England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

		Royal Courts of Justice Strand London, WC2 Tuesday, 15 October 2002

1. LORD JUSTICE SEDLEY: This is an application for permission to appeal from a decision of the Employment Appeal Tribunal. I pause at once to say that this in itself requires an amendment of the appellant's notice, which appears to be predicated on an assumption that it is from the Employment Tribunal direct that this appeal lies. However, in reality, as in most of these cases, this court will have to focus on the first-instance decision, although it will always read with respect the intervening views of the Employment Appeal Tribunal.
2. The case was an equal pay claim based upon an admitted disparity, and a serious one, between the applicant, Ms Nelson, and a man who was doing what was admitted to be like work in the same employment. The Employment Tribunal, in a decision which seems to me arguably to have strayed at the respondent's instance down a very long and possibly irrelevant by-way, came to the conclusion that the defence under section 1(3) of the Equal Pay Act was made out, at least to the extent that the employers were bound, or honestly believed themselves to be bound, by the Transfer of Undertakings (Protection of Employment) ("TUPE") Regulations to maintain pay differentials between men and women which they had inherited upon a transfer of undertakings, and that the rebuttal advanced by the employee, that this itself was tainted by sex discrimination, failed because, applying by analogy the indirect discrimination provisions in section 1(1)(b) of the Sex Discrimination Act 1975, one could not find a material requirement or condition and, even if one could, the evidence was insufficient to establish a satisfactory pool in which to test whether there was indirect discrimination or not.
3. Mummery LJ, who considered this case on the papers following the dismissal of a first appeal to the EAT, stood the application over for an oral hearing without notice in order that the issues could be properly focused and formulated. Today Mr Brian Langstaff QC comes before the court having sought to do what Mummery LJ asked. Like Mummery LJ, as I apprehend, I have sensed something amiss in the decisions below. The difficulty has been in seeing it formulated in the appellant's notice, and even in Mr Langstaff's skeleton argument some refinement has been needed in the course of argument today.
4. This was an apparently straightforward equal pay claim, it seems to me. The Equal Pay Act 1970 by section 1 does not call for an examination of an entire workforce or of any identified pool within it. It allows any woman to claim equal pay with any single man who is employed on like work in the same establishment at a higher rate of pay. Those facts were conceded here. Ms Nelson and Mr da Silva were doing the same job but initially she was being paid almost £2 an hour less than he was. Thereafter a general pay rise, which was the subject of separate complaint within these proceedings, actually increased the disparity.
5. If, therefore, there was to be any answer, it had to be under section 1(3) of the Equal Pay Act:

"An equality clause shall not operate in relation to a variation between a woman's contract and a man's contract if the employer proves that the variation is genuinely due to a material factor which is not a difference of sex .... "

The factor relied on by the respondents, and accepted by the Employment Tribunal as material, was that both employees had been inherited by the respondents under the TUPE provisions and that the respondent either was, or at least honestly considered that it was, obliged to perpetuate their pay differential. The employment tribunal held not only that this belief was genuinely held, but that it was legally correct.

6. That seems to me a highly debatable finding. The point, moreover, if it was not abandoned on appeal to the EAT, certainly was much diminished by the concession (if I read the EAT's decision rightly) that the complaint that there was no identifiable requirement or condition was a bad one, so that the initial stumbling-block, in the analogical deployment of section 1(1)(b) of the Sex Discrimination Act, which had impressed the Employment Tribunal, was not in reality there; but it seems to me that the strong argument is that a transfer of undertakings carries no legal obligation to perpetuate inherited disparities which are plainly contrary both to law and to the policy of the law. On the contrary, it may well be that regulation 5 of the TUPE regulations, by paragraph 2(a), which expressly transfers all the transferor's duties and liabilities to the transferees, transfers in that way the legal obligation to pay men and women the same for doing like work.
7. More important for present purposes, however, is Mr Langstaff's submission that even if one admits the argument that the inherited disparities, produced as they are by the labour market, are a material factor, the argument falls down the instant it is erected because the market itself reflects the difference of sex and the section 1(3) defence depends upon a material factor which is not a difference of sex. If that is wrong, then certainly the doctrine enunciated by the House of Lords that the differential must not be tainted by sex discrimination appears, at least at first blush, to apply if the market is relied on as the source of the differential.
8. The problem that arose in the Employment Tribunal seems to have been that this issue was dealt with not frontally but by introducing by analogy section 1(1)(b) of the Sex Discrimination Act in order to make an analysis of whether the pay differential was tainted by indirect sex discrimination. This may be a valuable aid in some cases, but the problem is that it demands the identification of a pool and a statistical analysis (which, as Mr Langstaff well knows, can be extremely complicated and demanding) of factual material. The fall-back position Mr Langstaff would take is that if this was a proper exercise, then the want of evidence which finally influenced the Employment Tribunal does not redound in law to the employee's but to the employer's disadvantage, since it is upon the employer that the burden rests throughout of negativing the claim to equal pay once the two foundation factors are established, as they were here.
9. It seems to me that if one stands back and looks at the simple facts of this case which I have outlined, the first question is: how could the Employment Tribunal have concluded that there was not a viable case for equal pay? At the end, as at the beginning, both they and the EAT were looking at a woman who was being paid less than a man for doing effectively the same work. The sole justification which had been advanced was that the respondent was obliged by law to do so. It is only if this afforded an initially persuasive defence that any question arose of it being itself tainted with sex discrimination. That may turn out to be the issue, and the question may then be where the onus lay. But the stronger argument seems to me to be that this point is never reached in a case like the present, and that the defence afforded by section 1(3) does not get off the ground upon the present facts. Full argument may demonstrate it not be to be so; but for the present it seems to me at least arguable and to deserve a hearing by the full court.
10. Accordingly I give permission to appeal.
ORDER: Application allowed