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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> McPolin v Department of Finance & Person... Department of Finance & Person... [2012] NIIT 00215_09IT (01 February 2012)
URL: http://www.bailii.org/nie/cases/NIIT/2012/00215_09IT.html
Cite as: [2012] NIIT 215_9IT, [2012] NIIT 00215_09IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 215/09
1210/10
CLAIMANT: Laura McPolin
RESPONDENT: Department of Finance & Personnel
DECISION
The unanimous decision of the tribunal is that:-
(i) the claimant is performing like work with her male comparators;
(ii) the claimant is receiving less basic pay than her male comparators;
(iii) the reason for the pay disparity is the length of service criterion within the respondent’s incremental pay scale;
(iv) the claimant has established that the length of service criterion is tainted with indirect sex discrimination;
(v) the claimant has failed to provide evidence capable of raising serious doubts over the link between experience and performance;
(vi) alternatively the respondent has established objective justification for the disparity caused by the length of service criterion within the respondent’s incremental pay scale;
and the claimant’s claim for equal pay is therefore dismissed.
Constitution of Tribunal:
President: Miss E McBride
Members: Mr B Hanna
Mrs E Kennedy
Appearances:
The claimant was represented by Mr M Potter, Barrister-at-Law, instructed by Russell Jones & Walker, Solicitors.
The respondent was represented by Ms N McGrenera, Queen’s Counsel, and
Mr M Wolfe, Barrister-at-Law instructed by the Departmental Solicitor’s Office.
Background
1. The claimant passed her A level exams in 1981. She went to university in 1989 having spent the intervening 8 year period bearing and rearing her children until both had started school. She graduated from Queen’s University in 1993 with a first class Honours Degree in Law and from the Institute of Professional Legal Studies in 1994, having come top of her year and having won all the available prizes. She was called to the Northern Ireland Bar in September 1994 and practiced there for approximately 2 years until 1996 when she commenced employment with the Northern Ireland Court Service as a legal officer. She worked there for 7 years until she commenced employment with the respondent (which the tribunal is satisfied is a separate employer from the Northern Ireland Court Service) in September 2003 as Assistant Director in the Office of Law Reform. Her post was the equivalent of a Grade 6 Senior Legal Assistant (SLA) and she was paid a Grade 6 salary.
2. On 3 January 2006, following a review of legal grades within the respondent, the claimant became a Senior Principal Legal Officer (SPLO) Grade 6, as did all Grade 6 SLAs who applied for the regraded Grade 6 SPLO posts. They were all assimilated on to the ‘new’ Grade 6 pay scale on the basis of their service as Grade 6 SLAs. Whether this was by way of regrading or appointment following regrading, the tribunal is satisfied that the respondent was justified in taking the previous service of all the Grade 6 SPLOs, as SLAs, or, in the claimant’s case, as Assistant Director of Law Reform, into account when assimilating them onto the Grade 6 pay scale, following the review of legal grades. That is because their previous service/experience had also been at Grade 6 level and there was no evidence that the competences had changed between what Mr Potter referred to as the ‘old’ and the ‘new’ Grade 6.
3. In April 2007 the Office of Law Reform closed and its work was subsumed partly within the Northern Ireland Law Commission and partly within the Departmental Solicitor’s Office. The claimant’s work as a SPLO, Grade 6, in the area of Law Reform continued within the Civil Law Reform Department of the Departmental Solicitor’s Office where she is still employed.
4. The claimant has consistently received the highest rating (box 1) for performance in her annual appraisals and has been assessed as fully suited for promotion to Grade 5 which is within the Senior Civil Service.
The Claims
5. The total pay of a SPLO is made up of basic pay and may also include a non consolidated bonus, a responsibility allowance, a special bonus and other allowances, as set out and governed by the Northern Ireland Civil Service Handbook. The claimant brought 2 claims for equal pay against the respondent in respect of basic pay, bonuses and responsibility allowance. The parties were able to resolve the claimant’s claims in respect of bonus payments and responsibility allowance and the tribunal was asked to determine the claimant’s claim for equal pay in respect of basic pay only.
6. The claimant’s first claim was presented on 9 January 2009 and was brought under the Equal Pay Act (Northern Ireland) 1970. The claimant’s second claim was presented on 30 April 2010 and added further or alternative claims under the Equal Pay Directive (75/117/EEC), the Equal Treatment Directive (76/207/EEC) now the Recast Directive (2006/54) and/or Article 141 of the European Union Treaty.
7. In both claims, the claimant contends that she is performing like work, work rated as equivalent or work of equal value with 9 male Grade 6 lawyers (7 SPLOs and 2 SLAs) working within the Departmental Solicitor’s Office but at the date of her first claim (9 January 2009) was being paid between £1,800 and £10,550 less annual basic pay than they. The claimant contends that the basic pay disparity is presumed to be due to the difference of sex and that in those circumstances she is entitled to:-
(a) a declaration that the equality clause which is deemed to be included in her contract of employment by virtue of Section 1(1) of the Equal Pay Act (Northern Ireland) 1970 shall operate by virtue of Section 1(2) to modify the term of her contract of employment relating to basic pay so that it is not less favourable than the comparable term in the contract of her male comparators, thereby entitling her to the same basic pay as her highest earning comparator; and
(b) six years arrears of the difference in basic pay.
That is, unless the respondent can rebut the presumption of sex discrimination by establishing the defence provided by Section 1(3) that the basic pay disparity is genuinely due to a material factor that is not itself the difference of sex. If the respondent establishes that defence, then, by virtue of Section 1(3), even if the claimant is performing like work and receiving less basic pay, the equality clause shall not operate so as to entitle her to the same basic pay as her comparators. The reason for that is that the Equal Pay Act (Northern Ireland) 1970 is not concerned with fair wages. It is only concerned with sex-related pay discrimination. Strathclyde Regional Council & Others –v- Wallace & Others (1998) IRLR146 HL.
The respondent’s defence
8. The respondent accepted that for basic pay purposes the claimant performs like work with her 9 male comparators and that in January 2009 she was paid between £1,800 and £10,550 less annual basic pay than they were. However, the respondent did raise a defence under Section 1(3) of the Equal Pay Act (Northern Ireland) 1970 and contended that the equality clause should not operate in the claimant’s contract of employment in relation to basic pay because the variation in basic pay is genuinely due to a material factor which is not the difference of sex and which is a material difference between her case and that of her comparators. The respondent contended that that is because basic pay is determined by reference to a progressive or incremental pay scale which has been agreed with the claimant’s trade union. Under that incremental pay scale, employees progress upwards along the pay scale, not because of their sex, but as their length of service increases up to a maximum point, provided that their annual performance is satisfactory or better. The respondent contended that the claimant’s comparators all receive higher rates of basic pay because they have longer service and have therefore progressed further up the incremental pay scale. The respondent contended that pay scales are frequently used in the public sector to reflect and reward length of service and experience and that it was entirely appropriate to do so. The respondent contended that the differences in the lengths of service of the claimant and her comparators explained and justified the variations in basic pay and denied that the incremental pay scale was in any sense tainted by any factor which could be regarded as discriminatory on the ground of sex.
The Issue
9. The issue therefore for the tribunal to determine is whether the respondent has established a defence under Section 1(3) of the Equal Pay Act (Northern Ireland) 1970.
Sources of Evidence
10. The tribunal heard evidence from the claimant and from Ms Sue Hastings, an equal pay expert and Mr James Caldwell of FDA on her behalf. The tribunal also received a written report from Ms Sue Hastings. The tribunal heard evidence from Mr Derek Baker, Director of Personnel for the Northern Ireland Civil Service and Deputy Secretary of the Department of Finance and Personnel, Ms Amanda Allaway, Assistant Human Resources Business partner with the Equal Opportunities Unit of the Human Resources Department and from Mr Oswyn Paulin, Departmental Solicitor and Head of Government Legal Services for Northern Ireland, on behalf of the respondent. The tribunal was also provided with 2 lever arch folders of documents and 2 lever arch folders of European and domestic legislation, relevant case law and other publications.
