England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
EAT0684/05/ZT

		Royal Courts of Justice Strand, London, WC2A 2LL
		28/06/2007

Lord Justice Sedley :

This is the judgment of the court.

The issue

1. This is the last of a group of cases about equal pay for female school support staff in the north-east who claimed equal pay with better-paid male workers doing identically rated work in what the women contended was the same employment. In one group of cases, brought against Hartlepool Borough Council, the claims failed because of a finding that the chosen male comparators were not in the same employment. An appeal to the Employment Appeal Tribunal was dismissed and has not been pursued. In a second group of cases, of which the present is now the lead case, it was held that the claimants were in the same employment as their comparators and that the pay inequalities between them put the local authority in breach of the women's equality clauses. The EAT dismissed both the local authority's appeal and the contingent cross-appeal of the claimants. The local authority alone now appeals, with permission granted by Sir Peter Gibson, who recognised that the issue was of general importance to local education authorities.
2. A local education authority is not a special entity but an ordinary local authority, such as the appellant, on which educational responsibilities are cast by law. All the claimants were women who worked at the material times as school support staff, typically cooks or cleaners, in South Tyneside community schools. Each was employed by the local authority and paid at a rate determined by the grade to which she was contractually assigned and which is set out in a collective agreement, known as the White Book, applicable to a wide range of local authority employees. The chosen comparators were men in the employ of the local authority, who were on the same White Book grades and were therefore doing equivalent-rated work, but whose earnings were significantly higher. None of the men, however, worked in schools, and most of them had jobs which would never take them into a school.
3. For reasons which will become apparent, it is accepted by the appellant local authority that those claimants who were employed directly by the local education authority without the intervention of school governors are entitled, on the tribunal's findings, to succeed in their equal pay claims. The case advanced before us concerns only claimants who have become employed on the recommendation of the governing body of a community school. To this end it has been agreed to substitute as respondent Lynda Irving, who became employed as a learning support assistant in a South Tyneside community school on the recommendation of the school's governing body.
4. The Newcastle upon Tyne employment tribunal (Mr J.J.L.Hargrove, Mrs C.E.Hunter and Mr T.C.Watson), to the quality of whose written decision we wish to pay tribute, concluded that some of the male comparators' uplifts by way of bonus were shams and that the rest, while not shams, were not justified. The findings of sham were not appealed. The findings of no justification were appealed to the EAT without success, and the appeals are not renewed in this court. It is no criticism to say that the EAT (Judge Peter Clark, Mr P.M.Smith and Professor P.D.Wickens), in dismissing both appeals, found it unnecessary to do much more than adopt the employment tribunal's findings and uphold their reasoning. This allowed the EAT to treat as moot the local authority's further appeal against a fallback finding that the claimants and their comparators had a single source of pay, and the claimants' cross-appeal against a finding that they were not employed in the same establishments as their comparators.
5. Our single concern now is with the argument, advanced by John Bowers QC who has appeared throughout for the local authority, that the women and their comparators were not, or were not proved to be, in the same employment. In a concise and cogent submission, Philip Engelman, who has represented the claimants throughout, contends that the facts have been squarely found against Mr Bowers without any discernible error of law, and that the argument on burden of proof is an irrelevance. Although he advances no cross-appeal, Mr Engelman reserves his alternative argument – that if the claimants were not in law employed in the same establishment as their male comparators, they were employed in the same service with a single source of pay and so are protected by article 141 of the EEC Treaty – and seeks a reference of it should he lose on the appeal issue.

State schools

6. Although the statutory regime changed at the end of August 2003 on the coming into force of the material provisions of the Education Act 2002, it is common ground that the new dispensation made no relevant alteration in the system put in place by the School Standards and Framework Act 1998, and that between them these statutes cover the material periods of the claimants' employment. Their claims were lodged in 2004, but they include six years' back-pay. We shall describe the system as it now stands under the 2002 Act.
7. The state system – that is to say the system of schools funded principally or entirely out of public funds - now contains five main classes of school: community schools (the ordinary secular state school); foundation schools; voluntary schools (which include voluntary aided schools and thus most state-funded faith schools); community special schools; and foundation special schools. By s. 35(2) of the Education Act 2002, any member of staff who is appointed to work under a contract of employment at a community school "is to be employed by the local education authority". It will be necessary to come later in a little more detail to the role of the school's governing body in relation to the appointment and remuneration of non-teaching staff.

