Fox Cross Claimants v Glasgow City Council (Unison Claimants v Glasgow City Council, GMB Claimants v Glasgow City Council)

For the purposes of the associated-employer provision in section 1(6) of the Equal Pay Act 1970, “company” is not confined to a limited company registered under the Companies Acts. In context, it may include a limited liability partnership. The provision is an anti-avoidance measure and must be construed purposively so that its application is not defeated by transferring employees to a differently constituted but closely controlled body.

The “single source” question is one of fact and degree. The relevant inquiry concerns the body responsible for the inequality and able to restore equal treatment, assessed by reference to practical governance and control rather than merely to who set pay in practice. A theoretical power is insufficient, but indirect responsibility and power exercised through governance and audit may suffice.

Glasgow City Council transferred leisure, parking and care services to Glasgow Life, City Parking (Glasgow) LLP and Cordia (Services) LLP. Employees transferred to those bodies sought to compare their pay with opposite-sex employees remaining in the Council’s employment.

The Employment Tribunal held that Glasgow Life was an associated employer under section 1(6) of the Equal Pay Act 1970, but that the two LLPs were not. It also held that Glasgow was not a single source responsible for the relevant pay differences and discharged Glasgow from the proceedings.

The appeals concerned the meaning of “company”, the proper approach to the single-source question, and whether Glasgow had properly been released from the GMB proceedings.

1. Associated employer. The appeals concerning the LLPs succeeded on the statutory construction issue. Section 1(6) of the Equal Pay Act 1970 does not define “company”, and the ordinary meaning must be identified in context. A company may be an association of persons formed for an economic purpose and is not necessarily a limited company registered under the Companies Acts.
2. The associated-employer provision is properly regarded as an anti-avoidance measure. It must therefore be construed purposively. Excluding limited liability partnerships would permit the very evasion of equal-pay obligations which the provision was intended to prevent. The LLPs were accordingly capable of being “companies” within section 1(6).
3. Single source. The question is one of fact and degree. The relevant body is the one responsible for the inequality and which could restore equal treatment. The inquiry is not confined to the body which actually fixed pay. Practical responsibility may be exercised indirectly through strategic governance, systems of control and audit. A merely theoretical power, such as an unused power to revoke a delegation, is insufficient.
4. The Tribunal had concentrated on who set pay in practice and had not addressed whether Glasgow could remedy the disparity in practical terms. It had also failed adequately to address the significance of the close control relied upon under the Teckal procurement principle. If the single-source issue had been determinative, it would have been remitted for reconsideration. Those observations were expressly obiter.
5. GMB appeal. Under regulation 4(2) of the Transfer of Undertakings, Protection of Employment Regulations 2006, liabilities connected with transferred contracts passed to the transferee. Glasgow therefore had no residual liability for the transferred employees’ claims. The Tribunal had exercised its case-management discretion on a partly erroneous basis, but its decision to release Glasgow was substantively correct. The EAT exercised its own discretion to the same effect and dismissed that appeal.
6. Permission to appeal to the Inner House of the Court of Session was granted.

• Employment Tribunal, Glasgow: by decision dated 20 December 2011, with an addendum in January 2012, held that Glasgow Life was an associated employer but that City Parking and Cordia were not; held that Glasgow was not a single source; and dismissed the claims against Glasgow.
• Employment Appeal Tribunal (Scotland): allowed the appeals on the meaning of “company”; expressed obiter views that the single-source issue had been approached inadequately; upheld the release of Glasgow from the proceedings; and granted permission to appeal to the Inner House.