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
MR JUSTICE ELIAS
UKEAT/0148/06/MAA
UKEAT/0463/06/MAA
UKEAT/0464/06/MAA
UKEAT/0465/06/MAA
UKEAT/0256/07/MAA

		Royal Courts of Justice Strand, London, WC2A 2LL
		3/04/2009

Lord Justice Mummery:

Application for permission to appeal

1. The court heard a renewed application for permission to appeal inter partes immediately after it heard the substantive appeals on time limits in the equal pay cases of Slack & Ors v. Cumbria County Council ...Appeal No 2007/2863). There was also an application for an extension of time in which to appeal. If we thought that the proposed appeal had a real prospect of success, we would grant an extension in the light of the Council's explanation for the late filing of the Appeal Notice.
2. Permission was sought to appeal from the decision of the Employment Appeal Tribunal (the EAT) of 12 November 2007. The decision was preceded by a 6 day hearing in May 2007. The EAT's judgment, which was prepared by its then President Elias J, is reported at [2008] IRLR 91. In numerous appeals and cross appeals affecting thousands of equal pay claims presented to the Employment Tribunal (ET) the EAT considered a whole series of genuine material factor defences (GMF) under section 1(3) of the Equal Pay Act 1970 (the 1970 Act). Like the ET, it rejected most of them.
3. The EAT dismissed an appeal by Cumbria County Council (the Council) and allowed an appeal by the Claimants so far as the issues related to the Council's GMF defence based on bonuses paid to comparators under productivity benefit schemes. That GMF defence was dealt with in the decision of the ET sent to the parties on 23 March 2006, as clarified in a further decision sent on 18 May 2006. The ET rejected that GMF defence pleaded by the Council in response to equal pay claims brought by groups of female cooks and cleaners employed by the Council, but it accepted that GMF defence so far as it related to groups of female care workers employed by the Council.
4. The EAT held that the GMF defence based on productivity benefit schemes failed as regards all the Claimants - carers, cleaners and cooks. There were other GMF issues (market forces and collective agreements), which the EAT remitted to a different tribunal to consider afresh. They do not feature in the arguments on this application.
5. On 29 November 2007 the EAT refused permission to appeal on the ground that the ET found that there was no true productivity benefit and that the points raised by the Council in the proposed appeal did not assist the Council, even if correct in principle.
6. On the application to this court for permission to appeal it was for the Council to show that its proposed appeal had a real prospect of success on a question of law. On 16 February 2008 Maurice Kay LJ refused permission on paper saying-

"I do not consider that the proposed appeal by Cumbria County Council would have a real prospect of success. The EAT judgment deals with the points in a thorough and error-free way. I am refusing permission substantially for the reasons set out in the written submissions by counsel for the respondent dated 25 Jan 2008."

7. This court's judgment on other potentially relevant equal pay appeals in Middlesbrough BC v. Surtees and Redcar & Cleveland BC v. Bainbridge [2008] EWCA Civ 885 had not been handed down at the date when permission was refused on paper. The law relating to the GMF defence was one of the issues in those appeals. After the judgment of the court was handed down on 29 July 2008 it was directed that this renewed permission application be adjourned to be heard inter partes in October 2008. It was to be listed with the time limits appeals to which the Council was respondent. It was also directed that, if permission were granted, the substantive hearing of the appeal would follow immediately.
8. After hearing oral submissions from both sides on the renewed application the court indicated that it would hand down its judgment in writing on the application at the same time as it handed down its reserved judgment on the time limit appeals.