The Relevant Legal Provisions
11. The right to equal pay was introduced by Article 119 of the Treaty of Rome, now Article 141 of the European Union Treaty. At sub paragraph (1) it states:-
“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.”
12. Article 141 was supplemented by what is now the Recast Directive 2006/54/EC. Article 4 states:-
“For the same work or work to which equal value is attributed, direct and indirect discrimination on grounds of sex with regard to all aspects and conditions of remuneration shall be eliminated.”
13. The right to equal pay was introduced in Northern Ireland in 1976 by the Equal Pay Act (Northern Ireland) 1970. Section 1 states:-
“(1) If the terms of a contract under which a woman is employed at an establishment in Northern Ireland 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 (whether concerned with pay or not) of a contract under which a woman is employed (the “woman’s contract”), and has the effect that –
(a) where the woman is employed on like work with a man in the same employment –
(i) if (apart from the equality clause) any term of the woman’s contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman’s contract shall be treated as so modified as not to be less favourable, and
(ii) if (apart from the equality clause) at any time the woman’s contract does not include a term corresponding to a term benefitting that man included in the contract under which he is employed, the woman’s contract shall be treated as including such a term.”
(b) ….
(c) ….
(3) “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 with sub section (2)(a) (like work)….., must be a material difference between the woman’s case and the man’s; ….
The Relevant Legal Principles relating to the section 1(3) defence
14. In Ministry of Defence –v- Armstrong (2004) IRLR 672 EAT, at paragraph 32, Cox J stated:-
“The provisions of Section 1(3) have been considered by the appellate courts on many occasions over the years and employment tribunals are frequently faced with the difficult task of applying authorities which, in interpreting those provisions, appear to say slightly different things or, at any rate, to use slightly different terminology. The complex and labyrinthine nature of equal pay is well known. The existence of authorities which cannot always be easily reconciled, is, regrettably, confusing and unhelpful. In equal pay cases there is a need not to lose sight of the essential purpose of the legislation. In considering Section 1(3) the fundamental question is whether the material cause of the pay difference between the applicant and her comparator is tainted by sex related factors. If it is then the defence fails.
At paragraph 44, Cox J stated:-
“We consider that, for the present, tribunals should continue to adhere to what we shall describe as the ‘Marshall approach’, since that currently provides the most recent and authoritative statement of the law in the domestic authorities as to the tests to be applied in determining the S.1(3) defence”.
15. The ‘Marshall approach’ refers to the decision of the House of Lords in Glasgow City Council –v- Marshall (2000) IRLR 272 HL. At paragraph 23, Lord Nicholls analysed Section 1 of the Equal Pay Act 1970 and explained that the:
“scheme of the Act is that a rebuttable presumption of sex discrimination arises once the gender based comparison shows that a woman, doing like work or work rated as equivalent or work of equal value to that of a man is being paid or treated less favourably than the man. The variation between her contract and the man’s contract is presumed to be due to the difference of sex. The burden passes to the employer to show that the explanation for the variation is not tainted with sex. In order to discharge this burden the employer must satisfy the tribunal on several matters. First, that the proffered explanation, or reason, is genuine, and not a sham or pretence. Second, that the less favourable treatment is due to the reason. The factor relied upon must be the cause of the disparity. In this regard, and in this sense, the factor must be a “material” factor, that is, a significant and relevant factor. Third, that the reason is not the “difference of sex”. This phrase is apt to embrace any form of sex discrimination, whether direct or indirect. Fourth that the factor relied upon is or, in a case within section 1(2)(c) (equal value cases), may be a “material” difference, that is, a significant and relevant difference, between the woman’s case and the man’s case.
When s.1 is thus analysed, it is apparent that an employer who satisfies the third of these requirements (that the reason relied upon is not the difference in sex) is under no obligation to provide a “good” reason for the pay disparity. In order to fulfil the third requirement he must prove the absence of sex discrimination, direct or indirect. If there is any evidence of sex discrimination, such as evidence that the difference in pay has a disparately adverse effect on women, the employer will be called upon to satisfy the tribunal that the difference in pay is objectively justifiable. But if the employer proves the absence of sex discrimination he is not obliged to justify the pay disparity.”
The application of Section 1(3) using Lord Nicholls’ guidance
16. As the respondent has conceded that the claimant is performing like work with her 9 male comparators and is being paid less basic pay, the tribunal is satisfied that a rebuttable presumption arises that the variation in basic pay is due to the difference of sex. The burden then passes to the respondent, under Section 1(3), to show that the explanation for the pay disparity is not tainted by sex either directly or indirectly. To discharge that burden the respondent must satisfy the tribunal that:-
(1) the explanation i.e. material factor is genuine and not a sham or pretence
The claimant did not dispute and the tribunal is satisfied that the respondent’s explanation for the basic pay disparity which is the provision/adoption and operation/use of the incremental pay scale is genuine and is neither a sham or pretence.
(2) That the less favourable treatment is due to the explanation i.e. that it is the cause of the disparity
The claimant did not dispute and the tribunal is satisfied that the provision and operation of the incremental pay scale are the cause of the disparity or variation in the basic pay of the claimant and her comparators.
(3) That the explanation i.e. material factor is not the “difference of sex” either directly or indirectly
Direct discrimination
17. The claimant accepts and the tribunal is satisfied that the provision and operation of the incremental pay scale are not tainted by direct sex discrimination. That is because, as the claimant accepted, basic pay is not determined on the ground of sex but on the basis of length of service subject to satisfactory or better performance. That is in accordance with the basic pay and grading rules which are applied neutrally to men and women in comparable circumstances. That means that men and women with the same length of service and satisfactory performance will be at the same point on the pay scale and in receipt of the same basic pay provided that other relevant circumstances are the same or not materially different.
Indirect sex discrimination
18. Although the guidance of Lord Nicholls suggests that the burden of establishing the absence of indirect discrimination falls on the respondent, the Court of Appeal clarified in Nelson v-v- Carillion Services Ltd (2003) ICR 1256 that the burden is on the claimant to establish a prima facie case of indirect discrimination and the claimant did not dispute that. The claimant contends that the pay and grading system, under which basic pay is determined, in part, on length of service and under which the Grade 6 SPLOs’ lengths of service as Grade 6 SLAs were taken into account when determining their basic pay, was indirectly discriminatory. That is because, although “facially neutral”, the length of service criterion has a disparate adverse impact on women as women are more likely than men to have shorter service as a result of either entering the workplace later in life or as a result of taking career breaks to have and/or raise their children and that the length of the pay scale cannot be objectively justified.
19. The Equal Pay Act (Northern Ireland) 1970, does not contain a definition of indirect discrimination. To ascertain the meaning of indirect discrimination under the Equal Pay Act (Northern Ireland) 1970, the tribunal considered the case law in Great Britain under the former Equal Pay Act 1970, which did not have a definition of indirect discrimination either. In the Ministry of Defence –v- Armstrong case, the Employment Appeal Tribunal held that:-
“The concept of indirect discrimination under the Equal Pay Act, when read together with European equal pay legislation and case law, is broader than that which applies under the Sex Discrimination Act. In considering S.1(3) the fundamental question is whether there is a causative link between the applicant’s sex and the fact that she is paid less than the true value of her job as reflected in the pay of her named comparator. If the material cause of the pay difference between the applicant and her comparator is tainted by sex-related factors, then the defence fails.
