Is it legal that new starters are offered better benefits than those already employed? Esther Smith and Martin Brewer consider their verdicts.
The question: Can a company offer improved benefits to new starters but not to existing staff?
The company I work for has offered an improved benefits package to new starters which has not been offered to existing staff. Are they legally entitled to do this?
The company I work for was bought in April 2008. Employees of the Company that took us over were entitled to inclusion in their company pension scheme and 25 days holiday per annum.
We were told that our terms and conditions would remain the same i.e. 21 days holiday per annum and no company pension scheme. I understand that the new company was under no obligation to extend these benefits to us.
However, I have since found out that they have taken on two new people who have been included in the company pension scheme and offered 25 days holiday. The company do not know that I have this information.
One of these new recruits was taken on as a manager in May 2009, the other as a product manager, which is an identical role to mine, in April 2010.
If the company is not entitled to do this what steps can I take to address the situation?
Legal advice:
Martin Brewer, partner, Mills & Reeve
The short answer is yes, they are able to do this and can only be challenged if the disparity throws up a discrimination issue.
Sex discrimination in particular is a possibility since many sectors of the working world retain traditional patterns of men’s’ and women’s’ work and if those who are less well-remunerated are mostly of one sex then that can give rise to an equal pay claim or a claim for sex discrimination (for non-pay claims).
Other than that there is the industrial relations/moral issue. Employees doing the same work on different terms creates tension and has the tendency to dis-incentivise those on the less favourable terms. Frankly, this employer sounds like a nightmare so you might want to consider a change of scene.
Martin Brewer can be contacted at martin.brewer@mills-reeve.com. For further information, please visit Mills & Reeve.
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Esther Smith, partner, Thomas Eggar
With regard to the new staff, there is again nothing technically illegal in them recruiting new staff on the same terms and conditions as their existing staff. The only possible challenge you would have to this differential would be if you could establish that there was some discriminatory grounds for the distinction, but from what you say that doesn’t sound likely. The other possible argument you may have, would be to rely on the difference in terms to argue for a constructive dismissal, arguing that the act of recruiting someone on an identical role, but enjoying better terms, amounts to a fundamental breach of contract. However, this would mean resigning and walking out on your job for what I think is a rather weak claim, particularly as the basis for the difference in terms is due to the TUPE transfer, rather than due to some lack of confidence in you, or complaint about your work.
I note that your employer doesn’t know that you know about the difference in terms – this could be a thing of the past when the provisions of the Equality Act come into play, obliging employers to provide transparent pay audits.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
One Response
TUPE
Although staff who transfer in to a new organisation under TUPE cannot have changes in their terms and conditions imposed on them, it is possible to change them by agreement. As no one is likely to complain if their terms are improved it is possible for employers to make changes that will bring all of their staff into line provided that none of the staff who have TUPE protection have their terms and conditions made less favourable. Even if someone was to complain it is hard to see what remedy a Tribunal could impose as the employee wouldn’t have suffered any detriment. It may be that your employer doesn’t understand this and are therefore sticking to the letter of the law so you might want to raise the issue or perhaps put it on the table when pay and conditions are under review.
What you haven’t said is whether any of your existing terms and conditions are more favourable than those of the Company that took your old employer over. If you recieve higher rates of pay, have more sick pay entitlement or recieve any benefits that the employees of the firm that you have been TUPE’d into do not receive your new employer is faced with a problem. In these situations everyone wants to “cherry pick” the benefits that are better than theirs and the cost to the employer of rounding everyone’s terms and conditions up can be prohibitive. As TUPE prevents your new employer from making changes that would be detrimental to the staff who were transfered in, in these circumstances they may have little choice but to leave things as they are.