Gutridge & Ors v Sodexo & Anor

On a transfer under Transfer of Undertakings (Protection of Employment) Regulations 1981, an equal-pay term which has already modified an employee’s contract continues against the transferee. The employee does not need to remain in the same employment as the original comparator after transfer.

However, Equal Pay Act 1970 limitation depends on the employment to which the particular claim relates. A claim for breach during employment with the transferor must be brought within six months after that employment ends, even though the transferee is the defendant under TUPE. A claim for the transferee’s own continuing post-transfer failure to honour the transferred term remains enforceable until six months after employment with the transferee ends.

Female hospital domestic cleaners transferred from an NHS trust to Sodexo on 1 July 2001 under TUPE. Their male maintenance-assistant comparators remained employed by the trust. On assumed facts, the cleaners had performed work of equal value and had been underpaid without objective justification.

In claims presented from December 2006, the cleaners sought six years’ arrears. The employment tribunal held that all arrears remained recoverable. The Employment Appeal Tribunal held that the modified pay term and post-transfer claim survived, but that arrears for the pre-transfer period were time-barred.

The cleaners appealed that limitation ruling. Sodexo cross-appealed, contending both that the equal-pay right did not survive transfer and that post-transfer arrears were also time-barred.

1. The appeal was dismissed by a majority and the cross-appeal was dismissed. Wall and Pill LJJ held that the cleaners could not enforce arrears arising from the trust’s pre-transfer underpayment because proceedings were not commenced within six months after their employment with the trust ended. Smith LJ would have allowed the appeal, but agreed that the cross-appeal failed.

2. An equality clause had modified the cleaners’ contracts while they and their comparators were in the trust’s employment. The resulting right to enhanced pay was not lost merely because the comparators did not transfer. Regulation 5 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 preserved the existing contractual term, so Sodexo became obliged to honour it after transfer.

3. Applying Powerhouse, [2006] UKHL 13, the majority held that “the employment” in section 2(4) of the Equal Pay Act 1970 means the employment to which the claim relates. TUPE does not merge the transferor and transferee employments for that purpose, nor enlarge the statutory right by extending the time for enforcement of the transferor’s breach.

4. A claim based on the trust’s pre-transfer breach related to employment with the trust. Although TUPE made Sodexo the appropriate defendant, the transferred right retained the six-month limit running from transfer. The claim for that period was therefore time-barred.

5. The post-transfer claim was different. Sodexo’s own failure to pay the transferred contractual rate was a continuing breach during the cleaners’ employment with Sodexo. As that employment continued, time had not begun to run for that claim. The EAT’s disposition was upheld.

• Court of Appeal (Civil Division): The cleaners’ appeal was dismissed by a majority; Sodexo’s cross-appeal was dismissed. The EAT’s division between pre-transfer and post-transfer arrears was upheld.
• Employment Appeal Tribunal: Elias J allowed Sodexo’s appeal in respect of pre-transfer arrears, which were held time-barred, but upheld the cleaners’ entitlement to pursue post-transfer arrears: UKEAT002408RN.
• Employment Tribunal, Newcastle upon Tyne: Held that TUPE transferred the modified equal-pay term and that time had not begun to run while the cleaners remained employed by Sodexo.