Redressing the balance
An equal pay claim ruling will affect the culture of ALMOs and councils, says Jack Harrington, partner at Pannone
A decision in December 2011 by an employment tribunal will have huge implications for arm’s-length management organisations in the social housing sector in terms of equal pay and redundancies.
An equal pay claim was brought to the tribunal by a group of staff employed by a number of ALMOs against their employers and the parent authority, Glasgow Council.
Glasgow Council sought to have the claims against it struck out on the basis that it was not responsible for the pay of the employees in question.
While the council succeeded in getting the claims struck out on that point, the employment tribunal found that one of the organisations, Glasgow Life, which provides libraries, sports and museums and is set up as a company limited by guarantee, was an ‘associated employer’ of the council - meaning staff could compare their pay with employees at the council.
This potentially has wide-ranging consequences in the social housing sector because most housing ALMOs are set up as companies limited by guarantee.
The definition of an associated employer in the equal pay provisions is the same as that used in other employment provisions, most notably the Employment Rights Act 1996.
The key implications of the tribunal ruling are:
- Most ALMOs recognise continuous service of staff who transferred from the local authority at the creation of the ALMO, but not for staff who later voluntarily transfer, for instance by applying for vacancies in the ALMO.
If the ALMO and the parent council are associated employers the staff will have continuous service whenever they move from one to the other. This has implications for unfair dismissal rights and redundancy payments. The same applies to moves from the ALMO to the council.
- In redundancy situations, the ALMO and the parent council should be asking each other if there are any suitable vacancies available - a failure to do so may render the dismissal unfair.
- In equal pay claims, staff working in ALMOs may potentially be able to compare their pay with staff employed in the parent authority.
This will involve a big shift in the culture of both ALMOs and the parent authorities. They can no longer regard themselves as entirely separate, autonomous organisations. Associated employer status means that for the purpose of many employment rights the two organisations are inextricably linked.
While the case is under appeal - it will be back in court later this year - we argue that the decision is legally correct and likely to be upheld on the associated employer point.