TUPE - is it a defence to an equal pay claim?
23 July 2010
When an employee transfers to another employer under TUPE, his terms and conditions are preserved. This may cause problems if the employer inherits men and women doing the same job but on different rates of pay. There is nothing the new employer can do to remedy the inequality - or is there?
A tribunal has recently held that in such a situation the employer can rely on TUPE as a defence to an equal pay claim - but only for a limited period. Whilst the employer cannot reduce pay following a transfer, it is under no obligation to increase it. What the employer should do in this situation is freeze the pay of those employees on better terms until their lower paid colleagues catch up.
However, even this strategy isn`t without problems. If the employer is in the habit of giving annual pay rises, or there is a contractual right to an annual pay rise, this could lead to claims for constructive dismissal.
Unfortunately, like many equal pay decisions, this case throws up as many questions as it answers. If you think you may have an equal pay issue take a look at our guidance notes and related documents on employmentbuddy.com
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