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
(ELIAS J, MRS C BAELZ, MR D WELCH)
Ref No: UKEAT000707MAA

		Royal Courts of Justice Strand, London, WC2A 2LL
		6 November 2008

Lord Justice Maurice Kay :

1. The appellants are female police officers in the West Midlands Police. They are "sector" or "front line" officers. Although such officers are generally required to work a 24/7 rotating shift pattern, the appellants are excused from that by reason of their childcare responsibilities. Sector officers who work the 24/7 rotating shift pattern receive a special priority payment. The appellants brought proceedings in the Employment Tribunal under section 1 of the Equal Pay Act 1970, complaining that they and a male comparator were employed on like work and that, as he received a special priority payment, so should they. He worked 24/7. The appellants succeeded before the Employment Tribunal but the Employment Appeal Tribunal (Mr Justice Elias, Mrs C Baelz and Mr D Welch) reversed that decision. The appellants now appeal to this Court, permission to appeal having been granted by Lord Justice Mummery.

The legal framework

2. Section 1(1) of the Equal Pay Act provides:

"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."

3. Section 1(2)(a) provides that the equality clause applies whenever the woman and her male comparator are employed on like work. The effect of the equality clause is to ensure that the contractual terms under which the woman is employed are no less favourable than those under which the man is employed. Section 1(3) provides a defence to an equal pay claim where the employer establishes that there is a genuine non-sex reason for a difference in pay. The material parts of section 1(3) state:

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

(a) in the case of an equality clause falling within subsection (2)(a) or (b) above, must be a material difference between the woman's case and the man's … "

4. These domestic provisions are the means whereby our legislation gives effect to Article 141 of the Treaty establishing the European Union which secures the right to equal pay for equal work or work of equal value. It is well established that we are obliged to interpret the Equal Pay Act consistently with EU law: see Autologic Holdings plc v IRC [2006] 1 AC 118, paragraphs16-17, per Lord Nicholls of Birkenhead.
5. The complaint in the present case is one of indirect discrimination. The appellants do not say that they were paid less simply because they are women. They contend that the special priority payment scheme has a disparate impact on women and puts them at a particular disadvantage when compared with men. Such indirect discrimination, along with a defence of justification, are now established aspects of section 1 of the Equal Pay Act, justification being a "genuinely due to a material factor" defence pursuant to section 1(3): see Rainey v Greater Glasgow Health Board [1987] 1 AC 224.
6. It is common ground that the approach to objective justification is that described by the European Court of Justice in Bilka-Kaufhaus GMBH v Weber von Hartz [1987] ICR 110 (at paragraph 36):

"It is for the national court, which has sole jurisdiction to make findings of fact, to determine whether and to what extent the grounds put forward by an employer to explain the adoption of a pay practice which applies independently of a worker's sex but in fact affects more women than men may be regarded as objectively justified economic grounds. If the national court finds that the measures chosen by Bilka correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objectives pursued and are necessary to that end, the fact that the measures affect a far greater number of women than men is not sufficient to show that they constitute an infringement of Article 119 [the predecessor of Article 141]."

7. To see how these legal principles apply in the present case, it is necessary to describe the factual background in more detail.

Factual background

8. The payment of allowances to police officers is governed by Regulation 34 of the Police Regulations 2003 which provides:

"1. … the Secretary of State shall determine the entitlement of members of a police force to any allowance, and in making such a determination the Secretary of State may confer on –

(a) the police authority;

(b) the chief officer,

such functions –

(i) in relation to the calculation of an allowance,

(ii) where the payment of an allowance is subject to such conditions as may be specified in the determination, in relation to those conditions,

as he thinks fit.

2. No allowances shall be paid to a member of a police force except as provided by or under these Regulations or approved by the Secretary of State, and the amounts and conditions of payment of such allowances shall be as so provided or approved."

9. In May 2002 a national agreement was reached as a result of discussion in the Police Negotiating Board. It referred to a scheme for special priority payments "targeted on frontline/operational officers in particular". It provided for payments of not less than £500 a year or (save in exceptional cases) more than £3,000 a year to be paid as a lump sum each December. It stated:

"The PNB expects that no less than 20% of force strength will benefit from this scheme and no more than 30%, save in exceptional circumstances."

10. More detail was provided in Annex C which included these provisions:

"Posts may qualify for payment where they:

carry a significantly higher responsibility level than the norm for the rank; or

present particular difficulties in recruitment and retention; or

have specially demanding working conditions or working environments.

This scheme will be targeted on frontline/operational officers in particular."

11. Effect was given to the PNB agreement by a determination under Regulation 34. By Annex U, paragraph 7, of the determination it was provided:

"(f) In agreeing the qualifying posts for the force's special priority payment scheme, the chief officer and police authority shall have regard to the following criteria in respect of any post, that it:

Carries a significantly higher responsibility level than the norm for the rank; or

Presents particular difficulties in recruitment and retention; or

Has specially demanding working conditions or working environments.

(g) The personal criteria are that the member has demonstrated that he is fully competent in and highly committed to his duties and responsibilities."