The tribunal decisions and grounds of appeal

9. The Claimants are employed in jobs that are mainly done by women: they are carers, cleaners and cooks. They chose as comparators men employed in jobs mainly done by men: road workers and ground maintenance staff. The comparators are entitled to the benefit of productivity bonus schemes under which they receive payments in addition to basic salary. The Claimants have not, in general, had the benefit of a productivity benefit scheme or received bonus payments. Their case was that the equality clause incorporated by section 1 of the 1970 Act entitled them to a bonus term. They argued that the road workers' bonus was not a true productivity benefit and that the bonus payments were an uplift in basic pay. The Council raised the GMF defence, which was discussed in this court's judgment in the Middlebrough and Redcar appeals. Both the Court of Appeal and the House of Lords refused permission to appeal from it.
10. The ET's main conclusions on the GMF defences were helpfully summarised both by it and also by the EAT (paragraph 54 of its judgment). The ET agreed with the Council that objective justification did not arise if the Council was able to show that the difference in pay was for a genuine reason unrelated to a difference in sex and that the onus was on the Claimants to establish disparate impact. The ET was satisfied that there was ample evidence of disparate impact, and it was not satisfied that the different treatment with respect to bonuses was wholly untainted by sex discrimination. Objective justification was required, but not established. There was significant adverse effect on women and the benefit to the Council of making productivity payments to the road workers was at best tenuous. Similar schemes could have been provided for the cleaners and caterers, so there was no justification as against them. However, a similar scheme to that adopted by the road workers could not have been established for the carers, so the Council had made good its GMF defence with respect to those Claimants.
11. The EAT disagreed with the ET's conclusions on the GMF defence in the case of the care workers, concluding that the reason for the difference in pay was tainted by a difference in sex and was not objectively justified .
12. In its grounds of appeal and its written submissions the Council made a number of general criticisms of the ET's reasons for its decision and of the EAT's judgment upholding the ET decision on the claims of cooks and cleaners, but not its decision on the claims of carers. The Council submitted that the ET wrongly treated the statistics relating to the Claimants' groups and the comparators' groups as raising a prima facie case of sex discrimination. The ET erred in law in failing to assess whether the reason for or cause of pay disparity put forward as a GMF was the reason for or cause of the disparity and, if so, whether that reason or cause was itself discriminatory and, if it was not, the gender disparity was irrelevant. In contrast to the case of Enderby [1994] ICR 112 cited by the ET, it was not self evident in this case that the disparate impact was related to the difference of sex and that the imbalance may require objective justification to be shown. Where the difference in pay is unrelated to sex there is no need for further inquiry and the GMF defence will succeed. It should have been held that the Council had made out the GMF defence on the basis that the genuine reason for the pay difference was the "objective of productivity and efficiency" as respects the comparator group. Further, the ET ought to have applied the principle that a failure to deprive the male comparators of part of their income attributable to a bonus scheme does not become discriminatory over time, if it was not discriminatory at its inception.
13. The Council also made many detailed criticisms of the ET's and the EAT's conclusions on the GMF defence. It submitted that the EAT ought not to have reversed the ET's decision that a GMF was established in respect of the comparison between the Claimants who are carers and the road worker comparators; that the ET ought not to have rejected the Council's contention that, even if no GMF was established, the productivity bonus was not capable of transposition into the contracts of the Claimant carers under section 1 of the 1970 Act; and that the ET ought not to have rejected the GMF defence as to bonus payments in the case of the Claimant caterers and cleaners and with respect to the particular comparators of road workers maintenance operatives and others.

