25 August 2010 #Employment
When considering an amalgamation of workforces after a transfer of undertakings, companies have to be careful about making any changes to the terms and conditions of the transferred work force. Any contractual change that is to the detriment of a transferred employee will not be effective if it is by reason of the transfer, unless it is for an economic, technical or organisational reason entailing a reduction in the workforce.
In Buchanan and another -v- Skills Development Scotland Co Ltd, this TUPE provision was considered in the context of equal pay and whether its requirements could provide a ‘genuine material factor` (GMF) defence to differences in pay.
In this case, two female employees found that they were paid over £12,000 less than a male comparator. The employees in this case all TUPE transferred from different employers in 2004 and then to Skills Development Scotland (SDS) in 2008.
The male comparator had already negotiated a pay increase in advance of an initial transfer but also subsequently received a pay increase and bonus prior to the transfer to SDS.
SDS argued that the comparator`s terms and conditions were protected under TUPE.
The Tribunal did not accept that the first TUPE transfer was a genuine reason for the difference in pay, particularly as the comparator had received further pay increases since the TUPE transfer. Also by the time of the second transfer to SDS the provisions under the Equal Pay Act had already come into operation to imply the comparator`s more favourable terms into the two female employees` contract, which the transferee must honour.
This case demonstrates potential problems that employers will have to face when acquiring employees whose terms and conditions are different and is a timely reminder that TUPE will not always provide a defence to an equal pay claim.