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Posts Tagged ‘TUPE’

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.

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Whether or not an employee can rely on a pay rise awarded under a collective agreement agreed ‘after’ a TUPE transfer takes place is still up in the air. The Supreme Court has declined to rule on the point and the question has been referred to the CJEC. (Parkwood Leisure Ltd v Alemo-Herron & Ors)

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The Code of Practice on Workforce Matters in Local Authority Service Contracts has been withdrawn according to the Communities & Local Government Department.

The Code was introduced in 2003 and applied to TUPE staff transfers in England and Wales where they involved local authority service contracts. The Code ensured that employees who joined the dedicated team after the transfer were not disadvantaged.

The idea was that this redressed the two tier worforce that had started to emerge as a result of employees being hired in on less favourable terms and conditions after a transfer. These employees joined the transferee organisation and sat along side team members who were on better terms and conditions because they were protected by TUPE Regulations.

But in any case this isn’t unusual because transferring employees often join new teams that are subject to less favourable terms and there is no obligation to ‘improve’ those terms in line with the new joiners!

Caution: This decision is not retrospective, so if your service contract is already covered by the Code it will continue to be so.

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A managing director was dismissed in preparation for a TUPE transfer and the EAT has held that this amounted to unfair dismissal.  It also found that there was no ETO (Economic, Technical or Organisational reason) defence because a company cannot operate without an MD. Good point! For those delegates who have recently attended my TUPE workshops I hope that EAT decision makes sense. Reference: Spaceright Europe Ltd. v Baillavoine.

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It looks as though the Coalition government will give charities the opportunity to do business with the public sector by cutting the red tape involved in taking over public sector contracts and their staff. TUPE currently prevents the new employer from making changes to pay and conditions (subject to exceptions) and argubly makes it unprofitable to take over these service contracts.  David Cameron’s vision for recovery is heavily dependent on a commerically astute third sector and this will be a practical move towards making the Big Society a reality sooner rather than later. More from FT. Coalition will review Tupe regulations – Third Sector.

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