The Court of Appeal has held in the long-running case of Tyne and Wear Passenger Transport Executive t/a Nexus v RMT and Unite the Union that not only had the company sued the wrong party, it could not seek rectification of a collective agreement as it was not legally enforceable.
Thompsons was instructed by the RMT and Unite the Union to represent their members.
Basic facts
In a letter sent to the RMT and Unite the Union in October 2012, Nexus (which operates the Tyne and Wear metro system) offered to consolidate a pre-existing productivity bonus into the basic pay of a number of employees. Following acceptance of the offer, an issue arose as to how shift allowance should be calculated for employees in grades one to three of the pay structure.
The company argued that basic pay should, henceforth, be calculated on the unenhanced basis, whilst the unions argued that it should be calculated on basic pay as increased once the productivity bonus had been incorporated into it. The employees successfully brought proceedings in the tribunal under section 13 of Part II of the 1996 Employment Rights Act for unlawful deduction of wages (see weekly LELRs 564 and 597). These became known as the Anderson proceedings.
Decision of High Court
Nexus then issued a claim in the High Court against the unions on the basis that the Letter Agreement (as interpreted by the courts) should be rectified, as it did not reflect the intention of the parties when it was agreed, or at least it did not reflect the intention of the company, a fact that the unions were aware of at the time. As such, it should be rectified on the grounds of mistake. RMT and Unite the Union applied for the claim to be dismissed.
The High Court refused, and the unions appealed on a number of grounds, most notably that the court did not have the power to rectify the Letter Agreement because it was not legally enforceable.
Decision of Court of Appeal
The Court of Appeal has now dismissed the claim, holding that Nexus should have sued the employees, not the unions, as they were the only parties to the legally binding contracts that the company was trying to rectify. As it was not possible to rectify a non-legally binding collective agreement (the Letter Agreement) that it had reached with the unions, it was, therefore, up to Nexus to decide whether to issue new proceedings against the individual employees.
It also commented that, as tribunals have jurisdiction to decide whether a deduction from wages is unauthorised, they must also have the power to resolve “any issue which needs to be decided in order to determine a complaint that a deduction from wages is unauthorised. If the employer contends that the deduction is lawful because the written contract between the parties does not properly reflect what was agreed and needs to be rectified, that is an issue which needs to be decided”. That being so, the tribunal would have had the jurisdiction to decide the issue at that stage, had the company raised it then. Given that it had not, it would have to “live with the consequences of its decision”.
The court also made clear that Nexus could not try to defeat an order for payment of the Anderson deductions at the remedy stage for a number of reasons, not least that it would constitute an abuse of process. Had it raised the issue of mistake at the outset, the outcome might well have been different.