Small firms looking to expand through merging with another company could place themselves at risk of unequal pay claims dating back six years after a tribunal ruling.
Emma Burrows, partner at Trowers and Hamlins, explains in the case of Sodexho v Gutridge an employment appeals tribunal found that the right to equal pay is included in Transfer of Undertakings Regulations.
This means that staff are able to make a claim for equal pay against their new employer using employees who stayed at the original firm as a point of comparison, she states.
Ms Burrows says: "Employees are able to claim up to six years worth of back payments to make amends for any pay inequality.
"This could prove to be very expensive so it is imperative that new employers take all the relevant steps to limit their liability when transfers take place"
Companies could find that they unwittingly perpetuate unequal pay practices conducted by the original employer due the problems relating to finding out pay levels at other firms, she adds.
Earlier this week, the Financial Times reported that ministers are at odds over government plans to promote gender and racial equality through a change to procurement rules for firms providing services to the state.
