National Union of Rail, Maritime and Transport Workers and another v Tyne and Wear Passenger Transport Executive T/A Nexus

A document recording a legally unenforceable collective agreement may be rectified where correction would alter legal rights through terms incorporated into employment contracts. Rectification corrects the document recording a transaction, rather than the transaction itself.

The proper defendants are those whose legal rights would be determined or altered. A trade union is not ordinarily an employee’s agent when negotiating a collective agreement.

An employment tribunal cannot order rectification when exercising its unauthorised-deductions jurisdiction under the Employment Rights Act 1996. It may nevertheless treat a document as rectified when deciding the parties’ rights. A party which could and should have raised rectification in earlier proceedings may be prevented by abuse of process from using it later to undo the result.

Nexus and two recognised trade unions recorded a 2012 collective agreement consolidating a productivity bonus into basic pay. The wording, incorporated into employees’ contracts, was held in earlier employment proceedings to increase shift allowances. Nexus then alleged that the document failed to reflect the negotiators’ common intention and claimed rectification against the unions, without joining any affected employee.

The High Court rejected preliminary objections to the claim: [2021] EWHC 1388 (Ch). The Court of Appeal allowed the unions’ appeal and dismissed the action: [2022] EWCA Civ 1408; [2023] ICR 148. It considered that the unenforceable collective agreement could not itself be rectified and that any claim had to concern the individual employment contracts and be brought against the employees.

The Supreme Court considered the proper target and parties for rectification, the employment tribunal’s powers, and whether rectification could later affect the concluded unauthorised-deductions proceedings.

1. Appeal dismissed unanimously. The Court of Appeal had erred in identifying both the possible target of rectification and the legal effect of the collective agreement’s unenforceability. It was nevertheless correct to dismiss the action because Nexus had sued the unions rather than the employees whose legal rights would be altered.

2. Rectification corrects a document which inaccurately records a transaction. It does not correct the transaction itself. Although the collective agreement was not enforceable between Nexus and the unions because of section 179(1) of the Trade Union and Labour Relations (Consolidation) Act 1992, its wording acquired legal effect through incorporation into employees’ contracts. Rectifying that wording would therefore not be futile and was legally possible if the ordinary requirements for rectification were established.

3. The individual employment contracts were not themselves possible targets for rectification. The employees did not participate in the collective bargaining or share the negotiators’ subjective intentions. A recognised union bargains as principal in employees’ collective interests, not as their agent. The incorporation clauses adopted the text of the collective agreement as worded, rather than the terms which the negotiators may subjectively have intended.

4. The affected employees, or representatives of them, were the proper defendants. An order would retrospectively reduce their contractual entitlements. Determining those rights without permitting the employees to give evidence and make submissions would violate a basic principle of procedural justice. The unions had no relevant legal rights or obligations under the unenforceable agreement. Representative proceedings under CPR Part 19 were available if a judgment binding all affected employees was required.

5. An employment tribunal exercising jurisdiction under Part II of the Employment Rights Act 1996 has no statutory power to order rectification. Its remedies are confined to those specified in section 24. It may, however, apply the equitable principle that a document can be treated as rectified without a formal order. Nexus could therefore have raised mistake and rectification as a defence to the earlier deduction-from-wages claims.

6. The concluded finding that the employees’ complaints were well-founded could not be revisited at the remedies hearing. It would also be an abuse of process for Nexus to use fresh rectification proceedings to deprive those claimants of the result obtained after completed litigation. Questions concerning other employees or later wage periods were outside the appeal.

1. United Kingdom Supreme Court: Dismissed Nexus’s appeal in [2024] UKSC 37. It upheld dismissal of the action because the affected employees had not been joined, while rejecting the Court of Appeal’s reasoning that the collective agreement was incapable of rectification.
2. Court of Appeal: Allowed the unions’ appeal and dismissed the action in [2022] EWCA Civ 1408; [2023] ICR 148. It held that Nexus had selected the wrong target and defendants and that undoing the earlier wage claims would be an abuse of process.
3. High Court, Chancery Division: In [2021] EWHC 1388 (Ch), decided the estoppel preliminary issue for Nexus and refused to strike out or summarily dismiss its rectification claim.