This link may be established in a variety of different ways, depending on the facts of the case. Although the Equal Pay Act focuses on the contracts of the individual applicant and her comparator, pay discrimination is frequently systemic in character, which arises not from the terms of individuals’ contracts of employment, but as a result of gender job segregation or from pay structures or pay practices which disadvantage women because they are likely to have shorter service or to work less hours than men, due to historical discrimination or disadvantage, or because of the traditional social role of women and their family responsibilities.
The tribunal should focus on substance, rather than form and on the result, rather than the route taken to arrive at it. Technicalities should be avoided. There is therefore no necessity for an employment tribunal, as a matter of law, always to adopt a formulaic approach consistent with the provisions of S.1(1)(b) of the Sex Discrimination Act (and since 12 October 2001, S1(2)) (Article 3(2) of the Sex Discrimination (Northern Ireland) Order 1976) in considering whether there is sex-related pay discrimination and disparate impact for the purposes of S.1(3). What matters is whether, in any particular case, a tribunal is satisfied on the evidence before them and the facts found that the pay difference is caused by a factor or factors which are related to the difference in sex between the applicant and her comparator.”
20. The tribunal considered whether the material cause of the pay difference (the incremental pay scale) was indirectly discriminatory using the definition set out in the Sex Discrimination (Northern Ireland) Order 1976, but mindful of the above dicta and the further dicta of Cox J in the Ministry of Defence –v- Armstrong case that even if the facts in this case do not fit precisely with that formulaic definition, the claimant’s case is not doomed to fail provided the tribunal is satisfied that there is a causative link between the claimant’s sex and the fact that she is paid less than the true value of her job as reflected in the pay of her comparators.
21. Indirect discrimination is defined at Article 3(2)(b) of the Sex Discrimination (Northern Ireland) Order 1976 as:-
(1) ….
(2) “In any circumstances relevant for the purposes of a provision to which this paragraph applies, a person discriminates against a woman if –
(a) ….
(b) he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but –
(i) which puts or would put women at a particular disadvantage when compared with men,
(ii) which puts her at that disadvantage, and
(iii) which he cannot show to be a proportionate means of achieving a legitimate aim.”
Article 7 of the Sex Discrimination (Northern Ireland) Order 1976 requires that the:-
“comparison of the cases of persons of different sex under Article 3 … (2),
…
must be such that the relevant circumstances in the one case are the same, or not materially different, in the other.”
22. The definition of indirect discrimination in the Sex Discrimination (Northern Ireland) Order 1996, as set out at paragraph 21 above, requires the claimant to establish that:-
(1) the respondent applies to her a provision, criterion or practice which they apply or would equally apply to a man;
(2) that the provision, criterion or practice puts or would put women at a particular disadvantage when compared with men in similar circumstances;
(3) that it puts the claimant at that disadvantage.
If the claimant establishes those 3 matters, the burden then shifts to the respondent to establish that the provision, criterion or practice, or in this case the material factor, is a proportionate means of achieving a legitimate aim.
Whether the respondent applies a provision, criterion or practice to the claimant which he applies or would apply equally to a man
23. The tribunal is satisfied that the application of the length of service criterion as a method of determining basic pay amounts to a provision, criterion or practice which the respondent applies or would apply equally to the claimant and to a man in similar circumstances.
Whether the application of the length of service criterion puts or would put women at a particular disadvantage when compared with men, in similar circumstances
24. The former definition of indirect discrimination would have required the claimant to establish that the proportion of women who could comply with the requirement or condition was considerably smaller than the proportion of men who could. This involved the identification of the correct “pool” of individuals for comparison purposes and the production of statistical evidence to prove that a considerably smaller proportion of women than men could comply with the requirement or condition. The present definition of indirect discrimination which requires the claimant to establish that the provision, criterion or practice puts or would put women at a particular disadvantage when compared to men does not require statistical proof. However, it has been pointed out in Harvey on Industrial Relations and Employment Law (Div L para 326) that:
“claimants remain under an obligation to bring to the tribunal some evidence in support of allegations of disproportionate impact, and this will usually involve both the use of statistics and the concept of a ‘pool’ of affected individuals, real or hypothetical, to test the consequences of the provision, criterion or practice which is being subjected to scrutiny”.
At paragraph 327, it is stated:-
“There have been numerous cases in which claimants have argued that a PCP of working full time has had a disproportionate impact on women, or in the modern formulation of the indirect discrimination test, places them at a particular disadvantage by reason of their child care obligations. In some cases this has been accepted by both parties, not infrequently looking at proportions within the UK labour market, or asking the tribunal to use their knowledge and expertise in the industrial field generally. This was the approach endorsed by the CA in London Underground –v- Edwards (No2) (1999) IRLR 364 (1999) ICR 494, where is was acknowledged that tribunals “do not sit in blinkers”. In that instance it was held that the tribunal was entitled to take into account, for the purposes of finding discrimination, its knowledge about the proportionally larger number of women than men who work and who have primary child care responsibilities, and also the fact that there are a high proportion of single mothers having care of a child. However, this approach is not always accepted and claimants must be prepared to provide (at least a prima facie case) of particular disadvantage to those who shared their particular characteristic.”
The pool
25. The IDS Handbook on Equal Pay (November 2008), states at page 234 that:-
“In most cases, a detailed statistical analysis will be required in order for disparate impact to be established. Tribunals will thus need to determine which individuals are to be taken into account when putting the statistics together; how the statistics should be analysed to provide a sensible result; and how great a disparity is required in order for a ‘sex taint’ to be established.”
26. In Grundy –v- British Airways (2008) IRLR 74, at paragraph 27, Sedley LJ stated that:-
“The correct principle, in my judgement, is that the pool must be one which suitably tests the particular discrimination complained of: but this is not the same thing as the proposition that there is a single suitable pool for every case. In fact, one of the striking things about both the race and sex discrimination legislation is that, contrary to early expectations, three decades of litigation have failed to produce any universal formula for locating the correct pool, driving tribunals and courts alike to the conclusion that there is none.”
At paragraph 30, Sedley LJ stated:
“The dilemma for fact-finding tribunals is that they can neither select a pool to give a desired result, nor be bound always to take the widest or narrowest available pool, yet have no principle which tells them what is a legally correct or defensible pool.”
At paragraph 33 Sedley LJ stated:-
“Section 5(3) of the Sex Discrimination Act 1975 requires comparisons made for, inter alia, indirect discrimination purposes to “be such that the relevant circumstances in the one case are the same, or not materially different, in the other”. This seems to me a useful indicator of how the pool should be chosen. It needs to include, but not be limited to, those effected by the term of which complaint is made, which can be expected to include both people who can and people who cannot comply with it.”
27. There was a dispute between the parties as to the appropriate pool for comparison purposes. The tribunal was unclear as to the pool being put forward by the claimant. That was because, having considered the claimant’s skeleton argument, Mr Potter’s opening of the case, the written report and oral evidence of Ms Hastings, together with Mr Potter’s written and oral closing submissions, the pool relied upon by the claimant appeared to vary from SPLO lawyers at Grade 6 to all Grade 6 lawyers, to all Grade 6 employees, to all Grade 6, Grade 7 and DP grade employees, to querying whether a pool was needed.
28. The respondent contended that the appropriate pool was made up of the Grade 6 lawyers i.e. SPLOs and SLAs. In support of their contention the respondent submitted that that was the pool relied upon by Ms Hastings, the claimant’s expert witness. Alternatively the respondent submitted that the appropriate pool should be no wider than all Grade 6 employees.
29. Following the above guidance, and in particular that of Sedley LJ that a like for like comparison must be made, the tribunal concludes that the appropriate pool for consideration of whether the operation of the length of service criterion within the incremental pay system puts women at a particular disadvantage compared with men, in similar circumstances, includes all those male and female employees who are performing like work with her (as the claimant’s case proceeded on that basis) and whose basic pay is determined by the impugned incremental pay system. That means that the pool for comparison purposes is all male and female Grade 6 lawyers which includes SPLOs and SLAs.
