Court of Appeal hand down judgment in Gutridge v Sodexo

The Court of Appeal has today handed down its decision in the case of Gutridge & Others v Sodexo & Others which deals with equal pay rights in the event of a TUPE transfer.

14/07/2009

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Sarah Lamont

Partner

The Court of Appeal has today handed down its decision in the case of Gutridge & Others v Sodexo & Others which deals with equal pay rights in the event of a TUPE transfer.

The Facts

The Claimants were female domestic cleaners employed by North Tees and Hartlepool NHS Trust (the Trust), working at Hartlepool General Hospital. On 1 July 2001 all Claimants were transferred, under the TUPE Regulations 1981, to work for Sodexo Limited (‘Sodexo’).

Following the transfer the Claimants continued to work at Hartlepool General Hospital and from December 2006 onwards brought equal pay claims in which they sought to compare themselves with

  • male maintenance assistants
  • who, at all material times both before and after 1 July 2001, worked at Hartlepool General Hospital and
  • who were not contracted out and remained in the Trust’s employment at all times

Their claims were in respect of employment for the six years prior to the date on which they lodged their claims.  That period spanned the date of the transfer of their contracts of employment from the Trust to Sodexo (1 July 2001).

For the purpose of the Tribunal application and the subsequent appeals it was assumed that work of the Claimants and their comparators was work of equal value, that the Claimants were paid less than their comparators and that there was no objective justification for the difference.

Employment tribunal

At first instance the Tribunal found that the time limit for bringing a claim (for losses incurred whilst employed by transferor and transferee) ran from the termination of the Claimant’s employment with the transferee Sodexo, therefore the claims were in time.

The decision was distinguished from the House of Lords decision in the case of Powerhouse Retail Limited v Burroughs (now referred to as the Preston v Wolverhampton Healthcare NHS Trust and Others (No 3)) where the time limit had been held to run from the date of the TUPE transfer as in that case, unlike the present case, there had not been a continuing breach by the transferee.

On appeal

Sodexo appealed to the Employment Appeal Tribunal who found that:

  • for all equal pay claims which derive from the equality clause against a transferor, section 2(4) of the Equal Pay Act 1970 means that the six month time limit to bring an equal pay claim runs from the date of the transfer
  • even though the equality clause ‘bites’ from the moment the conditions of its application are met, this does not mean that the equality clause itself transfers under TUPE. What transfers in reality is the contractual right derived from the equality clause so the Claimant can enforce rights against the transferee which were previously enforceable against the transferor
  • Regulation 5 of TUPE 1981 transferred two liabilities to the transferee under the equality clause, these are

 - liability for what was done (or not) by the transferor prior to transfer; and

 - continuing liability on the transferee to honour the contractual terms in place on the date of the transfer.

The EAT held that the time limit for bringing a claim enforcing liability for acts done by the transferor is six months from the date of the transfer and although the transferee stands in the shoes of the transferor this does not change the time limits applicable to those claims. This follows the decision in ‘Powerhouse’.

For ongoing liability however the time limit is six  months from the termination of employment with the transferee.

Court of Appeal

By a majority the Court of Appeal have today upheld the EAT’s decision.

Practical implications

The practical effects of the decision are:

  • Claims for equal pay which have accumulated prior to a transfer under TUPE, must be bought against the transferee within six months of the date of the transfer, otherwise they will be out of time
  • Where losses continue after the transfer a claim must be bought within six months of the date of termination of that employment, and can be for up to six years losses from the date the claim is filed
  • It remains to be seen if tribunals will take a similar view in respect of transfers as a result of reconfiguration of NHS Trusts. Test cases are imminent and we will update you as soon as we have more information.


 

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