Where an employer becomes insolvent, employees can recover certain outstanding payments from the Secretary of State. In the recent case of Graysons Restaurants Ltd v Jones, the Court of Appeal confirmed that compensation for equal pay claims could be recovered in this way.
Ms Jones was one of 86 catering assistants who in 2007 brought equal pay claims against their employer at the time, Liverpool City Council. The female dominated group of employees claimed that they should receive pay equal to that of their colleagues in male dominated roles, such as gravediggers and road sweepers. During the course of the litigation, it was conceded that the catering assistants had been performing work of equal value to their male colleagues.
In February 2007, Liverpool City Council outsourced the Claimant’s work to a private company, Dutchy Catering Ltd, which went into administration and appointed administrators on 9 January 2009. The assets of Dutchy Catering Ltd were purchased by Graysons Restaurants Ltd (Graysons) and they took on the Claimant’s employment.
Under The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), although liability for unpaid sums owed to employees would usually be passed to the transferee (in this case Graysons), this would not be the case where the transferor was insolvent and the sums owed could be recovered from the Secretary of State.
The question to be answered in this case, therefore, was whether the compensation for equal pay could be considered to be arrears of pay, and so recoverable from the Secretary of State, or not, in which case liability would pass to Graysons.
One of the arguments put forward was that as the value of the equal pay claim was not known at the time of the insolvency, it could not be considered to be arrears of pay. However, the Court of Appeal disagreed. As the remedy in a successful equal pay claim would be to recover the difference in pay between what should have been paid and what was actually paid, the claim was considered to be one of arrears of pay and so recoverable from the Secretary of State up to the specified limits.
