National Union of Rail, Maritime and Transport Workers and another v Tyne and Wear Passenger Transport Executive (trading as Nexus) [2024] UKSC 37

Nexus sought rectification of a collective agreement recording a productivity bonus consolidation, claiming it mistakenly increased shift allowances. The Supreme Court held that while collective agreements can be rectified despite being legally unenforceable, the proper defendants are affected employees, not unions. The claim against unions was dismissed.

Facts

Tyne and Wear Passenger Transport Executive (Nexus) and two trade unions reached a collective agreement in 2012 (the ‘letter agreement’) to consolidate a productivity bonus into basic pay. A dispute arose over whether this consolidation increased shift allowances. Employment tribunals and the Court of Appeal ruled in favour of employees in the Anderson proceedings, holding the shift allowance should be calculated on the increased basic pay. Nexus then brought proceedings in the High Court against the unions seeking rectification of the letter agreement, arguing it did not accurately record the parties’ common intention.

Nature of Collective Agreements

Under section 179(1) of the Trade Union and Labour Relations (Consolidation) Act 1992, collective agreements are conclusively presumed not to be legally enforceable contracts unless expressly stated otherwise. However, terms from collective agreements incorporated into individual employment contracts become legally enforceable.

Issues

1. Can a court rectify a collective agreement that is not a legally enforceable contract?
2. Who are the proper defendants to a rectification claim—the unions or the affected employees?
3. Is Nexus estopped or abusing process by bringing rectification proceedings after the Anderson litigation?

Judgment

Rectification of Collective Agreements

The Supreme Court held that the Court of Appeal erred in finding that a legally unenforceable collective agreement cannot be rectified. The Court explained that rectification corrects mistakes in documents, not transactions themselves. Although collective agreements create no legal rights between the parties, rectifying the letter agreement would alter legal rights under incorporated employment contracts.

“Although the letter agreement is not itself legally enforceable, it does create legal rights: not between the parties to the agreement but indirectly between the employer and employees into whose contracts the wording of the letter agreement is incorporated.”

Proper Defendants

The Court held that the proper defendants are the employees whose legal rights would be affected by rectification, not the unions. Nexus had no cause of action against the unions as there was no dispute about legal rights between them.

“Nexus is asking the court to make an order which would alter the legal rights of many individuals (the employees whose salaries will be reduced if the letter agreement is rectified) without giving any of them the opportunity to adduce evidence or make submissions on this question. That is contrary to the most basic principle of procedural justice.”

Employment Tribunal Jurisdiction

The Court confirmed that while employment tribunals cannot order rectification, they can treat documents as rectified without formal orders, applying the equitable principle that equity treats as done what ought to be done.

“If it is clear that, because of a relevant mistake, a document does not accurately record the true position between the parties to proceedings, a court is entitled in determining their mutual rights and obligations to treat the document as if it had been rectified without the need to make an order for rectification.”

Abuse of Process

The Court unanimously held it would be an abuse of process for Nexus to bring any claim that would deprive the Anderson claimants of their victory, as rectification could and should have been raised in those proceedings.

Implications

This case clarifies that rectification may apply to documents which are not themselves legally enforceable where they indirectly affect legal rights through incorporation. It reinforces procedural justice requirements that parties whose rights are affected must be proper defendants. The decision also confirms employment tribunals’ ability to apply equitable principles without making formal orders, and emphasises the importance of raising all relevant defences in initial proceedings to avoid abuse of process.

Verdict: Appeal dismissed. The Court of Appeal was correct to dismiss Nexus’s action against the unions. Any fresh rectification proceedings must be brought against affected employees, but it would be an abuse of process for Nexus to make any claim affecting the Anderson proceedings.

Source: National Union of Rail, Maritime and Transport Workers and another v Tyne and Wear Passenger Transport Executive (trading as Nexus) [2024] UKSC 37