Analysing and assessing the statistical and other evidence
30. The IDS Handbook on Equal Pay states at page 245 that:-
“There is no simple equation that can determine whether a disparity is sufficient to show that a provision, criterion or practice is tainted by sex discrimination … the question of disparate impact must always be determined with reference to the circumstances of the case.”
31. In the Enderby –v- Frenchay Health Authority (1994) ILR112 case the European Court held that:-
It is for the National Court to assess whether it may take those statistics into account, that is to say, whether they cover enough individuals, whether they illustrate purely fortuitous or short term phenomena, and whether, in general, they appear to be significant.”
32. In Rutherford and anor –v- Secretary of State for Trade and Industry (No.2) (2004) IRLR892, CA, at paragraph 35, Mummery LJ gave the following guidance when analysing the statistics:
“No methodology has been laid down in the Treaty or in any Directive or in national legislation. It has been left to the national courts and tribunals, which hear and assess the evidence and find the facts, to work out from case to case a satisfactory method for assessing whether or not there is disparate impact in the particular case.
It is a matter of applying considerations of logic, relevance and common sense to the raw material of the statistical analysis in order to determine the existence or otherwise of the objectionable state of affairs.”
33. In Gibson –v- Sheffield City Council (2010) ICR708, at paragraph 71, Smith LJ stated that: “In my view, where the statistics show that the pay practice has produced an adverse impact on women over a long period and where the statistics are convincing it will generally be difficult for an employer to show that adverse impact has nothing to do with sex”.
34. To establish that the length of service criterion puts or would put women at a particular disadvantage compared with men, the claimant relied on:-
(1) the written and oral evidence of Ms Hastings;
(2) the Northern Ireland Civil Service Equal Pay Review (NISRA);
(3) the tribunal’s integral knowledge and understanding of social custom;
(4) the body of public knowledge including the material disclosed to the Court of Appeal in the case of Cadman –v- Health & Safety Executive (2004) IRLR 971.
35. In support of their contention that the statistics do not establish disadvantage or that if they do there is no causative link between that and gender, the respondent relied on the evidence of Mr Baker and Ms Allaway together with the Northern Ireland Civil Service Equal Pay Review compiled by NISRA.
36. The tribunal is satisfied that Ms Hastings is an expert in equal pay. She has been involved in a number of publications on equal pay issues and she has been involved in a number of equal pay cases. Prior to 1995 she was an employee of the trade union research unit on grading and equal pay. From 1995 she has been working as an independent advisor providing advice on grading and equal pay issues to trade unions, employers, the Equal Opportunities Commission which is now the Equality and Human Rights Commission in Great Britain and the Equality Commission in Northern Ireland. She was a member of the team which had been commissioned by the then Equal Opportunities Commission in Great Britain to develop and test a user friendly equal pay review kit in 2002 for use by employers, which was updated in 2008. She was part of the team which adapted that review kit for use in Northern Ireland and she provided some initial training on its use.
37. Ms Hastings gave her expert opinion on 3 main issues:-
(1) whether and to what extent pay structures based on length of service in general have a disparate impact on females in Northern Ireland and/or more widely;
(2) measuring gender differences in pay and what differences may in general be regarded as significant; and
(3) whether the available statistics in the claimant’s case demonstrate that the pay scale in her case has a disparate impact on females.
38. Having considered the evidence of Ms Hastings, Mr Baker and Ms Allaway, the NISRA reports together with the tribunal’s own integral knowledge of social custom, the authorities and the detailed representations of Ms McGrenera, Mr Wolfe and Mr Potter, the tribunal found the following relevant facts and reached the following conclusions in relation to the issue of particular disadvantage within the pool.
39. It has been acknowledged in both law and employment practice that differences in experience can and should justify differences in pay. Pay structures based on lengthy periods of service and the consequential wide pay ranges associated with them have been recognised for many years as being potentially gender discriminatory. Long pay scales frequently come up in equal pay audits as the reason for gender differences in pay.
40. This is consistent with the Court of Appeal’s decision in Cadman –v- Health & Safety Executive (2004) IRLR 971, where Kay LJ stated, at paragraph 7:-
“Before leaving this brief summary of the facts it is appropriate to record that we also received evidence and submissions on behalf of the Equal Opportunities Commission, represented by Mr Robin Allen QC. The material discloses that in this country and throughout the European Union the length of service of female workers, taken as a whole, is less than that of male workers. The Commission suggests that length of service as a determinant of pay plays an important part in the continuing, albeit slowly narrowing, gap between female and male workers.”
Although the respondent disputed that was the situation in the present case, like the respondent in the Cadman case, they did not dispute the general suggestion.
41. Research conducted on behalf of the Equal Pay Taskforce GB found that:-
“when other factors are discounted between 25% and 50% of the gender pay gap is due to (pay) discrimination.”
42 The Equal Pay Taskforce advocated equal pay audits as the obvious tool to assist employers in identifying pay discrimination. As set out above, Ms Hastings was a member of the team which was commissioned by the then Equal Opportunities Commission (Great Britain) to develop and test a user friendly equal pay review tool for employers. This led to the publication of the Equal Pay Review Kit in 2002 which is a 5 step model which involves calculating mean or in this case median male and female basic pay and total earnings for those doing “equal work”, identifying differences which may be indicative of systemic pay discrimination, investigating the reasons for such differences and determining whether those reasons provide objective justification. As set out above, Ms Hastings was also part of the team which adapted the review kit for use in Northern Ireland.
43. The Northern Ireland Equal Pay Review Kit was used by NISRA when conducting equal pay audits on behalf of the Northern Ireland Civil Service. It was also used by Ms Hastings when analysing the 2008 data which had been provided by the respondent to the claimant in respect of the Grade 6 lawyers.
44. The Equal Pay Review Kit states:-
“As it may not be practical to investigate every single pay gap, particularly in very large organisations, as a general guide, any differences of 5% or more, or patterns of differences of 3% or more will require exploration and explanation.
If any the checks reveal either:-
· Significant differences between the basic pay or total earnings of men and women performing equal work (differences of 5% or more), or
· Patterns of basic pay difference e.g. women consistently earning less than men for equal work at most, or all, grades or levels in the organisation (differences of 3% or more)
then further investigation is needed.
It is advisable to record all the significant or patterned pay differences that have been identified.
There is no legal guidance on what constitutes a significant difference but techniques of statistical analysis suggest that a 5% or greater difference can be regarded as significant, wherever it occurs. A pattern of differences of 3% or more should also merit further investigation.”
45. That does not mean that a 5% difference in mean or median pay between men and women provides conclusive proof of pay discrimination, but it is indicative of pay discrimination and requires further exploration to determine the pay practice which is causing the difference.
46. The statistical analysis of the 2008 data carried out by Ms Hastings in respect of Grade 6 lawyers identified a difference of over 5% in median basic salary in favour of males. That was consistent with the statistical analysis carried out by NISRA on behalf of the Northern Ireland Civil Service which identified a difference of over 5% in the median basic salary of Grade 6 lawyers in favour of males throughout the 4 year period 2005-2008. NISRA also identified a difference of over 5% in the median basic salary of 4 of the 8 grades covered by this incremental pay scale including the whole of Grade 6. The actual differences in the median annual salary in favour of male Grade 6 lawyers were:-
2005 - £2,968 (5.6%);
2006 - £4,460 (8.5%);
2007 - £4,380 (8.1%);
2008 - £4,400 (7.9%).
47. As the pool of Grade 6 lawyers which was analysed was very small: for example, only 29 in 2005 (15 female, 14 male) out of over 20,000 employees, the tribunal must be careful to ensure that the statistics are not illustrating purely fortuitous or short term phenomena.