The claimants and the comparators

8. The present respondent and her co-claimants were all employed by South Tyneside MBC to work in community schools. Their rate of pay was determined by their position on a scale contained in a collective agreement known as the White Book and covering a wide range of local government employees. Not all the claimants had written contracts of employment, but those which were in writing contained a standard mobility clause allowing the local authority to deploy them anywhere appropriate to their work.
9. The men with whom they chose to compare themselves were likewise employed by South Tyneside MBC on the terms and conditions set by the White Book. They included drivers, a street cleaner, a painter, a refuse collector and a foreman. Each was at the same scale point in the White Book as the woman who compared herself with him. But by reason of top-up payments, which were found to be either sham or unjustified, the men were taking home more pay.

The White Book

10. No issue now remains on the factual comparability of the women's and the men's jobs or on the absence of any genuine material factor explaining or justifying the pay differentials. It is, however, relevant to what follows to see how the collective agreement contained in the White Book operates. It emanates from the National Joint Council for Local Authorities' Services, and has gone through successive agreed updates since it was first adopted in 1988 under the signatures of the joint secretaries representing the trade union and employers' sides. Such an agreement, the product of wide-ranging and complex negotiations, is an important factor in maintaining industrial peace by, among other things, eliminating or at least discouraging jockeying by sections of workforces for better pay in relation to other sections. It is therefore of real benefit to local authorities as well as to their staff.
11. The White Book contains most of the principal elements of a contract of employment. Its main sections include rates of wages, allowances and charges; grading structure; working arrangements (including incentive bonuses); overtime, weekend and other additional payments; holiday and sickness arrangements; grievance and disciplinary procedures; and so forth. In the (now outdated) version that we have seen, section 1 sets out the standard wage rates grade by grade. Both Ms Irving and her first-named comparator, Mr O'Brian, a street sweeper, were on grade 1. In this and in every other respect, by virtue of the incorporation of the White Book into their contracts of employment, they had common terms and conditions - save, of course, as to the capacity in which they were employed.

The law

12. The Equal Pay Act 1970 as amended provides:

1(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause, they shall be deemed to include one.

(2) An equality clause is a provision which relates to terms … of a contract under which a woman is employed (the 'woman's contract') and has the effect that –

….

(b) where the woman is employed on work rated as equivalent with that of a man in the same employment –

…………..

(ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included under the contract under which he is employed and determined by the rating of the work, the woman's contract shall be treated as including such a term;

………..

(6) …. men shall be treated as in the same employment with a woman if they are men employed by her employer … at the same establishment or establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes.

13. By way of background, article 141 (formerly article 119) of the EEC Treaty provides:

1. Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied.

2. …. 'pay' means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer.

The application of the law

14. The placing of each claimant on the same point of the White Book scale as a male employee was, it is accepted, a rating of their jobs as equivalent within the meaning of s.1(2)(b). It therefore remained necessary for each claimant to show that she was in the same employment as her comparator. The finding of the employment tribunal that the women and the men were not, for statutory purposes, employed in the same establishment is, for the present, not in issue. The question is therefore whether the employment tribunal were entitled to find, as they did, that the claimants and their comparators were employed by the same employer at different establishments at which common terms and conditions of employment were observed.
15. This is what the employment tribunal concluded on the question. The passage contains references, by way of contrast, to the Red Book cases which were also before the tribunal but which failed.

25.6 ….

"The first (in time) leading case to consider is Leverton-v-Clwyd County Council [1984] IRLR page 28 (House of Lords). The claimant, employed as a nursery nurse by the respondent in an infant school sought to compare herself with clerical staff employed by the respondent, but not in schools. The fact that the claimants and the comparators were not argued to be, or found to be, in the same establishments supports our first finding. It clearly supports the proposition that comparators in the present case are employed in establishments by the respondents which include the school establishments at which these test claimants were employed. The second issue we have to consider is whether common terms and conditions of employment are observed either generally or for employees of the relevant classes. It is to be noted that in Leverton the House of Lords found that it was sufficient to establish common terms and conditions to show that the claimant and her comparators were employed on terms and conditions derived from the same collective agreement. See Lord Bridge of Harwich at paragraph 8. It is to be noted that in Leverton none of the comparators actually worked at the claimant's school establishment (see Lord Bridge at paragraph 4). Thus it is not necessary in all cases to show that a comparator is employed in the same establishment as the claimant. It is merely necessary to show that the claimant in one establishment (the school) is employed on common terms and conditions for example, deriving from the same collective agreement as a comparator in another establishment. The House of Lords specifically held that the majority of the Employment Tribunal, the Employment Appeal Tribunal, and the majority of the Court of Appeal were wrong to apply a narrower test as to whether the terms of the claimant and the comparator were broadly similar. Upon this basis we conclude that these test claimants, at least those who were employed on White Book terms, were employed on common terms and conditions with White Book comparators employed at other establishments upon the basis that they derive from the same collective agreement. The same conclusion cannot be reached in respect of Red Book comparators, at least not upon the authority of Leverton, because the terms and conditions of Red Book comparators do not derive from the same collective agreement as the claimants. Some support for this interpretation is to be found for the first principle to be derived from Ayrshire Council v Morton [2002] IRLR 256 at paragraphs 51-54.

