Trowers & Hamlins

A new ruling could leave employers who take on another organisation’s employees under the Transfer of Undertakings Regulations (TUPE)  liable for up to six years of unequal pay claims, warns City law firm Trowers & Hamlins.

Comments Emma Burrows, Partner at Trowers & Hamlins: "This new ruling will have significant implications for the growing number of organisations looking to merge or even just share resources in order to deliver their services more effectively and improve profits. Taking on employees under TUPE could leave organisations liable for unwittingly continuing unequal pay practices perpetrated by the original employer."

In the case of Sodexho v Gutridge an Employment Appeals Tribunal has ruled that where there is a case of unequal pay whilst the employee is employed by the transferor organisation the right to equal pay transfers under TUPE to the organisation taking on the member of staff.

Trowers & Hamlins explains that the ruling means that employees can now enforce their right to equal pay against their new employer using employees who had remained at the original organisation as comparators.

Emma Burrows says: "Employers will need to consider this ruling whenever they take over the provision of a service previously provided by another organisation. It will obviously be very difficult for employers facing such claims taking on employees under TUPE to determine the pay levels of employees who remained at the transferor’s organisation."

"Employees are able to claim up to six years worth of back payments to make amends for any pay inequality. This could prove to be very expensive so it is imperative that new employers take all the relevant steps to limit their liability when transfers take place."