Employment Law Cases

Anne v Great Ormond Street Hospital for Children NHS Foundation Trust

An employer’s failure to harmonise the terms and conditions of staff transferred in under TUPE amounted to indirect race discrimination.

Background

Mr Anne and 79 others had worked for Great Ormond Street Hospital (GOSH) on behalf of their employer, Outsourced Client Solutions (OCS) for several years. OCS had a contract with the NHS Foundation Trust to provide cleaning services to GOSH. When GOSH brought the cleaning services in house, the claimants were part of the group that transferred to the Trust.

OCS paid the claimants the London Living Wage, at the time £10.75 per hour. Trust employees would ordinarily have been paid Agenda for Change (AfC) rates of pay - the national standardised pay system for many NHS staff. Under the AfC bands, the cleaners would have been entitled to £11.50 per hour.

As TUPE requires, the claimants transferred to the NHS Trust under the same terms of employment, meaning they continued to be paid the London Living Wage rather than their pay being uplifted to match the pay rates of similar colleagues working under NHS’ AfC. They brought tribunal proceedings against the Trust, claiming that they had been indirectly racially discriminated against by the Trust both in the period before the transfer (the pre-transfer period) and after the transfer (the post-transfer period).

The claimants relied on evidence showing that the transferred cleaning workforce was overwhelmingly from a black and minority ethnic (BAME) background, whereas the comparator AfC workforce was significantly less so. The core allegation was that the Trust applied a provision, criterion or practice (PCP) which made access to AfC pay and benefits dependent on not having transferred in under TUPE, and this put them at a particular disadvantage.

A tribunal dismissed their claim and they appealed.

EAT decision

The appeal was partially successful.

As regards the pre-transfer period, the EAT held that the tribunal was bound by previous case law: s. 41 of the Equality Act 2010 does not permit a discrimination claim to be brought by a contract worker against a principal (in this case, the Trust) about contractual pay terms set by the supplier and the claimants’ employer (in this case OCS). This part of the claimants’ appeal was dismissed.

As regards the post-transfer period however, the EAT held that the difference in pay was indirectly discriminatory once the claimants became employees of the Trust. From that point onwards, the Trust was responsible for their terms and conditions.

The Trust had applied a PCP from the date of the transfer, namely continuing the claimants’ employment under the terms and conditions of their employment with OCS.

The PCP resulted in a prima facie case of indirect race discrimination as it placed the claimants at a particular disadvantage when compared with other Trust employees who were engaged on AfC band 1 and 2: 78% of cleaners transferred in were of BAME backgrounds as compared with 51% of staff employed by the Trust at band 2.

The Trust tried to justify its approach by reference to TUPE, arguing that the regulations prevent immediate harmonisation. However, the transferred contracts contained an express contractual variation clause. This meant the Trust could lawfully have moved the employees onto AfC terms from Day 1, or shortly thereafter, without breaching TUPE. The failure to do so coupled with a slow and contested harmonisation process meant the discriminatory impact could not be objectively justified.

Comment

Where a TUPE transfer creates a situation in which employees are employed on different terms across a workforce, the fact of the TUPE transfer does not automatically shield an employer from claims arising from discriminatory differences, especially when TUPE only prevents transferees from making detrimental changes to terms and conditions, rather than offering to pay employees more.

While this decision has some NHS-specific facts, its implications are of broader relevance. Any employer bringing services in house, or acquiring a workforce through a TUPE transfer, should carefully consider how they handle post-transfer harmonisation. While TUPE protects terms upon transfer, it does not justify creating long-term, discriminatory pay disparities between transferred staff and existing NHS employees. If the retained differences in terms disproportionately affect a protected group, the employer must be able to justify that impact with evidence.