Equal pay claims were brought against Liverpool City Council in around 2007 by the Claimants who worked (and are still working) at various schools throughout Liverpool as cooks and kitchen assistants. Their employment transferred twice, the second employer becoming insolvent before being bought by the Respondent in these proceedings. The Claimants' contract of employment transferred to the Respondent. It is well known that the Secretary of State will be liable to pay certain sums to employees out of the National Insurance Fund if their employer becomes insolvent - the issue here was whether any sums that may become due if their equal pay claim was successful would be payable by the Secretary of State (up to the 8 week limit) and whether the transferee company would be liable for the balance. The ET ruled that equal pay arrears are not a debt payable at the time of transfer (or on the appropriate date) where the equal pay claims have not been determined and quantified, and further ruled that, if they were wrong about that, any liability in excess of the eight week sum guaranteed by the statutory scheme in Part XII transfers to the transferee and is not extinguished. The transferee company appealed.

The EAT allowed the appeal in part. First, the EJ was in error in concluding that arrears of pay arising from an equal pay claim that is as yet undetermined cannot be a claim for 'arrears of pay' within s.184(1) ERA - equal pay arrears can be 'arrears of pay' within s.184(1) ERA, and therefore a debt within s.182 ERA. However, the EAT upheld the ET decision that the balance of the liability after the first 8 weeks transferred to the transferee.