Next we had to consider the authority of British Coal-v-Smith [1996] IRLR page 406. This is the source of Mr Bowers' argument that the claimant has to show either that the comparator did share common terms and conditions at her establishment, or that like terms and conditions would apply if comparators were employed at her establishment (see in particular paragraphs 39 and 44 of Lord Slynn's judgment). Mr Bowers submits correctly that no comparators are in fact employed at the schools. He further submits that if they were to be employed, they would not be employed on common terms and conditions because the governors would not agree to such terms. We need first to consider whether the submission of law is correct, and secondly, if it is, whether it is factually correct that the comparators would not be employed on common terms and conditions if employed in schools, the burden of which should rest upon the claimants. We do not accept that British Coal-v-Smith establishes that in every case the claimants are required to show the comparators not employed in the same establishment as the claimant would, if employed in the same establishment, be employed on common terms conditions with the claimants. Section 1(6) does not specifically so state. The requirements of section 1(6) in a not same establishment case are:-

i) men and women employed by the same employer at different establishments in Great Britain;

ii) the observation of common terms and conditions;

iii) either generally or

iv) for employees of the particular class.

This latter expression has been interpreted as referring to the comparators relied upon.

It was not necessary for the claimant in Leverton to show that her male clerical staff comparators employed in different council establishments would have been employed in schools on terms common to her. The reason for that was because both she and comparators were employed on the same general terms and conditions derived from the same collective national agreement namely the Purple Book. That was not the same situation as in British Coal-v-Smith, where the relative claimants were canteen workers and cleaners and the relevant comparators were surface mineworkers and clerical workers employed at different establishments from the claimants, namely mines. There, each of the claimant groups and each of the comparator groups terms and conditions were derived from different collective agreements. The cleaners were in fact employed on the same white book terms as the claimant group in the present case, which had been adopted in joint negotiations at a national level by British Coal and the unions. However, in British Coal-v-Smith, it was still possible for the claimants to rely upon those comparators if they could show that the terms and conditions upon which the comparators "would be" employed at the claimants establishments were broadly similar. As Lord Bridge said in Leverton "terms and conditions of employment governed by the same collective agreement seemed to me to represent the paradigm, though not necessarily the only example, of the common terms and conditions of employment contemplated by the subsection. British Coal-v-Smith is an example of case where common terms and conditions can be found without the need for showing that the terms derived from the same collective agreement. Under the British Coal-v-Smith approach it would only be necessary for the claimants to show that comparators not employed on terms derived from the same collective agreement would have been employed at schools upon common terms and conditions with the claimants. It has not been established that the Red Book comparators such as storekeeper Charlton, or painter Connor, would have been employed at the schools upon terms which were "on a broad basis substantially comparable" (see per Lord Slynn)."

16. No suggestion is made by Mr Bowers that the tribunal misapprehended the authorities which they had to apply or overlooked anything in them. His argument is that, nevertheless, a correct appraisal of the statutory arrangements for the appointment of non-teaching staff shows that it was open to the governing body of each community school to decide what each claimant's terms and conditions of employment should be, so that, were her comparator to be employed at the same school, there was no certainty that the two would be appointed on common terms and conditions. The burden of showing that they would be, he submits, rests on the claimants and has not been discharged. For reasons set out earlier in this judgment, the argument now focuses solely on claimants such as Ms Irving who were engaged on the recommendation of a governing body. It is accepted that those employed directly by the local authority are entitled to succeed.

The engagement of non-teaching staff

17. The SSFA 1998, Sch.16, provided:

20.(1) Where the governing body desire the appointment of a person to work in a non-teaching post at the school, they may recommend a person to the local education authority for appointment to the post.

