Rectification As a Remedy in Trade Union Disputes
A recent Court of Appeal judgment raises interesting questions about what action an employer can take if it needs to correct a mistake in a contract.
What Happened in This Case?
In the case of Tyne and Wear Passenger Transport Executive t/a Nexus v National Union of Rail, Maritime and Transport Workers and another, there was a trade dispute between a metro company (Nexus) and a number of its employees. There was a collective agreement in place which was expressly incorporated into staff contracts. The claimants brought successful unlawful deductions from wages claims relating to the way shift allowances were being calculated (Original Litigation). In the Original Litigation, a letter was analysed, which had been sent by Nexus and which set out agreed changes to the collective agreement. The outcome of the Original Litigation was that according to this letter, enhanced shift allowances were to be paid. It is important to understand for the purpose of what follows, that the letter was not, in its own right, a legally enforceable collective agreement.
Second Litigation
Nexus then brought a High Court claim, seeking rectification (or correction) of the letter.
Nexus argued that payment of the enhanced shift allowance did not correspond with the parties' common intention (or alternatively what the company had intended). Nexus wanted to use the rectified letter to defend itself in the upcoming remedies hearing in the Original Litigation, and also to defend itself against any future claims that might be brought on the same basis.
What Did the Court of Appeal Decide?
The High Court allowed Nexus' claim to proceed. The Unions have now appealed successfully to the Court of Appeal, which has dismissed the claim. The Court of Appeal has held that a collective agreement which is not legally enforceable cannot be "rectified" by the courts. However, the Court noted that Nexus could bring separate proceedings in order to seek the rectification of individual staff contracts of employment, should it so desire. The Court of Appeal was clear that Nexus might have found itself in a different position, had it raised its arguments around rectification of the letter as part of the Original Litigation.
What Can Employers Learn from This Decision?
Learning points from this decision are not limited to trade union disputes.
Documents recording how benefits are calculated, including salary and allowances, should be clear and reflect the intentions of the parties.
In this and any contractual dispute, the mistake issue should have been raised as early as possible in the Original Litigation. This would have enabled the parties and the Tribunal to consider how the issue should best be determined as part of wider case management considerations.
