Ongoing Liability for Equal Pay Breach

In Sodexho Limited v Gutridge and others UKEAT 0024/08, it was held by the Employment Appeal Tribunal that in the event of an employer's failure to provide equal pay to its employees, a contractual liability arises in respect of those employees to whom the failure relates, even before any action has been taken to determine the existence of the pay inequality.

As such, where an employee who has been discriminated against transfers to a new employer, their pay level as protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006, is not that which the outgoing employer actually paid, but that which the outgoing employer was liable to pay following the operation of the equality clause. As a result, where the incoming employer pays the transferred employee at the lower rate in ignorance, it is committing an ongoing breach of contract.

Accordingly, the incoming employer on a TUPE transfer may be held liable in respect of pay discrimination for which the outgoing employer was responsible, even where that discrimination does not emerge until a significant time after the transfer has occurred.