48. In view of the fact that the statistics are consistent throughout the 4 year period of analysis within the Grade 6 lawyers group, and that there is a similar pattern of more than 5% pay differences in basic pay in favour of males compared with females in 4 of the 8 grades, including Grade 6 as a whole which covers a substantially larger number of employees, the tribunal concludes that the statistics are not purely fortuitous or due to short term phenomena.
49. These median pay differences do not provide conclusive proof of pay discrimination. However, the tribunal is satisfied that they are indicative of pay discrimination and require further analysis in relation to the factors which are causing the difference. NISRA’s further analysis in respect of the 2005 data (no further analysis was carried out by NISRA in respect of 2006, 2007 or 2008) established that the reason for the median pay gap for that year between male and female Grade 6 lawyers, was that male Grade 6 lawyers had, on average, 4 years longer service than females and had therefore more years to progress towards the maximum of the pay scale subject to satisfactory or better performance.
50. The respondent submitted that, even if the tribunal accepts the validity of the statistics relied on by the claimant, there is nevertheless no evidence to demonstrate that there is a causative link between gender and the relatively lower pay of some women, or the claimant’s pay in particular, for the following reasons:-
(1) the unchallenged evidence of Ms Allaway was that there is a broad correlation between length of service and the point on the pay scale across all Grade 6 lawyers, male and female;
(2) if that is correct, then whatever might be said about the impact of the length of service criterion on women across the labour market in general, there can be no basis for suggesting that the basic pay differential between male and female Grade 6 lawyers has been caused by factors related to gender;
(3) in relation to the 5 female employees highlighted by Ms Hastings because their start dates had less close correlation with the scale point and salary than males with the same start date, the unchallenged evidence of Ms Allaway was that their personnel files indicated that this had nothing to do with gender but was due to the fact that they had previously been employed for a period in the Northern Ireland Office which had its own delegated pay and which did not apply the same pay scales or progression arrangements as the respondent.
51. The claimant contended that the failure of the respondent to undertake a forensic or comprehensive analysis of the career histories of all the female Grade 6 lawyers to ascertain why they have less service than the male Grade 6 lawyers significantly limits the import of Ms Allaway’s analysis.
52. The tribunal considers that the fact that there is a broad correlation between the basic pay of male and female Grade 6 employees with similar start dates indicates that the incremental pay scale is not tainted with direct sex discrimination. That is because, as set out at paragraph 17 above, it confirms that, by and large, men and women with the same length of service and satisfactory performance will be at the same point on the pay scale and in receipt of the same basic pay. The claimant’s claim, however, is that the incremental pay scale is tainted with indirect sex discrimination. That is because it puts or would put women at a particular disadvantage compared to men because they are more likely than men to have shorter service as a result of entering the workplace later in life or as a result of taking career breaks to have and/or raise their children.
53. The respondent indicated that in carrying out the review of the personnel files of the 5 female Grade 6 lawyers highlighted by Ms Hastings, they were following the fifth suggested investigation of step 2 of checklist 19 of Section F of the Equality and Human Rights Commission’s checklist on Equal Pay in Practice entitled “Long Pay Scales or Ranges”. The tribunal noted that they followed this part of the Great Britain checklist notwithstanding that NISRA had used the Northern Ireland Equality Commission’s review kit which does not appear to include this suggested investigation. The suggested investigation was that:-
“If none of the above proves to explain the significant gender pay gaps, review a sample of personnel files, especially those with the highest and lowest salaries within each pay range to investigate other possible causes”.
Notwithstanding this, the respondent only reviewed the files of the 5 females highlighted by Ms Hastings, none of whom had the highest or lowest salaries. Given the fact that there were only 20 female Grade 6 lawyers at that stage, the tribunal considers that it would not have been unduly onerous for the respondent to have carried out an analysis of the personnel files of all the Grade 6 female lawyers to ascertain whether their service had been affected by career breaks or by starting their careers later due to child care responsibilities. Such analysis would have enabled the respondent to ascertain the reasons for the career breaks of the 3 female Grade 6 lawyers identified as F1, F16 and F18 and in particular whether they were related to child care responsibilities.
54. In light of respondent’s failure to review the personnel files of all the Grade 6 female lawyers or even those with the highest and lowest salaries, and in light of the fact that 1 Grade 6 lawyer (identified as F1), is at a lower point on the pay scale than she would have been, but for her career break and 2 other female Grade 6 lawyers (identified as F16 and F18), are currently on career breaks, the tribunal is not satisfied that the respondent’s review of the personnel files of the 5 female Grade 6 lawyers, highlighted by Ms Hastings, is sufficient to demonstrate that there can be no basis for suggesting that the basic pay differential between male and female lawyers has been indirectly caused by factors related to gender.
55. The tribunal concludes from the facts set out above that there is a direct causative link between the gap in median basic pay between male Grade 6 lawyers and female Grade 6 lawyers and the length of service criterion in the incremental pay system. The tribunal’s conclusion is supported by its own knowledge of social custom which is consistent with the evidence submitted to the Court of Appeal in the Cadman case by the Equal Opportunities Commission (see paragraph 40 above). The tribunal is therefore satisfied that the application of the length of service criterion puts or would put women at a particular disadvantage when compared with men, in similar circumstances, and that the incremental pay scale which is based on length of service subject to satisfactory or better performance is therefore tainted with indirect sex discrimination or has a disparate adverse impact on women.
Which puts the claimant at that disadvantage
56. The claimant contended that the fact that she took 8 years out of her career to have and to look after her 2 children directly impacted upon her capacity to compete on a pay scale based in part on length of service. That is because, as a result of that delay, she has less years to compete with males in terms of progression up the pay scale.
57. The respondent contended that the claimant’s “lost years” since qualifying were not lost to the claimant by reason of her gender. The respondent contended that if the claimant had commenced employment with the respondent in 1994 instead of going to the Northern Ireland Bar, or in 1996 instead of going to work for the Northern Ireland Court Service or before 2003 then, subject to satisfactory performance, she would have been closer to the maximum point on the pay scale. Accordingly it is not correct for it to be said, on behalf of the claimant, that her family responsibilities have impacted on her capacity to compete on a length of service criterion at least since 1994.
58. Harvey on Industrial Relations and Employment Law, Division L, at paragraph 330 states:-
“The new definition of indirect discrimination removes the requirement for the claimant to show that s/he could not comply with the requirement or condition imposed. Now all that has to be proved is that the provision, criterion or practice puts or would put persons who share a protected characteristic at a particular disadvantage when compared with those who do not have that characteristic, and the claimant is put to that disadvantage. Provided that it is also not justifiable for a reason irrespective of the protected characteristic of the person to whom the PCP is applied, the requirements for discrimination are made out. This change makes it unnecessary to consider whether actual compliance on the part of the individual is possible and so renders superfluous such interesting questions as whether women with substantial resources which allow them to buy child-care facilities “can comply” with work requirements that demand their full-time presence. Instead, it directs attention rather to a more generalised condition of the effects of provision, criterion or practice.”
59. In light of the change to the definition of direct discrimination, as set out at paragraph 24 above, the tribunal concludes that the fact that the claimant could have been higher up the pay scale if she had gone straight from Queen’s University to employment with the respondent does not mean that the length of service criterion did not put the claimant at a particular disadvantage. On the contrary, the tribunal is satisfied that the length of service criterion did put the claimant at that same particular disadvantage because her later entry into the labour market or workforce, following qualification, did affect her ability to compete on an incremental pay scale. The tribunal is also satisfied that that particular disadvantage carried through all employment in which basic salary was determined fully or in part, by length of service. The tribunal considers that its conclusion is supported by the decisions of the European Court of Justice in Handels-og Kontorfunktionaerernes Forbund I Danmark –v- Dansk Arbejdsgiverforening (1991) ICR74, known as the Danfoss case and Cadman –v- Health and Safety Executive (2006) IRLR 969 which talk of women having entered “the labour market” and “the workforce” more recently than men rather than having commenced a specific job.
