Mr Alpha Anne and others v Great Ormond Street Hospital for Children NHS Foundation Trust [2026] EAT 15
This is an important decision of the EAT in which we acted that found:
- That individuals ("contracted staff") who are employed by one employer ("the contractor") but provided as part of a service to another organisation ("the client") cannot bring discrimination claims against the client in relation to pay when that pay is contractually determined by the contractor (even where the client may have some influence over pay through the terms agreed with the contractor).
- That following an insourcing and TUPE transfer of the contracted staff from contractor to client, the contracted staff may be entitled to harmonised terms from Day 1 of the transfer if the terms on which they transferred were otherwise indirectly discriminatory when compared with other comparable employees employed by the client.
This is a complex case with potentially far reaching consequences for employers which are discussed below.
Facts
Prior to August 2021, the claimants (a group of 80 cleaners of BAME background) were part of a group of staff ("staff") employed by a contractor (OCS) to provided cleaning services at the respondent's premises. They were insourced to the respondent from 1 August 2021.
The respondent generally employed its non-medical staff on Agenda for Change terms, which is an NHS wide pay structure. Prior to insourcing (at the respondent's behest), the claimants were employed on the London Living Wage by OCS rather than OCS' usual lower pay rates. However the London Living Wage was less than payrates under Agenda for Change. Post-transfer, the staff who had transferred to the respondent remained on OCS terms pending consultation around the harmonisation process. Ultimately that harmonisation process resulted in many staff being moved to Agenda for Change pay rates with pay back dated to the TUPE transfer date.
The claimants brought claims for indirect race discrimination on the basis that:
- Pre-transfer, the respondent failed to require OCS to offer its staff Agenda for Change pay rates
- Post-transfer, the respondent failed to offer the claimants Agenda for Change pay rates from Day 1 of the TUPE transfer
The Employment Tribunal concluded that both claims failed on the basis that following the EAT decision in Royal Parks Limited v Boohene & Others [2024] IRLR 18 it could not be established that the Trust had applied a provision, criterion or practice (“PCP”) to the claimants as the Employment Tribunal had not been provided with evidence relating to the racial composition and contractual terms of other contractors to the Trust.
Both the claimants and the respondent appealed the Employment Tribunal decision.
Pre-Transfer
The EAT affirmed the Tribunal's decision in respect of the period pre transfer. It applied a line of authorities, most recently the Court of Appeal decision in Royal Parks Ltd that section 41 of the Equality Act 2010 (“the 2010 Act”) did not permit a discrimination claim to be brought by contracted staff against a client which relates to the remuneration payable under the worker’s contract of employment with the contractor.
Post-Transfer
In relation to the post-transfer period, the claimants had become employed by the respondent as they had TUPE transferred. The EAT noted the principles of regulation 4(1) of the Transfer of Undertakings Protection of Employment Regulations 2006 ("TUPE") mean that an employer becomes responsible for the terms and conditions of employment offered to onboarded staff even if those terms were originally put in place by the pre-transfer employer. In light of this and the fact that the claimants were not immediately moved to Agenda for Change terms the EAT held the claimants were treated differently from others employed by the respondent.
The EAT went on to consider various Provision, Criterion & Practices ("PCPs") that the claimants said were in place at the Trust and had placed them at disadvantage compared with other groups. The EAT upheld one PCP claimed namely:
"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 requirement did constitute a PCP on the basis that it was dependent upon being an employed cleaner and that the comparison was between cleaners employed by the Respondent and cleaners employed by contractors, which was information before the Tribunal.
The EAT considered that the Employment Tribunal had made findings of fact that the Claimants were in a group that disproportionately disadvantaged ethnic minority staff (because the BAME make-up of the transferred staff was greater than the comparable Trust workforce) and there was no objective justification for this PCP. Importantly, the transferring workers had provisions on their old OCS contract that permitted the employer to make reasonable contractual changes. Accordingly, the EAT found that the claims of indirect discrimination with respect to the post-transfer period should succeed.
What does this mean for employers?
Given the finding that there should have been Day 1 harmonisation, any employers insourcing services with staff transferring in will need to give careful consideration to whether the TUPE process may result in an indirect discrimination pay liability if pay differentials continue post transfer and the impact of this on the decision to insource and how to manage onboarding under TUPE (in particular in relation to timing and consultation where changes to terms are necessary).
There are two main aspects to this, due diligence and consultation.
On due diligence before a transfer: where staff are being insourced, we consider it is imperative for employers to understand what pay and benefit arrangement staff that potentially transfer in receive and whether the composition of the transferring workforce means that employees with a protected characteristic are disproportionately impacted by any on-going pay differential post-transfer. Without asking for this information at an early stage, it will be difficult for employers to assess what Day 1 actions they may need to undertake. This information will go beyond what is typically asked for now or required to be provided as employee liability information by the transferring employer to the incoming employer under TUPE and so should be built into contractual provisions.
As part of the pre-transfer due diligence, employers should check whether staff transferring to them have contractual provisions which permit the employer to make changes. There was such a provision in this case but the absence of such a clause may allow an employer to justify not making changes on Day 1 on the basis of Regulation 4(1) of TUPE.
On consultation, we suggest that employers hold proactive discussions with any recognised unions to explore how best to deal with TUPE processes effectively. Where employers do not consider it would be practicable to introduce changes from Day 1, union agreement on this point and what an appropriate timescale for consultation around these changes might help an employer to justify why it did not take action to address any pay differentials from Day 1.