12. Yet further guidance was provided to Chief Constables by the PNB on 8 November 2002. Much of it repeated the earlier formulations but, under the heading "Developing Local Schemes", it stated:

"It is for each chief constable and police authority to determine locally the posts that should attract payment under this scheme, and the level of payment to be made to each qualifying post. In doing so, they should have regard and give due weight to the following factors:

the importance of individual posts to national and local policing priorities;

the relative importance of continuity in the post; and

whether the posts meet one or more of the national criteria specified in the PNB agreement."

13. Chief Constables and Police Authorities were required to consult local staff associations before deciding their local schemes. The guidance also referred to the "local" element in these passages:

"This scheme is about making extra payments to special priority posts in local schemes … The scheme envisages local schemes being tailored to the requirements of local circumstances. The scheme provides flexibility for managers to reward those posts where individuals are required to operate above and beyond the norm for the rank and to enable managers to respond to local management issues and requirements."

14. The guidance concluded with the injunction that local schemes should not discriminate on grounds of gender, race or any other immaterial factor.
15. In the West Midlands Police, consideration was first given to the possibility of including all sector officers in the local scheme but this would have fallen foul of the 30% limit. In March 2003, the Secretary of State refused to countenance an exception. The West Midlands Police then proceeded to produce a scheme which complied with the 30% requirement. One of the categories to benefit from the Special Priority Payment Scheme was defined as:

"Posts covering the full 24/7 shift pattern:

… Sector Officers"

"24/7 officers" were defined as:

"Officers whose published, rostered working patterns either involve a shift pattern or regular working hours covering a band width of at least 4 hours between midnight and 6.00am over a cyclical 168 hour period and technically complies with the provisions of the Working Time Regulations."

16. The appellants are sector officers. When they joined the force they were expected to work a 24/7 rotating shift pattern and, at any one time, about half of the officers in the West Midlands Police do so. However, some officers come to be excused from working 24/7. In the case of the appellants they were excused by reason of their childcare responsibilities but others are excused, for example, for medical reasons.

The decision of the Employment Tribunal

17. The Employment Tribunal held that the appellants and their male comparator were engaged on "like work" and that the 24/7 criterion had a disparate impact upon women and men because it operated to the disadvantage of considerably more women than men. Those findings are not challenged in this appeal. The sole issue now relates to objective justification. The conclusions of the Employment Tribunal on this issue are set out in paragraphs 113 – 115 of its decision. The relevant parts read as follows:

"The question we have to ask ourselves is whether the 24/7 requirement corresponded to a real need, was appropriate to achieve the objectives and was necessary to that end … We find the wish to reward night-time working was, for our purposes, a legitimate aim and the 24/7 requirement corresponded with that aim.

… the tribunal is enjoined to consider whether it was possible to achieve the desired aims by less discriminatory means … By our calculation, to recognise the gender issue by excusing the 29 officers with child-care responsibilities from the 24/7 requirement would have added only a little over £20,000 (probably less because many were part-time and would have qualified only for a pro-rata sum) to the Force's annual wage bill. It is doubtful whether economic grounds can be relied upon for justification in the public sector at all but in the context of the size of the respondent's very large organisation, that must be a relatively insignificant sum.

When weighed against the importance of the principle of equality of treatment and pay between the sexes, the introduction of pay practices which derogate from that principle requires, in our judgment, much more cogent justification than has been demonstrated in this case. The respondent's aim could easily have been achieved, as other Forces appear to have achieved it, without offending against this important principle. Having regard to our observations about the unsatisfactory lack of the gender impact assessment the respondent's witnesses told us was 'invariably' carried out, it seems to us likely that it occurred either because the issue was not thought out or was ignored. However it occurred, it was neither necessary nor proportionate to adopt a criterion for qualification for [special priority payments] which failed to take account of the discrimination which we have found to be implicit in the definition adopted. On these grounds, we find that the respondent has been unable to demonstrate to us that the reason for the difference between the claimants' case and PC Bowles' case is a material factor other than the difference of sex."

The Chief Constable appealed against that decision.

The decision of the Employment Appeal Tribunal

18. The starting point in the Employment Appeal Tribunal was the unchallenged finding of the Employment Tribunal that the wish to reward night-time working was a legitimate aim and that the 24/7 requirement corresponded with that aim. The Employment Appeal Tribunal considered that the appellants were seeking to require the Chief Constable to adopt a different scheme along the lines adopted in some other areas, for example a matrix scheme.
19. The essence of the decision of the Employment Appeal Tribunal is to be found in these passages:

"40 The purpose of the scheme adopted by the Chief Constable is to single out and reward those working nights; we find it difficult to see how that objective is achieved if those who do not work nights are also paid the same amount. Those doing the work are not then being marked out for special treatment, which is the very purpose of the payment.

41. More fundamentally, we consider that the approach of the tribunal misunderstands the principle underlying indirect discrimination. The premise is that the predominantly male group is paid more than the predominantly female group for some reason other than sex. The question is whether it can be justified to make that payment.

