are “properly payable” within the meaning of section 13(3) of the Employment Rights Act 1996.
The Supreme Court held that it was open to either party in a section 13 claim to argue that the test for rectification is met and that the Tribunal should treat a contractual document as “rectified” when determining what is “properly payable” within the meaning of section 13(3) (see in particular [82 to 83] of the judgment).
The Supreme Court’s judgment can be read here.
Oliver Segal KC and Madeline Stanley were instructed by Thompsons Solicitors LLP on behalf of the Unions.
