Obviously this is a headache.  Readers will know better than I that this is an administrative nightmare; you have to use pay review dates not set by you, and you have to go and find out what terms have changed.  Financially it is impossible to know what return will be coming from a contract when you have no control over the major cost constituent – pay. After some uncertainty the Employment Appeal Tribunal decided in January 2009 that this was the law – the case is – Alemo-Herron –v- Parkwood Leisure Ltd. But the employers appealed.  It took a whole year for the appeal to be concluded – and the report of it is now available. The Court of Appeal decided that a European Court of Justice decision (Werhof –v- Freeway Traffic Systems GmbH, in 2006) had not been taken into account by the Employment Appeal Tribunal, and overturned their decision. So now the Court of Appeal has decided that the law is that this type of contract is a ‘static’ contract of employment.

Reading the case is not recommended!  It would be easier to understand how to make a moon rocket.  But the conclusion is very easy to grasp.  When such a employee transfers to you his or her terms and conditions are as if preserved in aspic at that point.  That snapshot is what they came with.  From that date on they do not have pay rates and conditions variable by outside bodies. Pay and conditions are a matter – solely – for you and them. Those of you with lawyers like me to advise you will probably know of this already, - and those without might wish to find one – but for smaller companies struggling with the burden of this financially and administratively who have not heard of this, it is unmitigated good news.  Any reader who would like a more lawyerly exposition than this can obtain it without charge by contacting me.    

BEERS LLP Website