42. It can be justified if it is in pursuance of an objective which is legitimate and where the means chosen are proportionate to that objective. To say that the employer can afford to eliminate the difference in pay simply fails to engage with the defence at all. It is no answer to a defence of justification for a difference in pay to say that there is no need for the difference in the first place. If the employer had made these payments to the claimants, as the tribunal suggested that they should, then the issue of justification would not have arisen at all because there would have been no pay differential to justify. …

44. The tribunal's conclusion is that the employer cannot justify because they can secure equalisation by deeming the women to have done what they have, in fact, not done. This is in truth a conclusion of staggering consequence. …

46. Nothing in the Equal Pay Act requires an employer to deem that women have done what they have not done. The payment of money to compensate for the economic disadvantages suffered by those who have childcare responsibilities is not what the Equal Pay Act requires. Nor is the assessment of the employer's ability to pay sums of this kind a task which Parliament could conceivably have expected tribunals to do.

47 … It is highly desirable that employers adopt flexible work practices which will enable women to work part-time or at hours compatible with their childcare, even if that involves incurring some cost in achieving that. But it does not follow at all that they should then pay the women on the basis of the work they would have done if they had not had the childcare responsibilities."

20. The Employment Appeal Tribunal concluded by stating that, having found that paying extra for night work was a legitimate objective, the tribunal erred in saying that the relatively modest sums paid in this case were not objectively justified.

The grounds of appeal to this Court

21. By amended grounds of appeal Mr Robin Allen QC and Ms Rachel Crasnow (neither of whom appeared below) reduced the grounds of appeal to a single paragraph:

"The ET correctly analysed the context within which the issue of proportionality arose by reference to the purposes of the national scheme for special priority payments to officers over and above their normal wages. Its decision was based on a sound application of the principle of proportionality. The EAT erred in failing to consider the whole context within which the issue arose and in looking only at the aim of the West Midlands Police in choosing 24/7 working as a criterion for determining who would benefit from the allocation of funds in respect of special priority payments."

22. In written and oral submissions, Mr Allen emphasises the aim of the Secretary of State in providing additional funds for police forces in order to make special priority payments. He identifies the aim as being the targeting of front-line police officers and the rewarding of specially demanding posts. He refers specifically to paragraph 7(f) of Annex U to the determination pursuant to Regulation 34. He submits that the appropriateness of the criteria adopted by the West Midlands Police has to be tested not merely against a subjective desire to reward 24/7 officers but against "the greater aim" enshrined in the determination of the Secretary of State.

Discussion

23. I am bound to say that I find this to be a straightforward case, essentially for the reasons advanced by Ms Elizabeth Slade QC on behalf of the Chief Constable. The Employment Tribunal found as a fact that "the Chief Constable was particularly keen to recognise 24/7 working". It concluded that

"… the wish to reward night-time working was, for our purposes, a legitimate aim and the 24/7 requirement corresponded with that aim."

24. There is no challenge to that finding or that conclusion. Before the Employment Tribunal there appears to have been a suggestion advanced on behalf of the appellants to the effect that the 24/7 requirement was ultra vires because the Chief Constable had strayed outside the prescription of the Regulations and the determination of the Secretary of State. However, that suggestion did not find favour with the Employment Tribunal and it has not reared its head as a submission in the Employment Appeal Tribunal or in this Court.
25. In this as in any similar case the focus must be on the aim of the employer. It is abundantly clear from the guidance that the Secretary of State approved a structure which envisaged "local schemes being tailored to the requirements of local circumstances". The considered view in the West Midlands Police, expressed through the Chief Constable, was that 24/7 working should be rewarded. In my judgment, that was both rational and within the parameters of the national structure. The fact that some other police forces may have adopted schemes that had no or less disparate impact is nothing to the point. I accept Miss Slade's submission that it is other means of achieving the employer's legitimate aim which are relevant not the means of achieving different aims. In Kutz-Bauer v Freie und Hansestadt Hamburg [2003] IRLR 368 (at paragraph 51) the Court of Justice referred to the need to take into account:

"the possibility of achieving by other means the aims pursued by the provisions in question". (emphasis added)

26. Thus, the use of the scoring matrix which did not give special recognition to 24/7 working or providing special priority payments to those who were excused from 24/7 working for childcare reasons was not a means of achieving the Chief Constable's legitimate aim. As the Employment Appeal Tribunal observed, if the legitimate aim was to reward 24/7 working, it is difficult to see how that objective would be furthered if those who do not work 24/7 are also paid the same amount.
27. For these reasons, I consider that the Employment Tribunal fell into legal error. Although a different emphasis has been put on the case for the appellants in this Court, the analysis of objective justification, aims and means in the judgment of the Employment Appeal Tribunal was correct. I respectfully agree with its reasoning and the decision to which it led.

Conclusion

28. It follows from what I have said that I would dismiss this appeal and uphold the decision of the Employment Appeal Tribunal. In this eventuality, it is not suggested that there is any need to remit the case to the Employment Tribunal. The justification defence has defeated the appellants' case.

Lord Justice Wilson:

29. I agree.

Lord Justice Scott Baker:

30. I also agree.