Gutridge v Sodexo and North Tees & Hartlepool NHS Trust
Equal pay claims have to be brought within six months of the end of the claimant’s employment. In Gutridge v Sodexo and North Tees & Hartlepool NHS Trust, the Court of Appeal said that, in the event of a TUPE transfer, the new employer has to honour the contractual terms enjoyed by the claimants at the transfer date (although claims relating prior to the transfer must still be made within six months).
The claimants’ unions, GMB and UNISON, instructed Thompsons to act on their behalf.
Ms Gutridge and her colleagues worked as domestic staff for an NHS Trust until they were transferred under the TUPE (Transfer of Undertakings (Protection of Employment) regulations on 1 July 2001 to work for private sector contractors, Sodexo Ltd.
In December 2006 they took out equal pay claims against Sodexo. (The Trust was added later because the claimants were transferred back to the Trust). The women argued that the statutory equality clause implied into their contracts by the Equal Pay Act gave them a contractual entitlement to be paid the same by the Trust as male maintenance worker in the period leading up to the transfer, and that this liability then passed to Sodexo in July 2001.
The tribunal said that the equality clause had the effect, prior to the transfer, of substituting more favourable terms and conditions of employment into the women’s contracts of employment. These rights then transferred over under TUPE to Sodexo.
The fact that the women had not taken proceedings to establish those rights was irrelevant as “the right to the benefit of the equality clause bites immediately the conditions for its application apply. There is no need for successful proceedings to have been taken ...”
As the women’s equal pay claims related to their employment with Sodexo, the six-month time limit for bringing a claim did not start to run until the date of termination of the women’s employment with Sodexo. They could therefore make a claim in respect of their employment both with the Trust and with Sodexo.
EAT and Court of Appeal decision
The EAT partially reversed the tribunal’s decision. It ruled that the outcome of the House of Lords decision in Preston and ors v Wolverhampton Healthcare NHS Trust and ors (No 3)was that the six month time limit started running from the date of the transfer “for all equal pay claims which derive from the equality clause with the transferor, at least with respect to alleged breaches by the transferor”. As the women had not brought equal pay claims within six months of the transfer, they were barred from doing so now.
However, the EAT then said that although the equality clause itself did not transfer, the women could enforce a contractual right derived from it. This was because their contracts had been varied by the equality clause when they were still employed by the Trust.
As a result, "the true position after the transfer is that the claimant is enforcing a contractual right which is derived from the equality clause operating with respect to the transferor. She could enforce against the transferee such terms as were enforceable against the transferor." But had the women run out of time?
Regulation 5 of TUPE 1981 (now regulation 4 of TUPE 2006) transfers two liabilities under the equality clause:
- Liability for what was done by the transferor prior to the transfer. Following Powerhouse, that is six months from the date of transfer, and
- Continuing liability to honour the contractual terms in place at the point of transfer on the transferee.
Given that the women were still employed by Sodexo when they issued proceedings and it was in continuing breach the contractual rights derived from the equality clause, their claims in relation to post-transfer unequal pay were in time. So although the women’s claims against the Trust were out of time, their claims against Sodexo were in time and it was liable from the point of transfer.
A majority of the Court of Appeal upheld the EAT’s decision.
It will be difficult for employees to understand why they have to make a claim within six months of a transfer when they have been told that the transfer does not affect their employment. But the law is now clear about claims relating to the pre-transfer period and the confirmation that the Equal Pay Act 1970 operates by changing a woman’s contract and that those rights continue after the transfer will also help to make the law clearer and easier to understand.