Whether the respondent can objectively justify its incremental pay system by establishing that it is a proportionate means of achieving a legitimate aim
60. It was common case that where an employee has established that the material cause of the pay difference i.e. the incremental pay scale is tainted with indirect sex discrimination, the burden shifts back to the employer to objectively justify the pay disparity caused by the material factor, otherwise the claimant will succeed in her claim for equal pay.
The test of objective justification
61. The European Court held in Bilka – Kaufhaus Gmbh –v- Weber Von Hartz (1986) IRLR 317 that an employer can objectively justify a pay practice or system if he can establish:-
(i) that it corresponds to a real need on the part of the employer’s business;
(ii) it is appropriate with a view to achieving the objectives pursued; and
(iii) it is necessary to achieve those objectives.
62. In Rainey –v- Greater Glasgow Health Board (1987) ICR 129 the House of Lords confirmed that the Bilka – Kaufhaus test applied to the material factor defence under Section 1(3) of the Equal Pay Act.
63. In Hampson –v- Department of Education & Science (1989) ICR179, the Court of Appeal held (in a race discrimination case) that when considering whether the imposition of a condition was justifiable, industrial tribunals had to apply an objective test and balance the discriminatory effect of the condition against the reasonable needs of the employer. This formulation has become known as the principle of proportionality and is expressly provided for in the Sex Discrimination (Northern Ireland) Order 1976 which requires the employer to show that the provision, criterion or practice is a “proportionate means of achieving a legitimate aim”.
64. In Hardy and Hansons Plc –v- Lax (2005) IRLR726, the Court of Appeal accepted that the word ‘necessary’ used in the Bilka case should be qualified by the word ‘reasonably’ to reflect the presence and applicability of the principle of proportionality which means that an employer is not required to establish that no other measure was possible. The Court of Appeal also held that the test of justification is an objective one and is not a band of reasonable responses test as in an unfair dismissal case.
Length of service – objective justification
65. It was common case that where the material factor relied upon is an incremental pay scale based on length of service, the employer is only required to objectively justify the pay difference caused by it, where the claimant “provides evidence capable of giving rise to serious doubts as to whether recourse to the criterion of length of service is, in the circumstances, appropriate to attain the aforementioned objective.”
66. The European Court recognised in Handels-og Kontorfunktionaerernes Forbund I Danmark –v- Dansk Arbejdsgiverforening (acting for Danfoss A/S) 1991 ICR74 ECJ, that the criterion of length of service may result in less favourable treatment of female workers compared with male workers, “in so far as women have entered the labour market more recently than men or are subject to more frequent interruptions of their careers”. The Court of Justice nevertheless concluded that “since seniority goes hand in hand with experience which generally places a worker in a better position to carry out his duties, it is permissible for the employer to reward it without the need to establish the importance which it takes on for the performance of the specific duties to be entrusted to the worker”. The Danfoss case was considered by the European Court in a number of subsequent cases namely Nimz, Gerster and Cadman in which it confirmed the application of the above principle unless “the worker provides evidence capable of giving rise to serious doubts as to whether recourse to the criterion of length of service is, in the circumstances, appropriate to attain the objective of rewarding experience which enables the worker to perform his duties better, then it is for the employer to justify in detail recourse to the criterion of length of service by proving, as regards the job in question, that length of service goes hand in hand with experience and that experience enables the worker to perform his duties better.”
67. The meaning to be attributed to the “concept of serious doubts” introduced by the European Court in the Cadman case, was considered by the Court of Appeal in Wilson –v- Health and Safety Executive (2010) IRLR 59. At paragraph 48 Arden LJ stated:-
“in my judgment, the requirement of “serious doubts” is merely the counterpart of a length of service pay criterion not requiring justification in the usual case. The employee has to show that there is evidence from which, if established at trial, it can properly be found that the general rule does not apply. The employee does not necessarily have to descend into detail. I agree, however, with the EAT … that it is not enough that the evidence is capable of giving rise to serious doubts in the minds of the tribunal without having to convince the tribunal of those doubts. But there would have to be some basis for inferring that the adoption or use (as the case may be) of the length of service criterion was disproportionate. The onus of proof on proportionality does not shift to the employee.
At paragraph 52 Arden LJ stated:-
“when it comes to a question of deciding what criteria should be applied in determining the pay of an employee, the Court must necessarily defer to some degree to the judgment of an employer. In applying the test of serous doubts the tribunal must take that into consideration.”
68. There was dispute between the parties with regard to the “serious doubts” issue. On the one hand Ms McGrenera and Mr Wolfe submitted, at paragraph 108 of their first written submission, that the “Claimant has not given any evidence which would cast serious doubts on the ‘general rule’ that length of service goes hand in hand with experience and that this generally enables a worker to perform better at work. The tribunal is made up of persons with experience of the workplace and who, it is submitted, will appreciate that the ‘general rule’ applies with particular force when the occupation under consideration is a professional grade where the work varies over time as opposed to a generalised administrative Grade 6.”
On the other hand Mr Potter submitted, at page 8 paragraph 4 of his first written submission, that the “Claimant has established serious doubts as regards the inapplicability of the principle or presumption the law recognises, namely that experience enables an employee to perform better as it applies in her work and particularly in the face of pay scales greater than three to five years. She has been an outstanding performer throughout her time as an SPLO and the Respondent was unable to establish that comparators or colleagues with quantitatively more experience were qualitatively performing more effectively.”
69. The claimant gave oral evidence of her own outstanding performance which was supported by documentary evidence in the form of a number of her annual appraisals. In addition Mr Potter submitted at page 8, paragraph 4 of his first written submission, that he questioned Mr Paulin “specifically on this issue as to whether comparators were performing more effectively“ and “Mr Paulin stated that he just didn’t know”. In his oral submission Mr Potter submitted that he put the following question directly to Mr Paulin twice:
“If there are people in the same role who have been there longer and who are working to a higher degree of competency, proficiency, please tell us about those people.”
Mr Potter submitted that Mr Paulin did not answer that question twice and that he “declined” to answer it.
70. When considering its decision, none of the members of the tribunal was able to locate that question in their notes of the evidence. Given the potential significance of the question and Mr Paulin’s alleged failure to answer it twice, the tribunal reconvened the Hearing to clarify whether Ms McGrenera and Mr Wolfe accepted that it had been asked and, if not, to give Mr Potter the opportunity to clarify the stage at which it was asked, so that the members of the tribunal could check their notes again.
71. Mr Gillam, who had attended Mr Potter for the majority of the Hearing, provided the tribunal and Ms McGrenera with a typed copy of his notes of the relevant part of the Hearing. Mr Gillam’s notes were very similar to the President’s notes. At the reconvened Hearing, Mr Potter accepted that the questions he actually asked Mr Paulin in relation to this issue were not the same as the question set out at paragraph 69 above. However, Mr Potter submitted that the questions he actually asked Mr Paulin amounted to that same question in that they required Mr Paulin to identify people who were performing more proficiently and effectively than the claimant. Mr Potter further submitted that when he stated that Mr Paulin did not answer his direct question twice and that he declined to answer it, what he meant was that Mr Paulin did provide answers but those answers did not address the questions being asked.
72. Ms McGrenera submitted that it was clear from the notes of the relevant exchanges, that at no stage was the question:-
“If there are people in the same role who have been there longer and who are working to a higher degree of competency, proficiency, please tell us about those people;”
put directly to Mr Paulin. Ms McGrenera also submitted that that may be the question Mr Potter wishes he had asked but it was clearly not asked. Ms McGrenera further submitted that Mr Potter asked questions around that issue and got answers to those questions, but at no stage was Mr Paulin given the opportunity to answer that specific question.
