This case concerned two women who brought claims for equal pay. They had been, and continued to be, paid significantly less than a male employee who carried out similar work to them following TUPE transfers.
The employer successfully argued that that the difference in pay was caused by TUPE and had nothing to do with the sex of the employees. The employer had adopted a standard approach when it awarded pay increases and bonuses to its staff. It also had a practice of not freezing the salaries of its employees.
The EAT held that that the requirement under TUPE to preserve the contractual rights of a particular employee can be a ‘genuine, material, and gender-neutral factor’ to explain a difference in pay. The fact that this may, as it did in this case, result in a particular employee being paid more than other employees was irrelevant.
The EAT further held that the employer was under no duty to ‘narrow the pay gap’ after the transfer, for example by freezing the salary of transferred employees until others had caught up and equalised. The mere ‘effluxion of time’ (or in more common language, the ‘passage of time’) did not change the explanation for the difference in pay.
Case reference: Skills Development Scotland Co Ltd v Miss M Buchanan and Ms P Holland.
The EAT’s decision was based upon the particular facts of this case. An equal pay claim needs a finding of sex discrimination to succeed and there was no such finding in this case because as long as a decision to award everyone a pay rise (and thus perpetuate a pay gap) is not tainted by sex, an employer will be able to establish a defence to an equal pay claim. Had there been a finding of indirect discrimination then the employer would have had to show that there was an objective justification for the difference in pay.
This decision will be a relief for employers who would otherwise be caught between a rock and hard place trying to balance the demands of the competing legislation.
Employment Law Essentials UK 