Employers taking on employees after a merger or buyout could face up to six years worth of unequal pay claims, an employment lawyer has warned.
A ruling by the Employment Appeal Tribunal in the Sodexho v Gutridge case means employers taking on staff under the Transfer of Undertakings Regulations (TUPE) are now liable for the continuation of unequal pay practices of the previous employer.
The long-running case concerned female cleaners at Hartlepool General Hospital who were transferred from the NHS Trust to outsourcing provider Sodhexo in 2001. The workers sought to compare their pay with male maintenance assistants who did not transfer to the new company.
Emma Burrows, partner at City law firm Trowers & Hamlins, said: “This new ruling will have significant implications for the growing number of organisations looking to merge or even just share resources to deliver their services more effectively and improve profits.
“Taking on employees under TUPE could leave organisations liable for unwittingly continuing unequal pay practices perpetrated by the original employer.”
Burrows warned that the ruling meant employees can now enforce their right to equal pay against their new employer using staff who had remained at the original organisation as comparators.