Background:

An agreement was reached between the two parties, one being an employer and the other being a recognised trade union. The agreement related to productivity bonuses and that they would be consolidated into basic pay. One of the Unions involved subsequently brought a claim stating that the letter of agreement outlined that they were entitled to an enhanced shift allowance and, in turn, the failure to pay the enhanced shift allowance amounted to an unlawful deduction from wages.

The Employer also brought proceedings stating that there should be rectification of the agreement on the basis of mistake. They argued that it was not within the parties’ intentions to provide for an enhanced shift allowance.

Outcome:

At first instance, the Tribunal allowed the action from the Trade Union in that there was an enhanced shift allowance. The Court of Appeal dismissed an appeal from the employer vis-à-vis rectification citing that the collective agreement was not a legally enforceable contract and that any rectification claim being brought would have to be against the individual employment contracts and against the individual employees. The employer appealed this decision to the Supreme Court.

The Supreme Court stated that it was not possible to rectify the individual employment contracts in this case. This was on the basis that those individual employees did not make any mistake as they were not parties to the overarching agreement.  For rectification to be possible there must be a common subjective intention with the parties to the agreement.  The Supreme Court did outline though that rectification was not confined to documents of particular types but that, as an equitable remedy, they would take into account the rights of third parties (in this situation, the employees).

The Supreme Court further held that the Court of Appeal was correct in dismissing the case on the basis that it was brought against the Union and not against the individual employees. Claiming against a Union in a case of collective agreements was regarded as being illegitimate especially where there was no significant practical impediment in bringing the claims against the individual employees. Interestingly, the Supreme Court further held that rectification could have been applied by the Tribunal even when it does not have the power to order it. This was on the basis that equity treats as done which ought to be done so the Tribunal could use that to treat the document as being rectified and operating upon the rectified document.

Practical Guidance for Employers:

This case is rather heavy on the law which is unsurprising considering that it has gone to the Supreme Court. However, the Supreme Court is making it clear that any rectification claim based upon mistake in a contract would be properly brought against the individual employee rather than the Union involved in collective agreements. Additionally, they cite some novel and creative ways in which the Tribunal could, in essence, infer a document being rectified from the parties’ intentions even where they do not have the power to do so.

https://www.supremecourt.uk/cases/docs/uksc-2022-0180-judgment.pdf