A transferee may face substantial equal pay claims from employees whom the transferor should have paid at the same rate as a pre-transfer comparator. TUPE applies to transfer the salary level the employee ought to have received pre-transfer, even if the comparator hasn’t transferred to the transferee and the transferee has no knowledge of the inequality.

Claims in relation to the period pre-transfer must be brought within six months of the transfer. Claims in relation to the period post-transfer can be made at any time up to six months after employment with the transferee ends.

The decision presents practical problems for transferees who may be unaware of the pay inequality. There is no obligation on the employee to allege the inequality pre-transfer or within a certain time post-transfer. If the transferee does not take on the comparator, there may be nothing in the business due diligence to indicate a potential claim and no evidence with which to defend the claim. The inequality may apply to a group of employees so there could be a knock-on requirement to increase the salaries of the whole group.

Transferees will need to negotiate as comprehensive warranties and indemnities as possible and/or reflect the risk in the price. It would also be prudent to include a clause requiring the transferor to provide information and/or assistance should a claim be brought. (Sodexo v Gutridge, EAT)