One of the many concerns employers raise with us when taking a TUPE transfer in of staff is anxiety over these employees working alongside their existing employees on different terms and conditions. We are consistently speaking with employers about what this means for employee relations and, more importantly, whether this breaches equal pay legislation. Although TUPE can be a defence to any equal pay claim, many employers take the view that over time, they should take steps to narrow the gap.
The case of Skills Development Scotland (SDS) v Buchanan & Anor, has provided clarification in this area for employers and gone as far as stating that there is no need for employers to narrow the gap.
Here, two female employees working for SDS and their (male) comparator had transferred under TUPE from different employers to a predecessor company in 2002 and then on to SDS in 2008. The male comparator was paid over £12,000 more than they were. Whilst employed by SDS, SDS had continued to make pay increases and bonuses to the comparator, thereby keeping the pay differential that existed in place.
At the employment tribunal, SDS contended that the comparator’s terms and conditions were protected under TUPE by the 2002 transfer and this was therefore a genuine material factor defence to their claim. Whilst TUPE is usually a defence to such a claim, the tribunal found that TUPE was not the reason for the differential in terms and conditions. Specifically it found there was no evidence of SDS’s obligations under TUPE to make the post transfer pay increases and bonuses to the comparator and did not believe that the TUPE transfer in this case was the genuine reason for this disparity.
The case was appealed and it was found that an employer is under no duty to ‘narrow the pay gap’ after the transfer by, for example, freezing the salary of the transferred employee until others have caught up and equalised. As long as the decision to award everyone pay rises is not tainted by sex and thereby keeping the gap in pay, the employer will still be able to establish a defence to an equal pay claim.
This decision will allow employers the breathing space it needs to address pay equality in the workplace following a transfer in of staff.