Is it discriminatory to pay contract workers who are brought in-house less than other workers? | The Indicator Podcast

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In this case the EAT considered whether an employer could objectively justify a pay disparity between two groups of employees, where the disparity had arisen as a result of a TUPE transfer under which the services of one group of previously outsourced workers had been brought back in-house. Listen along to find out what happened!

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Speaker #0
Today, in the Lefebvre HR and Employment Law podcast, we're discussing the judgment in the case of Alpha Anne and others and Great Ormond Street Hospital for Children NHS Foundation Trust, in which the Employment Appeal Tribunal was asked to consider whether an employer could objectively justify a pay disparity between two groups of employees which had arisen as a result of a TUPE transfer, under which the services of one group of previously outsourced workers had been brought back in-house. In this case, A and others, a group of 80 cleaners, worked at the employer, a hospital trust. For a number of years, they were employed by a contractor, OCS, which had a contract with the trust for the provision of cleaning services. During this time, they were paid the London living wage at £10.75 per hour, whereas the trust paid its directly employed staff a higher rate of £11.50 per hour, referred to as the Agenda for Change Rate. In August 2021, the cleaning services were brought back in-house and TUPE transferred to the Trust, but A and others continued to be paid the London Living Wage. A and others, who are of a black or ethnic minority background, brought indirect race discrimination claims against the Trust, on the grounds that it failed to provide the Agenda for Change Rate of Pay and Benefits, both before and after the TUPE transfer. Regarding the pre-transfer period, they claimed that, as contract workers, the Trust had failed to require OCS to offer its employees Agenda for Change pay rates and other terms including contractual sick pay, annual leave, overtime and access to the NHS pension scheme. Regarding the post-transfer period, they argued that once they were direct employees of the Trust, it failed to offer them Agenda for Change rates. This was as a result of a provision, criterion or practice, PCP, that the Agenda for Change rate of pay and other benefits for working as a cleaner at the hospital was dependent, directly or indirectly, on not having been transferred to the trust from an outsourced contractor employer, which placed A and others, as individuals from a black or ethnic minority background, at a particular disadvantage compared with the trust's directly employed staff, who were on Agenda for Change terms and conditions and who were predominantly white. The Employment Tribunal dismissed their claims and the claimants appealed. The Employment Appeal Tribunal held that in respect of the pre-transfer period, it was bound by the decision of the Court of Appeal in the Royal Parks Limited and Boohene and others which had held that a discrimination claim cannot be brought by contracted staff against the principal which relates to the terms of their contract with an outsourcing company. Such claims can only be made against the outsourcing company because such terms are not part of the principal-employer relationship unless such terms have been directed or dictated by the principal. In the present case, the Trust had not positively prohibited OCS from paying rates to their cleaners, but mirrored Agenda for Change rates, and so the situation did not fall within the possible exception to the principle identified by the Court of Appeal in that case. In respect to the post-transfer period, the Tribunal had misdirected itself. The PCP in the present case involved a comparison between: a) cleaners who were employed by the Trust post-transfer, and b) directly engaged trust employees who were paid Agenda for Change rates. The tribunal had found clear evidence, on the face of it, that there was a particular disadvantage to A and others since 78% of them were of black or ethnic minority background, compared with 51% of the staff employed directly by the trust on Agenda for Change pay rates. As to whether the trust could objectively justify the pay disparity, The Employment Appeal Tribunal rejected the assertion that any post-transfer harmonisation would have been void under the TUPE regulations. Rather, the Employment Appeal Tribunal found that within A and others' contract of employment with OCS, which was then transferred to the Trust, there was an express variation of contract provision which would have enabled the Trust to unilaterally place them on the more favourable Agenda for Change rates from the date of, or shortly after, the TUPE transfer. The appeal was upheld therefore in respect of the post-transfer discrimination claim and the Employment Appeal Tribunal substituted its decision that those claims should succeed. Look out for further episodes in this series to stay up to date on all things HR and employment law related.

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Transcription

Speaker #0
Today, in the Lefebvre HR and Employment Law podcast, we're discussing the judgment in the case of Alpha Anne and others and Great Ormond Street Hospital for Children NHS Foundation Trust, in which the Employment Appeal Tribunal was asked to consider whether an employer could objectively justify a pay disparity between two groups of employees which had arisen as a result of a TUPE transfer, under which the services of one group of previously outsourced workers had been brought back in-house. In this case, A and others, a group of 80 cleaners, worked at the employer, a hospital trust. For a number of years, they were employed by a contractor, OCS, which had a contract with the trust for the provision of cleaning services. During this time, they were paid the London living wage at £10.75 per hour, whereas the trust paid its directly employed staff a higher rate of £11.50 per hour, referred to as the Agenda for Change Rate. In August 2021, the cleaning services were brought back in-house and TUPE transferred to the Trust, but A and others continued to be paid the London Living Wage. A and others, who are of a black or ethnic minority background, brought indirect race discrimination claims against the Trust, on the grounds that it failed to provide the Agenda for Change Rate of Pay and Benefits, both before and after the TUPE transfer. Regarding the pre-transfer period, they claimed that, as contract workers, the Trust had failed to require OCS to offer its employees Agenda for Change pay rates and other terms including contractual sick pay, annual leave, overtime and access to the NHS pension scheme. Regarding the post-transfer period, they argued that once they were direct employees of the Trust, it failed to offer them Agenda for Change rates. This was as a result of a provision, criterion or practice, PCP, that the Agenda for Change rate of pay and other benefits for working as a cleaner at the hospital was dependent, directly or indirectly, on not having been transferred to the trust from an outsourced contractor employer, which placed A and others, as individuals from a black or ethnic minority background, at a particular disadvantage compared with the trust's directly employed staff, who were on Agenda for Change terms and conditions and who were predominantly white. The Employment Tribunal dismissed their claims and the claimants appealed. The Employment Appeal Tribunal held that in respect of the pre-transfer period, it was bound by the decision of the Court of Appeal in the Royal Parks Limited and Boohene and others which had held that a discrimination claim cannot be brought by contracted staff against the principal which relates to the terms of their contract with an outsourcing company. Such claims can only be made against the outsourcing company because such terms are not part of the principal-employer relationship unless such terms have been directed or dictated by the principal. In the present case, the Trust had not positively prohibited OCS from paying rates to their cleaners, but mirrored Agenda for Change rates, and so the situation did not fall within the possible exception to the principle identified by the Court of Appeal in that case. In respect to the post-transfer period, the Tribunal had misdirected itself. The PCP in the present case involved a comparison between: a) cleaners who were employed by the Trust post-transfer, and b) directly engaged trust employees who were paid Agenda for Change rates. The tribunal had found clear evidence, on the face of it, that there was a particular disadvantage to A and others since 78% of them were of black or ethnic minority background, compared with 51% of the staff employed directly by the trust on Agenda for Change pay rates. As to whether the trust could objectively justify the pay disparity, The Employment Appeal Tribunal rejected the assertion that any post-transfer harmonisation would have been void under the TUPE regulations. Rather, the Employment Appeal Tribunal found that within A and others' contract of employment with OCS, which was then transferred to the Trust, there was an express variation of contract provision which would have enabled the Trust to unilaterally place them on the more favourable Agenda for Change rates from the date of, or shortly after, the TUPE transfer. The appeal was upheld therefore in respect of the post-transfer discrimination claim and the Employment Appeal Tribunal substituted its decision that those claims should succeed. Look out for further episodes in this series to stay up to date on all things HR and employment law related.

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