73. In light of the conflict, the tribunal has set out the exchange of questions and answers between Mr Potter and Mr Paulin as follows:-
Question: The claimant in her evidence believes that her appraisals demonstrate that she hit the ground running.
Answer: You would expect that from a Grade 6.
Question: And this aspect of her case is about the contention that, particularly in 2008, she was fully effective and as effective as anyone else.
Answer: We are being asked to compare different people in different posts. I say everyone grows in their post or you become a poor performer. You become more useful the more experienced you are. New problems are always arising and you become more confident and can guide better during litigation.
Question: The claimant said that when she was appointed in 2006, that is when she came into the SPLO post, she said she hit the ground running and was effective but you indicated that it was startling that people starting in a post should be paid the same and you said a box 1 performer can develop and become more effective. That is true, but when talking about pay and grade, are they fully effective at the grade? Is it not the case that in 2008 and 2009 even though she is at a different area of work she is no less competent than anyone else at Grade 6?
Answer: I do not think I could agree with that.
Question: Can I put a nuance on that. She says she has exactly the same experience as every SPLO at that time and her appraisals demonstrate that she is no less equal and that is what she is saying to this tribunal.
Answer: That is very difficult without looking at everyone else’s performance.
Question: The first point is the learning curve point. Certainly in 2008 they have been in SPLO for two years. Certainly in 2009 the claimant is saying she is fully an effective performer as anyone else in the grade. The nuance is, as part of that, she has been in the SPLO grade for the exact same time as anyone else.
Answer: That is on the basis that there is no history to all of this. I am not an expert on what happened. My impression is you looked at the SLA grade which was a combination of Grades 6 and 7. Some of the work was not at Grade 6 so you were able to establish a number of Grade 6 posts. One of the things was the staff for SPLO Grade 6. The first point the claimant had no staff. One of the things a SPLO had to have was staff.
Question: The review found at page 81 paragraph 6.3 the SLA was analogous more to Grade 7 than to Grade 6. The claimant in her role at Law Reform is performing at the same level as anyone else in Grade 6.
Answer: I don’t know how you can know that.
Question: Is one of the best indicators by looking at the appraisals.
Answer: I can’t agree that.
74. Having considered the submissions of Mr Potter and Ms McGrenera together with the notes of the questions and answers, the tribunal is satisfied that Mr Potter put directly to Mr Paulin that the claimant believed that in 2008 she was fully effective and as effective as anyone else. However, he did not go on to ask Mr Paulin to tell the tribunal about any other SPLOs who had longer service than the claimant and who were working to a higher degree of competency or proficiency. Nor does the tribunal consider that Mr Paulin could have been expected to interpret Mr Potter’s actual questions in that way. In those circumstances, the tribunal is not satisfied that the claimant has raised evidence of or, as Mr Potter submitted, has established serious doubts over the link between length of service (experience) and performance.
75. In light of that conclusion, the tribunal is satisfied that the respondent has succeeded in its Section 1(3) defence without having to provide objective justification for its incremental pay scale and that the claimant’s claim for equal pay fails. However, in case the tribunal’s conclusion is wrong and as the issue of justification was dealt with in detail by the parties, the tribunal considered, in the alternative, whether the respondent would have been able to objectively justify its incremental pay system if it had been required to do so.
The respondent’s incremental pay system
The pre-2002 pay system
76. Prior to the commencement of the claimant’s employment in 2003, the respondent operated a number of pay systems, the most recent of which dated back to 1992. Mr Baker described that system as complicated, confusing and chaotic. It was made up of very long pay spines, was difficult to administer and was even more difficult to understand. Although it did reward performance, it lacked transparency in that an employee could move up either a small number or a large number of points depending on performance which led to very wide disparities in the basic pay of staff at similar grades.
The 2002 Single Pay Agreement
77. In 2002, following negotiations between management and the trade union, a single pay system was agreed and introduced, with effect from the 2002/03 pay year, for all non-industrial grades below the senior civil service which included Grade 6. It was designed to be a simple and transparent pay system which could be understood easily by both staff and the public.
78. The objectives of the 2002 Single Pay Agreement were:-
“i. To encourage staff to improve their individual performance for providing a direct and regular link between satisfactory performance and pay
ii. To link the pay and personnel management arrangements
iii. To provide incentives for improving and maintaining efficiency
iv. To provide better pay opportunities through pay progression
v. To further improve the openness of all the rules and provisions of the pay, promotion and career management arrangements so that staff could understand it easily
vi. To provide for equity of treatment in respect of remuneration in accordance with the Equal Opportunities policy of the NICS while also providing for flexibility to deal with particular pay problems
vii. to secure the confidence of staff that their pay will be determined fairly through a simple and transparent pay system
viii. To secure the confidence of the public in the system for determining the pay of the staff in the non-industrial Civil Service covered by the Agreement by providing that their pay shall be such, taking one year with another, as to recruit, retain and motivate them to perform efficiently the duties required of them; and
viii.(sic)To enable the Government to reconcile its responsibilities for the control of public expenditure with its responsibilities as an employer.”
79. Under the 2002 Single Pay Agreement, the old pay scales were abolished and each grade was given a new pay scale which consisted of a minimum pay point, a maximum pay point of between 10 and 13 points and a series of pay points in between. The performance of each member of staff was appraised annually against their agreed objectives for the year and all members of staff who received either a box 1 mark (the highest), a box 2 mark or a box 3 mark were eligible for upwards progression by one point each year until the maximum point was reached, with a non-consolidated bonus for box 1 and box 2 performers. Those members of staff who received either a box 4 mark or a box 5 mark in their annual appraisals were not eligible for upwards progression that year except in exceptional circumstances.
The Grade 6 pay scale under the 2002 Single Pay Agreement
80. Under the 2002 Single Pay Agreement, the Grade 6 basic pay scale had 13 points. When the claimant commenced employment with the respondent in September 2003, she was placed between points 2 and 3 so that her basic pay matched what she had been earning with the Northern Ireland Court Service. In 2004/05 the claimant progressed to point 4 on the pay scale. In 2005/06, although the claimant’s basic pay increased, she remained at point 4. Mr Baker explained that this was because an additional point was added to the pay scale that year, on a one off basis, to redress the fact that staff at the maximum point would otherwise have received virtually no pay increase.
The restructuring of the 2002 Single Pay System
81. The respondent considered that the 2002 Single Pay System had a number of advantages over previous systems and that it was appropriate to meet its objectives. That was because the respondent believed, as set out at paragraph 35 of its draft business case to Her Majesty’s Treasury, dated 9 August 2006, that it provided transparency for staff and for a clear progression path towards the pay scale maxima through a “clear and demonstrable linkage and compatibility between our pay and performance management systems, in that the achievement of in-year personal objectives, on which performance and therefore pay awards are based are linked to the achievement of business area objectives and the development of competences at the grade”.
82. However the respondent recognised that the 2002 pay system also had a number of disadvantages. In particular:-
(i) the pay scales were too long and had resulted in equal pay vulnerability, particularly in the lower grades where it could not reasonably be argued that such a lengthy period of experience and development was required to be fully effective in the grade;
(ii) the pay scales had too many overlaps;
(iii) there were still too many different pay scales; and
(iv) the cost of annual progression was too high.
83. In February 2006, Her Majesty’s Treasury issued its 2006/07 Civil Service Pay Guidance which provided the framework within which departments could make pay awards from 2006 onwards. The objectives of the guidance were essentially to ensure that pay across the whole Civil Service was fair and non discriminatory and that increases were affordable within the overall fiscal environment, which included a target of £250 million procurement savings for 2006, and offered value for money. The Guidance included the expectation that any increase sought by the Northern Ireland Civil Service should be between 2% and 3.5% and it made it clear that any increases above that needed to include very convincing arguments in support of them.