(2) A recommendation under this paragraph shall be in writing and shall specify-

(a) the duties to be performed by the person appointed (including, where the post is part-time, his hours of work) and such terms (if any) as to the duration of his appointment as are proposed by the governing body;

(b) the grade (on the scale of grades currently applicable in relation to employment with the authority) which the governing body consider appropriate for the post; and

(c) where the authority have a discretion with respect to the remuneration to be paid to a person appointed to the post, the determination of any matter to which that discretion applies and which the governing body consider appropriate in the case of the person recommended for appointment.

(3) Before selecting a person to recommend under this paragraph and determining in relation to such a recommendation any matters mentioned in sub-paragraph (2), the governing body shall consult-

(a) the head teacher (where he would not otherwise be involved in the decision), and

(b) the chief education officer of the authority.

(4) For the purposes of sub-paragraph (2)(c), the authority are to be regarded as having discretion with respect to the remuneration to be paid to a person appointed to a post if any provisions regulating the rates of remuneration or allowances payable to persons in the authority's employment either-

(a) do not apply in relation to that appointment, or

(b) leave to the authority any degree of discretion as to rate of remuneration or allowances in the case of that appointment.

21. (1) The local education authority shall appoint a person recommended to them under paragraph 20 unless he does not meet any staff qualification requirements and which are applicable in relation to his appointment.

(2) Any such appointment shall be on such terms as to give effect, so far as they relate to any matter mentioned in paragraph 20(2), to the governing body's recommendation in respect of that matter.

18. The replacement provisions under the 2002 Act are contained in the School Staffing (England) Regulations 2003. These make flexible provision for the appointment of teaching staff, but in relation to non-teaching staff they provide:

11. (1) Where a governing body approves, identifies, selects or recommends a person for appointment under regulations 13(5), 13(7), 14(3) or 15(1), it is for the governing body to determine whether that person is appointed –

(a) under a contract of employment with the authority,

(b) by the authority otherwise than under a contract of employment, or

(c) by the governing body otherwise than under a contract of employment.

(2) Any person so appointed must meet all relevant staff qualification requirements.

15. (1) Subject to regulation 18, where the governing body identifies a support staff post to be filled, it may recommend a person to the authority for appointment.

(2) Any such recommendation must be sent to the authority with a job specification for the post. The job specification must include the governing body's recommendations as to –

(a) the duties to be performed,

(b) the hours of work (where the post is part-time),

(c) the duration of appointment,

(d) the grade, and

(e) the remuneration.

(3) The grade must be on the scale of grades applicable in relation to employment with the authority, and such as the governing body considers appropriate.

(4) Where the authority has discretion with respect to remuneration, it must exercise that discretion in accordance with the governing body's recommendation. The authority may be regarded as having discretion if any provisions regulating the rates of remuneration or allowances payable to persons in the authority's employment either –

(a) do not apply in relation to that appointment, or

(b) leave to the authority any degree of discretion as to the rate of remuneration.

(5) If within a period of seven days after receiving the job specification the authority makes written representations to the governing body relating to the grade or remuneration to be paid, the governing body must –

(a) consider those representations, and

(b) where it decides not to change the grade or remuneration to be paid, notify the authority in writing of its reasons.

(6) Subject to regulation 11(2), the authority must appoint a person recommended to the post by the governing body, unless regulation 11(1)(c) applies.

19. Reg.16 then permits the school to suspend the employee so long as it notifies the authority. Reg. 17 allows the governing body to decide that a non-teaching staff member should cease to work at their school, but requires the local authority, as employer, to carry out the dismissal. (Reg. 18(3) extends this to school meals staff. For the rest, however, reg. 18(1) makes school meals staff subject to direct appointment, discipline, suspension and dismissal by the local authority, subject only to such consultation with the governors as the authority thinks fit. For this reason they do not feature in the present argument.)
20. Mr Bowers contends that these statutory arrangements, by putting material contractual decisions and discretions in the hands of governing bodies, render untenable the finding that the women employees and their male comparators had common terms and conditions, or at least make it impossible for the claimants to establish it. Mr Engelman submits that the governors' powers do not introduce any significant variability into the contracts of employment entered into by non-teaching staff and the local authority.