The key points

14. Mr Christopher Jeans QC appearing for the Council helpfully concentrated his oral submissions on the permission application on his key points.
15. The first point was on the equal pay claims by carers. They compared themselves with road workers, who had a productivity-based bonus scheme. The ET was not satisfied that increases in productivity had been achieved by the road workers, but it was satisfied productivity had been maintained and that the objective was genuine.
16. The ET went on to hold that the carers' jobs could not be subject to a productivity scheme; that care work has to be done at the pace of the service user; that faster work is not a desirable end; and that the variation in pay was genuinely due to a GMF, not to a difference in sex.
17. The EAT rejected a challenge on the ground of perversity to the finding that the carers could not have been subject to a similar scheme. However, the EAT held that the ET had erred in law in finding that the GMF defence applied. The EAT concluded that it did not apply, because it had not been shown that the object of improving productivity had been achieved and objective justification was not established.
18. Mr Jeans submitted that the EAT erred in law in interfering with the ET's decision. The error was in requiring justification to be shown. He contended that the mere fact that the road worker group was predominantly male and that the carer group was largely female did not require the Council to establish justification of the variation. Adverse impact per se was not enough to require justification. The evidence established that the reason for the difference in pay was that the carers' work was not amenable to productivity incentives offered to the road workers. The productivity scheme for the road workers was genuine, even if it was not effective. That was a genuine material factor for the difference in pay and it was unrelated to sex. The fact that the reason for the difference in pay was not sex based or sex tainted was sufficient to establish the GMF defence. There was no discrimination requiring justification by the Council.
19. The Council's second key point was on the cleaners and cooks. They also compared themselves with road workers. The ET distinguished them from carers on the basis that it would have been practicable to have introduced incentive bonus schemes for cleaners and cooks. The relevant question, however, was not whether there could have been a productivity scheme for the cleaners and cooks, but whether the reason for the difference in pay was genuine and not based on the difference in sex.
20. The EAT recognised that the ET's emphasis on what was possible was misplaced, but it dismissed the appeal on the basis that the road workers' scheme was not justified, as it did not achieve its objective. Mr Jeans contended the EAT should have overturned the ET on this point, because it had erred by applying the wrong test. The issue of justification did not arise, as the reason why the cleaners and cooks did not have bonus schemes was nothing to do with the ground of sex. In the case of cooks they could not move on to other work by preparing meals quicker. In the case of cleaners the only point in giving them an incentive to work faster would be to employ fewer of them and create redundancies. A previous scheme had been withdrawn at the express request of the workforce in order to preserve jobs. They had chosen to decline a bonus. There was therefore nothing for the Council to justify.

Discussion and conclusion

21. Statistically there was an indisputable adverse disparate impact between (1) the Claimants doing the traditionally female jobs of caring, cooking and cleaning and (2) the comparators doing the traditionally male jobs of road workers and maintenance operatives, for which they received more pay than the Claimants in the form of bonuses.
22. The Council's fundamental difficulties on its proposed appeal are that (1) the ET made a finding of fact that the Council had not established that the bonuses were true productivity benefits with a causative link between performance and bonus payments, so that the bonuses had in practice become automatic additions to the basic wage ("an automatic uplift in pay"); and (2) the EAT rightly concluded that the ET's findings of fact could not conceivably be said to be perverse.
23. The ET concluded that there was evidence of improved productivity due to factors such as better management and improved technology and it was related in only the most tenuous way to an improvement in personal performance. The ET concluded at paragraph 22.9-

"We do not accept that it is established that the road workers are working any faster or harder. The maintenance of productivity is likely to be the result of increased mechanisation and increased management efficiency, and the link between extra effort on the part of the workforce and any particular level of bonus payment is not established."

24. The consequence of the adverse findings of fact was that the Council failed to prove that the difference in pay was unrelated to a difference in sex. There was prima facie sex discrimination which the Council had not shown to be objectively justified.
25. The ET's findings of fact, coupled with absence of legal error in the EAT's summary of the relevant legal principles on equal pay and the GMF defence (see paragraphs 11 to 25 of its judgment), means that the Council cannot show that it has a real prospect of success on a question of law in the proposed appeals.
26. Nor is there some other compelling reason why the court should hear the appeal. No-one underestimates the importance of the points argued in the ET and the EAT both for the Council and the Claimants and the large number of employees affected by their decisions. However, the relevant law governing the GMF defence has been recently reviewed in depth by this court in the judgment of the court handed down on 29 July 2008. It is unnecessary for the detailed legal arguments to be re-visited in this judgment or in proposed appeals to the full court on the GMF defence.

Result

27. Accordingly permission to appeal is refused.