Visteon Engineering Services Ltd v Oliphant & Ors

A contractual entitlement for transferred employees’ terms to mirror those of another employer for the duration of their employment is not cut down by a separate six-year provision governing bargaining representation. Contractual language must be construed in its full commercial context, but a court cannot insert a time limit merely because the bargain appears onerous or industrially unattractive.

An incorporated collective agreement may vary or replace such a contractual entitlement. A later procedure agreement which establishes bargaining machinery does not, without an agreement changing the employees’ pay terms, itself displace the existing mirroring entitlement.

The appellant employer appealed from an Employment Judge’s decision on a pre-hearing review, sent to the parties on 1 October 2012. Thirty-five employees claimed unlawful deductions from wages, alleging entitlement to Ford pay increases for 2008 and 2009 under a Mirrored Terms Agreement incorporated into their contracts following a transfer.

The agreement gave transferred Ford employees lifetime protection by mirroring Ford terms, while providing that Ford bargaining arrangements would continue for six years and that new arrangements would then be established. The employer contended that mirroring ended after six years or was replaced by a 2007 procedure agreement with Unite. The central issue was whether the contractual pay entitlement had expired or been superseded.

1. Appeal dismissed. The Employment Judge was correct that the contractual entitlement to mirrored Ford pay terms did not expire six years after the transfer. The words providing protection for the duration of employment were clear and could not linguistically mean six years from separation.

2. Applying Pink Floyd Music Ltd v EMI Records Ltd [2011] 1 WLR 770, contractual wording must be read in its factual and commercial context from the standpoint of an informed reasonable person. The court must read the agreement as a whole. Nevertheless, the separate six-year provision for Ford representation and bargaining machinery did not conflict with the continuing contractual pay entitlement. An onerous or unattractive bargain did not establish a drafting mistake or justify inserting a six-year limit.

3. The Employment Judge erred in holding that the mirrored pay terms lay outside the 2007 Procedure Agreement. The agreement covered the transferred employees and permitted their major terms and conditions to be determined through the respondent’s bargaining machinery. A collective agreement incorporated into their contracts could therefore vary or replace the mirroring term.

4. However, no collective or individual agreement had actually varied or replaced the mirrored pay terms by the hearing before the Employment Judge. The 2007 Procedure Agreement merely supplied the mechanism through which a future variation could be made. The employees’ pay therefore continued to mirror Ford pay settlements.

• Employment Appeal Tribunal: dismissed the employer’s appeal from the Employment Judge’s pre-hearing-review decision sent on 1 October 2012. It upheld the conclusion that mirroring had not expired, while correcting the Employment Judge’s view that the later bargaining procedure could not cover the transferred employees’ pay.
• Employment Tribunal: held that the mirrored-terms agreement did not expire in 2006 and that the transferred employees remained entitled to Ford-equivalent pay increases.