Visteon Engineering v Oliphant - Interpretation of 'mirrored terms agreement' after a TUPE transfer

17 September 2013

Ian Hunter, Emily Clark

In Visteon Engineering v Oliphant, the EAT considered the effect of a TUPE transfer that took place thirteen years ago.

In 2000, Visteon (a new business), was ‘spun out of’ Ford. It was a TUPE transfer affecting some Ford employees. A ‘Mirrored Terms Agreement’ (‘MTA’) was entered into between Ford and its European Works Council which said that the employees' pay terms would mirror those of Ford employees and that they would continue to be represented in Ford collective bargaining procedures for the next six years.

Was the MTA still effective? Visteon argued that the whole MTA was only intended to last for six years and had now come to an end.

The EAT disagreed. There was no clear term in the contract that the whole MTA (as opposed to the employees’ right to be represented in Ford pay negotiations) should come to an end after six years. The MTA could have been varied or replaced at any time but that had not been done, even though Visteon had entered into a collective bargaining agreement with UNITE (that covered all employees) in 2007. The MTA was still effective.

Point to note –

  • This case covers similar ground to Alemo-Herron and others v Parkwood Leisure Ltd (see below) and appears to be an example of a "dynamic" approach to the TUPE automatic transfer principle, which the ECJ ruled is precluded by the Acquired Rights Directive. The effect of the EAT's decision was that the transferee was bound by Ford's collectively agreed pay increases even though it had no control over, nor input into the process. This case was heard prior to the ECJ's judgment in Alemo-Herron being released.