The Court found that new employers must be free to manage their activities and effectively assert their interests in contractual proceedings. As a result, the new employer was not bound by collective agreement wage decisions made by the former employer after the transfer date in negotiations in which the new employer had not participated. In Parkwood Leisure Ltd v. Alemo-Herron, among others, the Court of Appeal considered the impact on collective agreements of Regulations 5 and 6 of the Health and Safety Transition Regulations 1981 (TUPE 1981). The Court held that, in cases where a contractual right to a salary increase is subject to contractual conditions, the buyer of a transferred undertaking is not bound by conditions collectively agreed by third parties after the transfer. In this decision, the Court refused to follow the established case-law of the United Kingdom, preferring instead to follow a decision of the Court of Justice of the European Communities (ECJ) of 2006. One year after the transfer, new employers can renegotiate the terms of a collective agreement – as long as the overall change is no less favourable for the workers concerned. Clauses of this type, which cover future amendments to collective agreements, are often referred to as “dynamic” (unlike “static” clauses which would only aim to apply the conditions introduced in the collective agreement at the time of the transfer). The clause was in line with the German Business Transition Act, which required that the general terms and conditions be transferred to the buyer in an unchanged and dynamic manner. The amended rules give new employers the certainty that they will not be affected by decisions on the conditions of sale of their employees that will be taken after the transfer, unless they themselves have participated in these decisions. Both new and old employers need to obtain relevant information on collective bargaining prior to TUPE transfers and ensure that information and consultation obligations are met. The new employer remains bound by the collective agreement in effect at the time of the transfer, but not by the amendments negotiated and agreed to by the outgoing employer after the date of the transfer if the new employer is not involved in the process.

The next ECJ case, Alemo-Herron, was that employees working for a local authority had employment contracts that indicated that their terms were in line with collective agreements negotiated from time to time by the National Joint Council of Municipal Services. During a transfer of TUPE, the staff employed by the local authority was transferred to a private company that did not participate in collective bargaining. The ECJ ruled that the terms of the collective agreements negotiated after the date of the transfer are not applicable to the buyer who had not had the opportunity to participate in the negotiations. The ECJ considered that the interests of the transferred workers had to be weighed against the interests of the worker and concluded that a dynamic interpretation would push the balance in favour of the workers too far. Dynamic application is contrary to the worker`s fundamental right to freedom of enterprise, as he does not have sufficient contractual freedom (since he does not have the possibility of being involved in collective bargaining). . . .