Employment Update: TUPE/equal pay

16 September 2008

Equal pay claim may survive a TUPE transfer.

In the recent case of Sodexo v Gutteridge and others the president of the EAT has developed further the law on the extent to which the right to bring an equal pay claim survives a TUPE transfer.

The starting point is that an employee must bring an equal pay claim within 6 months of the termination of the relevant 'employment'. If the equal pay claim relates to pension rights and there is a TUPE transfer and an employee could have brought the claim against the transferor pre-transfer, the decision in the case of Powerhouse established that the claim does survive the TUPE transfer and can be made against the transferee. Powerhouse found that as pension rights do not transfer under TUPE, the 6 month time limit for bringing such a claim runs from the date of the transfer.The decision in Sodexo, however, adds a twist to the point made by the decisions in Powerhouse.

In Sodexo, the facts were slightly different. Five years after the transfer, the employees wanted to bring an equal pay claim (not based on pension rights) against their present employer (the transferee), but compared themselves to comparators employed by the transferor who had not transferred with them at the time of the TUPE transfer.

The EAT has said that they could do so, but they could only make their claims for the period of their employment after the transfer. The fact that, because of the TUPE transfer, a comparator is no longer a comparator in the same employment, does not mean that the claim is doomed to failure.

The decision in Powerhouse was found to only apply the six month time limit post-transfer to claims against the transferee in respect of breaches by the transferor. So far as continuing breaches by the transferee are concerned, the normal rules apply. That is, the employee may bring a claim up to six months after the end of their employment.

Point to note –

  • The EAT was careful to note that in practice indemnities are taken from the transferor, to cover the transferee against any liabilities that are outstanding on transfer. This decision adds another potential claim to the list of potential liabilities that the transferee should have in mind when negotiating the terms of an outsourcing project. Specialist legal advice is always essential in such cases.