Was it discriminatory to delay pay harmonisation after a TUPE transfer?

Employer’s delay in harmonising pay was indirect race discrimination.

In Alpha Anne and others v Great Ormond Street Hospital for Children NHS Foundation Trust (“GOSH”), the EAT confirmed that an employer’s delay in harmonising pay following a TUPE transfer amounted to indirect discrimination. 

In this article, we will consider the Alpha Anne judgment and its implications for employers undertaking TUPE transfers.

TUPE’s impact on terms and conditions

Regulation 4(1) of TUPE provides that, on a relevant transfer, employees transfer from their existing employer (the “Transferor”) to a new employer (the “Transferee”) on their existing terms and conditions of employment.

TUPE operates to preserve employees’ existing terms and any changes to terms of employment because of the transfer itself are usually void.

Employers are therefore rightly cautious of pay harmonisation exercises after a TUPE transfer as the reason for pay harmonisation will usually be the transfer itself. Harmonisation which results in less favourable terms for employees will create particular risk of claims.

Indirect discrimination 

Indirect discrimination occurs where an employer applies to a worker an apparently neutral provision, criterion or practice (“PCP”) that it would apply equally to others, but this PCP puts (or would put) those who share the worker’s protected characteristic at a particular disadvantage. Indirect discrimination can be objectively justified, and the claim defended, if the PCP is a proportionate means of achieving a legitimate aim. 

The facts of the case 

A group of 80 cleaners working at GOSH were employed by OCS, an external contractor, and were paid the London Living Wage. By contrast, cleaners directly employed by GOSH received higher pay and benefits under the Agenda for Change (“AfC”) pay structure. The OCS cleaners were predominantly from Black, Asian and Minority Ethnic backgrounds. 

In August 2021, GOSH brought its cleaning services in‑house following the termination of the OCS contract. The OCS cleaners therefore transferred to GOSH under TUPE. 

Prior to the TUPE transfer, GOSH carried out a local job evaluation, which concluded that following the transfer, the transferring cleaners should attract AfC Band 2 pay and benefits. Pay harmonisation was however delayed after the transfer and the transferred cleaners remained on their existing contractual terms, which included lower rates of pay than equivalent cleaners employed by GOSH. 

The Claims 

The transferred cleaners brought claims for indirect race discrimination against GOSH under the Equality Act 2010 (“EqA”). They argued that firstly, GOSH had indirectly discriminated against them by failing to require OCS to pay AfC rates before the TUPE transfer, and secondly,that GOSH’s failure to move them immediately onto AfC terms amounted to a PCP that disproportionately disadvantaged them. 

At first instance, the Employment Tribunal dismissed both claims, finding that it could not be established that GOSH had applied a PCP to the Claimants as it had not been provided with evidence relating to the racial composition and contractual terms of other contractors to GOSH. The Claimants appealed to the EAT. 

The EAT’s decision

Pre-transfer discrimination 

The EAT upheld the Tribunal’s dismissal of the pre‑transfer claims. It found that GOSH was not the Claimants’ employer prior to the transfer and was therefore not legally responsible for their contractual pay terms at that stage. 

Applying the Court of Appeal’s decision in Royal Parks Ltd v Boohene, the EAT confirmed that contract workers cannot rely on section 41 EqA to bring discrimination claims against a ‘principal’ (in this case, GOSH) in respect of contractual terms set by their own employer.  

Post-transfer discrimination 

However the EAT found that, following the TUPE transfer, GOSH had applied a PCP to the Claimants, namely making receipt of the relevant AfC pay and benefits for working as a cleaner at GOSH dependent on not having been transferred to GOSH from an outsourced contractor under a relevant transfer in respect of their work as a cleaner at GOSH. 

Statistical evidence showed that 78% of the Claimants were from a Black, Asian and Minority Ethnic background, compared with 51% of GOSH’s directly employed cleaners in comparable roles. This disparity placed Black, Asian and Minority Ethnic staff at a particular disadvantage, establishing a prima facie case of indirect race discrimination.

GOSH argued that TUPE prevented it from varying the Claimants’ contractual terms following the transfer. The EAT rejected this argument.  The claimants' contracts contained a power for the employer to unilaterally vary the relevant terms and the EAT found that the Trust could have done so lawfully from day one following the transfer, and it therefore did not have objective justification for delaying in doing so.

The EAT therefore allowed the Claimants’ appeal, and the Claimants’ complaint of post transfer indirect discrimination succeeded. 

Learning points for transferee employers 

Maintaining lower pay for transferred staff, even temporarily, may give rise to indirect discrimination claims where this disproportionately disadvantages a group sharing a protected characteristic. TUPE cannot be relied upon as a blanket defence where pay disparities have a discriminatory effect. 

When embarking upon TUPE transfers, Transferees should: 

• seek accurate due diligence information about the transferring employees; while this information is not part of the TUPE Employee Liability Information which must be shared by the Transferor, Transferees should consider seeking anonymised equality data for the transferring employees to compare with their own workforce;

• consider whether retaining transferring employees’ existing terms and conditions would result in disadvantage to a particular group when compared with other employees in the Transferee’s workforce and identify any potential disparities at an early stage; and

• consider whether the employment contracts permit unilateral changes to the relevant terms such that the reason for changing the terms would not be the TUPE transfer. If the Transferee can lawfully change the terms under the contract immediately after the transfer, there may be no objective justification for delaying levelling up the terms. 

The full judgment is available at: Mr Alpha Anne & Others v Great Ormond Street Hospital for Children NHS Foundation Trust: [2026] EAT 15 - GOV.UK

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice, please feel free to contact Wrigleys Solicitors