Insolvency

Pressure Coolers Limited v Molloy and others UKEAT 0272/10

In January 2009 Maestro an insolvent company went into administration and on the appointment of administrators its business was transferred to Pressure Coolers by way of a pre-pack administration sale.  Mr Molloy was dismissed around the time of the transfer and he brought claims for discrimination, unfair dismissal, wrongful dismissal, failure to inform and consult under TUPE, unpaid holiday pay and unlawful deduction of wages. 

Maestro had gone into liquidation at 11am on 13 January and at 3pm on the same day Mr Molloy was informed he was redundant so he had transferred under TUPE and was dismissed by Pressure Coolers after the transfer.  His claims against Pressure Coolers succeeded.   

The Secretary of State was liable to pay him his holiday pay and unpaid wages but Pressure Coolers was liable to pay him a basic award for unfair dismissal and notice pay as these liabilities arose after the transfer.  Pressure Coolers was also held liable to make a payment in respect of Maestro’s failure to inform and consult. 

Key point:  The Secretary of State will only be responsible for past liabilities owed by the transferor as at the transfer date.  

- Equal Pay

Skills Development Scotland Co Limited v Buchanan and another UKEAT/0042/10

The EAT has held in this case that a TUPE transfer in 2002 by which the Claimants and their comparator transferred from different employers to a new employer at different salaries amounted to a genuine material factor (“GMF”) defence to equal pay claims six years later.  The TUPE transfer was and remained the only root cause of the pay disparity not sex.  The mere passage of time did not change that. 

Mr Sweeney was paid £12,000 more than two female customer service managers working for SDS.  Although Mrs Buchanan and her colleague were told that a planned evaluation study would address any anomalies in the pay structure this did not happen.  SDS contended that Mr Sweeney’s terms and conditions were protected under TUPE by the 2002 transfer but the tribunal rejected SDS’ defence for the continued pay disparity after April 2004.  SDS successfully appealed.  The equal pay claims were dismissed.  SDS has a genuine explanation for the pay disparity which is not in any way gender related.   

Key point:  There is no general principle that the genuine material factor defence will evaporate with the passage of time.  However, the burden remains on the employer to prove that TUPE is and remains the genuine cause of pay disparity. 

- Effect of collectively agreed terms following transfer

Parkwood Leisure Limited v Alemo-Herron and others 2011 UKSC 26

The Supreme Court in this case held that there should be a reference to the European Court of Justice to establish whether the Acquired Rights Directive precludes National Courts from giving a dynamic as opposed to a static interpretation of TUPE where employees’ contracts incorporate a collective agreement.  The decision is significant for public sector outsourcing.  Under the static model a private sector transferee is only bound by collectively agreed terms that apply at the date of transfer whereas the dynamic model would give transferring employees the right to benefit from future pay rises or other changes agreed between the unions and the public sector transferor after the transfer. 

Key point:  Pending the ECJ’s ruling the Court of Appeal’s decision that TUPE only transfers static contractual terms remains good law.