TUPE, race discrimination and the two-tier workforce – why the GOSH case matters

A recent Employment Appeal Tribunal (EAT) decision, Alpha Anne & Others v Great Ormond Street Hospital NHS Foundation Trust [2026] EAT 15, highlights the discrimination risks that can arise following any TUPE transfer, where transferred employees are left on less favourable terms than their new employer's existing workforce.

Although the case concerned the NHS bringing outsourced services back in-house, the EAT confirmed that the legal principles on indirect discrimination and post-transfer treatment apply broadly, including to service provision changes, re‑tendering exercises, and business transfers. The key risk arises when employers delay or fail to address disparities in terms and conditions, particularly where these disproportionately affect a group with a protected characteristic.

The case at a glance

On 1 August 2021, 80 cleaners, the majority of whom were Black, Asian and minority ethnic (BAME), transferred to Great Ormond Street Hospital NHS Foundation Trust (GOSH) under TUPE from outsourced provider OCS Group UK Ltd (OCS).

Post-transfer, they remained on their OCS terms and conditions, which were less favourable than those of equivalent Band 2 NHS employees directly employed by GOSH. The in-house staff were on Agenda for Change (AfC) terms, with higher pay, better sick pay, more holiday, and superior pension arrangements.

The Employment Tribunal found that:

• No claim could be brought for the pre-transfer period – Under the Equality Act 2010 (EqA 2010), GOSH was not liable for the terms applied by the previous employer.
• Unlawful indirect discrimination occurred post-transfer – Once GOSH became the legal employer, it retained staff on less favourable terms for over a year. Although GOSH had legal advice confirming it could vary terms post-transfer (including through a potential contractual mechanism), it failed to act.
• The Tribunal found that this ongoing disparity disproportionately affected a racially diverse group, and GOSH failed to justify the delay. This amounted to indirect race discrimination.

The EAT upheld these findings, confirming that GOSH's inaction breached the EqA 2010.

Why this case matters

You don't need a collective agreement like AfC for these legal risks to arise. Any time transferred staff are retained on older, less favourable terms - particularly where those staff are disproportionately from a protected group - there is a risk of an indirect discrimination claim and also Equal Pay claims.

Intent is not required: indirect discrimination arises from the impact of policies or practices. If a provision, criterion, or practice puts a group at a disadvantage, and the employer cannot justify it objectively, liability may follow.

Justifying disparity post-TUPE

To defend an indirect discrimination claim, employers must show that any disadvantage caused was 'a proportionate means of achieving a legitimate aim'.

A legitimate aim might include operational continuity, legal compliance, or avoiding redundancies. To be proportionate, the employer must show the disparity was necessary, time-limited, and that less discriminatory alternatives were considered. It's not sufficient to rely on:

• cost savings alone.
• administrative delay without justification.
• a failure to act where variation was legally possible.

In this case, GOSH was unable to justify its delay in harmonising terms, despite having received legal advice that variation was permissible. This contributed directly to a finding of unlawful indirect race discrimination.

Wider implications: not just for the NHS

The legal principles apply across:

• public and private sectors.
• all TUPE transfers, including business sales, service provision changes, and re-tendering.
• any disparity in pay, hours, pensions, or benefits post-transfer.

What matters is whether transferred staff are left on inferior terms, and whether they are part of a protected group under the EqA 2010. AfC highlighted the disparity clearly, but the same risk arises with internal pay frameworks, local terms, or informal arrangements.

Two-Tier Workforce Code

This case mirrors the concerns the government's forthcoming Statutory Code of Practice on Two-Tier Workforces is designed to address.

Expected under the Employment Rights Act 2025 reforms, and linked to the Procurement Act 2023, the Code will:

• promote harmonisation of terms and conditions between transferred and non-transferred staff post-TUPE.
• encourage consultation and transparency in public service outsourcing and re-tendering arrangements.
• require contracting authorities and providers to include fair treatment provisions in contracts.
• enable employment tribunals to uplift compensation by up to 25% where there is non-compliance with the Code (mirroring the uplift mechanism under other statutory codes, e.g. ACAS).

Final word

This case is a clear signal that leaving staff on legacy terms, especially where protected groups are adversely affected, may result in unlawful discrimination, even when operationally convenient.

Whether you're in health, education, government, or the private sector, TUPE harmonisation must consider equality as well as compliance.