Key takeaways
Delayed harmonisation can amount to discrimination
Failing to move TUPE transferred staff onto equal pay terms created unlawful disadvantage.
TUPE doesn’t prevent positive contract changes
EAT confirmed employers may vary terms post transfer where contracts allow it.
Employers must monitor pay equity risks
Accurate workforce data helps identify and avoid discriminatory post transfer disparities.
In Alpha Anne and others -v- Great Ormond Street Hospital for Children NHS Foundation Trust the Employment Appeal Tribunal (‘EAT’) has ruled that a hospital indirectly discriminated against cleaners who transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (‘TUPE’) by failing to move them onto NHS pay terms.
Background
The Claimants, a group of 80 cleaners, who were predominantly of BAME background, were employed by a contractor, OCS, and assigned to work at Great Ormond Street Hospital (‘GOSH’). The Claimants were paid the London Living Wage. This was lower than the NHS pay rates under Agenda for Change (AfC) that the cleaners directly employed by Great Ormond Street Hospital for Children NHS Foundation Trust (‘the Trust’) received.
The Trust brought its cleaning services in-house on 1 August 2021, and the Claimants transferred from OCS to the Trust under the TUPE regulations. Following the transfer, the Claimants remained on their OCS contractual terms and rate of pay and continued to be paid less than the cleaners directly employed by the Trust.
Prior to the transfer, the Trust had carried out a local job evaluation that determined the Claimants were entitled to the AfC Band 2 rates and benefits upon transfer. However, there were delays in the harmonisation of their terms and conditions post-transfer.
As a result, the Claimants brought claims for indirect race discrimination against the Trust on the following basis: -
Pre-transfer – they argued that the Trust failed to require OCS to provide them with more favourable pay rates under AfC.
Post-transfer – they argued that the Trust failed to move them to the AfC terms immediately after the transfer from OCS to the Trust.
The Employment Tribunal dismissed the claims and the Claimants appealed to the Employment Appeal Tribunal (‘EAT’).
The EAT’s decision
In assessing whether there was any discrimination in the pre-transfer period, the EAT considered s.41 of the Equality Act 2010 (‘EqA 2010’) which governs discrimination by a 'principal' (in this case, the Trust) towards contract workers. This element of the Claimants’ claim failed. The EAT applied the Court of Appeal decision in Royal Parks Ltd v Boohene, which ruled that s.41 EqA 2010 did not permit a discrimination claim to be brought by contracted workers against a principal relating to contractual terms set by their own employer.
However, the EAT upheld the Claimants’ indirect race discrimination claim in relation to the post-transfer period. It held that the Trust did apply the following provision, criterion or practice (‘PCP’) to all staff: -
'making receipt of the band 1 or 2 AfC rate of pay and other benefits for working as a cleaner at GOSH dependent, directly or indirectly, on not having been transferred to the Trust from an outsourced contractor employer under a relevant transfer in respect of their work as a cleaner at GOSH'.
The EAT found that this PCP put the Claimants at a particular disadvantage when compared to other employees of the Trust on AfC pay rates (78% of contractor cleaners were from a BAME background, compared with 51% of directly employed cleaners on AfC terms).
The Trust could not objectively justify this PCP. The EAT rejected its argument that TUPE required it to maintain existing terms; whilst TUPE restricts variations motivated by the transfer, the Trust did have contractual power to vary terms from day one as the Claimants’ contracts with OCS contained an express unilateral variation clause.
Comment
This case confirms that TUPE is not a blanket shield preventing changes to contractual terms post-transfers. If pre-transfer contracts permit employers to make changes, post-transfer employers must justify delaying harmonisation where disparities adversely affect protected groups.
Employers should ensure they hold accurate equality data for both their own employees and contractor workforces when planning insourcing. This will help identify any potential indirect discrimination post-transfer due to disparity in pay and other terms.
This decision also reflects the amendments to the Procurement Act 2023 (via the Employment Rights Act 2025) coming into effect from October 2026, that will introduce a statutory regime aimed at ensuring that workers engaged on outsourced public-sector contracts are treated no less favourably than those who transferred from the public sector. The new regime is designed to prevent the creation of 'two tier' workforces when public services are outsourced or later insourced.
