Alpha Anne v Great Ormond Street Hospital: Indirect discrimination and TUPE transfers

The Employment Appeal Tribunal has handed down an important judgement on indirect race discrimination in the context of TUPE transfers, finding that Great Ormond Street Hospital unlawfully discriminated against transferred cleaners by failing to align their pay with existing NHS staff.

Eighty cleaners, predominantly from BAME backgrounds, worked at Great Ormond Street Hospital under contractor OCS until August 2021, when services were brought in-house. During their employment with OCS, they received London Living Wage rates (£10.75/hour) rather than Agenda for Change Band 2 rates (£11.50/hour) paid to directly employed NHS cleaners. Following the TUPE transfer to the Trust, they were not immediately moved to AfC terms.

The claimants alleged indirect race discrimination both before and after the transfer, arguing the Trust had applied discriminatory provisions, criteria or practices regarding pay and benefits.

The pre-transfer position

The EAT dismissed claims relating to the pre-transfer period, bound by the Court of Appeal's decision in Royal Parks Ltd v Boohene. That judgement established that section 41 of the Equality Act 2010 does not permit contract workers to bring discrimination claims against principals concerning contractual pay terms set by their employer, even where the principal influences those terms.

The tribunal found no evidence that the Trust positively prohibited OCS from paying AfC rates. The mere fact that contract pricing affected what OCS could afford to pay did not constitute the Trust "effectively dictating" pay rates within the meaning established by Royal Parks.

Post-transfer discrimination established

The post-transfer claims succeeded. Mr Justice Sheldon held that the employment tribunal had misdirected itself by applying Royal Parks to the period after the cleaners became Trust employees. The relevant provision, criterion or practice (PCP(d)) concerned whether receipt of AfC terms was dependent on not having transferred from an outsourced contractor.

This PCP required comparison between the transferred cleaners and other Trust employees at AfC Bands 1 and 2—not with employees of other contractors. The tribunal's insistence on evidence about other contractor workforces was therefore erroneous.

The statistics demonstrated clear particular disadvantage: 78% of domestic staff were BAME compared with 51% of Band 2 employees generally. The tribunal had expressly found the claimants disadvantaged compared with directly employed Band 2 staff, a finding unchallenged on appeal.

TUPE and objective justification

The Trust argued that TUPE regulation 4(4) prevented immediate harmonisation of terms, as variations motivated by the transfer itself are void. Whilst the tribunal misdirected itself regarding regulation 4(5)—which requires an economic, technical or organisational reason to "entail changes in the workforce"—this error proved immaterial.

The claimants' employment contracts with OCS contained an express variation clause permitting "reasonable changes" to terms and conditions. Under regulation 4(5)(b), such contractual variation powers are preserved despite TUPE. The Trust could therefore have moved the claimants to AfC terms from day one or shortly thereafter.

The tribunal rejected the Trust's justification arguments, finding no good reason for the prolonged harmonisation process when significant numbers of transferred employees sought AfC terms immediately. This finding was not challenged as perverse.

Implications

The judgement clarifies that whilst Royal Parks prevents contract workers claiming discrimination over pay set by their employer, different principles apply post-TUPE transfer. Transferred employees become direct employees for discrimination law purposes, making comparisons with the transferee's existing workforce appropriate.

Employers cannot rely on TUPE as blanket justification for maintaining pay disparities where contractual variation clauses permit immediate harmonisation. The case underscores the importance of addressing potential indirect discrimination arising from legacy contractor terms, particularly where disparate impact along protected characteristics can be demonstrated statistically.

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