Discussion

21. "Common", as applied to terms and conditions of employment, means sufficiently similar for a broad comparison to be made: see British Coal v Smith [1996] ICR 515, 526-7, per Lord Slynn. Subject to the ordinary constraints of law, this is a matter of factual judgment for the employment tribunal. Once it is found that the two employees' terms are "broadly similar", it is open to the employer to show a genuine material difference; but none was demonstrated in these cases.
22. The tribunal, having carefully and fully directed themselves on the relevant law, found that the British Coal test was met on the facts before them. The question for us is whether they were wrong to do so in relation to those claimants who had been engaged by the local authority on the recommendation of school governors.
23. In our judgment the tribunal did not err. The issue was concluded by a straightforward application of s.1(6) of the Equal Pay Act 1970: Ms Irving and her male comparator, a road sweeper on the same point of the White Book scale, were employed by the same employer at separate establishments at which common terms and conditions were observed for employees of the relevant classes, that is to say learning support assistants and road sweepers. They were therefore to be treated as in the same employment. From this, coupled with the inequality of pay, a breach of the implied equality clause ineluctably followed.
24. Mr Bowers' contrary argument from disparity of terms and conditions starts from a predicate which he first needs to establish. The predicate is that, since there are no road sweepers employed in community schools, Ms Irving has to establish that, if a road sweeper were to be appointed by the same governing body, it would be on terms and conditions common to both employees. But since governors have a discretion as to these, it is Mr Bowers' submission that it can never be predicted or presumed that the two would be substantially the same.
25. The reason why this hypothetical exercise has, in Mr Bowers' submission, to be gone through lies in Lord Slynn's speech in British Coal Corporation v Smith [1996] ICR 515, 526. There, having described the effect of s.1(6), Lord Slynn said:

"What therefore has to be shown is that the male comparators at other establishments and at her establishment share common terms and conditions. If there are no such men at the claimant's place of work then it has to be shown that like terms and conditions would apply if men were employed there in the particular jobs concerned."

26. What Mr Bowers' reliance on this passage overlooks is that the situation in the British Coal case differed in an important respect from the situation before us. There the claimants were seeking to compare themselves with miners and other staff who were employed on the terms of different collective agreements. In the absence of common terms and conditions, a way needed to be found of ascertaining whether, if they were to have been employed under the same roof, the women and the men would have had common terms and conditions: hence Lord Slynn's formula. Had they all been employed by British Coal in different establishments but on common terms and conditions, the need for a hypothetical answer would not have arisen. That, as Mr Engelman submits, is this case. Here, as in Leverton v Clwyd County Council [1989] ICR 33, it is sufficient if the claimant and the comparator are employed by the same employer, albeit in different establishments, on similar terms and conditions. The foundation of Mr Bowers' argument is therefore unsound, and his argument falls with it.
27. But we think it right to go one step further and to assume, contrary to what we have held, that it is necessary for the claimant to establish that her terms and conditions and those of a street cleaner hypothetically employed by the local authority at the school would be broadly similar. In our judgment, as in that of the employment tribunal, they would be, because both would be on grade 1 of the White Book scale. The margins of discretion which Mr Bowers' argument seeks to vest in the governors are largely illusory. Any relevant appointment of a claimant will be under Reg. 11(1)(a), that is to say under a contract of employment with the local authority. The governors will have recommended her for appointment with a job specification that included her proposed duties, hours, duration, grade and remuneration: see Reg. 15(2). But by Reg. 15(3) the grade is required to be on the applicable scale – here the White Book scale – and to be "such as the governing body considers appropriate", if necessary (see Reg, 15(5)) after considering the local authority's representations in response to the proposal. It seems to us both legally and factually fanciful to suppose that a governing body can by this means select and bind the local authority to an inappropriate grade for a new member of the school's staff. There will ordinarily be a known pay grade for learning support assistants which it will be both unrealistic and arguably perverse for governors to seek to depart from.
28. The provision in Reg. 15(4) that any local authority discretion with respect to remuneration is to be exercised in accordance with the governing body's recommendation does not alter this situation. It licenses neither the governing body nor the local authority to make discretionary payments which create spurious or unjustified pay differentials. If applicable, it simply reflects legitimate increments (Mr Bowers instances productivity bonus, unsocial hours payments or protective clothing allowances) which lie outside the White Book. But, notwithstanding that one job may attract such payments while another on the same grade does not, the terms and conditions governing them will, or should, still be the same.
29. If necessary we would therefore uphold the employment tribunal's alternative finding to the effect that Ms Irving and Mr O'Brian, if employed at the same establishment, would have had common terms and conditions of employment.

Conclusion

30. For these reasons the appeal in this test case is dismissed. The further questions which the EAT regarded as moot remain for the present undetermined.