84. The respondent proposed making a number of structural changes to the 2002 system to remove what it considered to be the unnecessary complexities, inconsistencies, inherent unfairness and equal pay vulnerabilities that had developed within the structures and to replace it with a system that was fair to all staff and that was transparent, affordable (within the Government’s Public Sector Pay Policy), adaptable, more efficient to administer and which was sufficient to enable the Northern Ireland Civil Service to recruit, retain and motivate staff and to reduce the cost of progression.
85. The respondent’s initial focus was on the need to ensure that the pay system was compliant with current and future legislative requirements, principally in the areas of low and equal pay and with an increased emphasis on performance requirements. The respondent’s ultimate aim was to move to a 4 year pay scale for AA and AO grades, a 6 year pay scale for EO and SO grades and an 8 year pay scale for DP, PO and SPO grades which included Grade 6 lawyers. The rationale for this proposal was that the respondent considered that at the more junior grades, staff should be able to acquire and develop skills and experience more quickly because of the nature of those posts whereas at higher levels the depth and breadth of skills and experience which needed to be developed took more time.
86. The respondent considered that the required restructuring would be expensive and that it was neither achievable nor affordable within a single pay year. The respondent therefore proposed, in its business case to Her Majesty’s Treasury, developing a set of proposals for implementation over a 3 year period and the respondent sought increases above 3.5% to fund the proposed restructuring.
For 2006/07 the respondent sought an increase of 4.56%, (53% of which was to be spent on pay progression costs; for 2007/08 the respondent sought an increase of 4.09%, 60% of which was to be spent on pay progression costs; and for 2008/09 the respondent sought an increase of 3.85%, 58% of which was to be spent on pay progression costs.
The respondent recognised that it would be too expensive to complete the restructuring process within that 3 year period and committed itself to continue to shorten the pay scales until its ultimate objective of reaching 4 years for the lower grades, 6 years for the middle grades and 8 years for the higher grades, which includes Grade 6, was achieved.
87. The respondent’s business case for additional funding was accepted by Her Majesty’s Treasury and in February 2007, following agreement between management and trade union side, the terms of the three year pay settlement and the restructured incremental pay scale were announced to all relevant staff by way of circular.
The restructured pay system
88. The main elements of the 2006/09 agreement which are relevant to this claim were:-
(1) the continuation of the 2002 one step pay progression for all eligible staff who received box 1, 2 or 3 marks in their annual appraisals, with the non-consolidated performance bonus being set at £150 for box 1 performers and £50 for box 2 performers;
(2) the restructuring of the 2002 pay scales by:-
(i) shortening them through the reduction of the number of points between the minima and maxima points;
(ii) reducing the financial gap between the minima and maxima points by providing larger increases for the pay points towards the bottom of the pay scale than at the higher and maxima points to enable staff to move towards the maximum basic salary more quickly and to reflect the fact that the learning curve is steeper in the earlier years in a grade and gentler as a member of staff approaches the maximum point;
(iii) increases to the amount of basic pay for minima and maxima basic points;
(iv) consideration of the revalorisation of pay points each year.
The effect of the restructured pay system on the Grade 6 pay scale and on the claimant
89. The effect of the restructuring on the Grade 6 pay scale, which included SPLOs, was that the number of points on the pay scale was reduced from 13 points in 2005/06 to 12 points in 2006/07, 11 points in 2007/08 and 10 points in 2008/09. In pursuance of its commitment to further reductions in the number of pay points, the respondent reduced the pay scale to 9 points in 2009/10 with the intention of reducing it to 8 points in 2010/11. However, in the absence of a decision at Ministerial level on the Public Sector pay remit for 2010/11 by September 2009, the respondent gave the trade union side 6 months written notice of its intention to withdraw from the Single Pay Agreement and that was still the position at the time of the Hearing in December 2010.
90. The effect of the restructuring of the Grade 6 pay scale on the claimant was that, although the claimant remained at point 4, she continued to be one point closer to the maximum point each year and the financial gap between her basic salary at point 4 and the maximum basic salary was reducing more quickly. That is because the increase in her basic salary at point 4 was:-
£2,293 for 2006/07;
£2,324 for 2007/08; and
£2,070 for 2008/09;
whereas at the maximum point the increase was:-
£1,200 for 2006/07;
£1,224 for 2007/08; with
no increase for 2008/09.
Legitimate Aims
91. The respondent contended that the provision of its incremental pay scale was necessary to meet a number of objectives and that it operated its incremental pay scales in a manner which was proportionate to those objectives and in a way which minimised the discriminatory effect of them. The respondent also contended that the fact that a number of reasons exist to justify the length of the pay scale enhances that justification rather than diminishes it. The respondent further submitted that while each objective, taken individually may be sufficient justification, when grouped collectively, their strength was overwhelming. The respondent’s objectives which largely mirror the objectives of the 2002 Single Pay System were set out in its skeleton argument, dated 21 April 2010, as follows:-
(1) the provision and operation of the pay scale was necessary to enable the Government to reconcile its responsibilities for the control of public expenditure with its responsibilities as an employer in circumstances involving budgetary constraints, where the demands on finite resources were virtually unlimited and often unpredictable, and where affordability and value for money were key considerations;
(2) it was necessary for the respondent to operate its pay scale in order to encourage staff to improve their individual performance and to develop the competences relevant to their agreed personal objectives by providing a direct and regular link between satisfactory performance and pay (using a one point progression formula applicable to all eligible staff whose performance was deemed as satisfactory or better), thereby ensuring the delivery and administration of high quality public services;
(3) the operation of the pay scale provided an important link between pay and personnel management arrangements;
(4) the operation of the pay scale provided incentives for improving and maintaining efficiency;
(5) the operation of the pay scale provided for better pay opportunities in line with continuing service, and was necessary to reward the loyalty of staff;
(6) the operation of the scale was necessary for the respondent to promote and improve the openness of all the rules and provisions of the pay, promotion and career management arrangements;
(7) the operation of the pay scale provided for certainty, transparency, consistency and equity of treatment in respect of remuneration in accordance with the respondent’s equal opportunities policy while also providing for flexibility to deal with particular pay problems;
(8) the operation of the pay scale was necessary to secure the confidence of staff that their pay would be determined fairly, and was developed with the agreement and support of trade union side;
(9) the operation of the pay scale was necessary to secure the confidence of the public in the system for determining pay of employees in the Northern Ireland Civil Service, by providing that their pay was such, taking one year with another, as to recruit, retain and motivate them to perform efficiently the duties required of them;
(10) the operation of the pay scale was a necessary investment in skills which was in part designed to incentivise staff in order to retain and motivate experienced, trained employees in a proportionate fashion, particularly in the context of those workers who had attained a certain level of experience in a grade but who were not, for whatever reason, going forward for promotion.
The length of the pay scale
92. The respondent submitted that it was difficult to know precisely what claim the claimant was making in respect of the length of the pay scale. The tribunal shared that difficulty for the following reasons.
(1) In his opening, Mr Potter did not suggest that the respondent’s provision or adoption of an incremental pay scale was being challenged. He indicated that it was the respondent’s “use” of the incremental pay scale for the period 1 August 2006 – 31 July 2009 that was being challenged and that the position of the claimant’s trade union, which was funding her case, was that the incremental pay scale should not exceed 5 years. He also stated that in light of the claimant’s history even 4 or 5 years would be too long;
(2) In terms of performance and proficiency, the claimant’s direct evidence in respect of the length of the pay scale varied from:-
(a) her belief that basic pay should be determined on performance without reference to experience; to
(b) her belief that anyone who meets the competences for Grade 6 should be able to hit the ground running; to
(c) her view that her experience as a Grade 7 with her former employer enabled her to hit the ground running at Grade 6 with the respondent; to
(d) her view that in light of her appointment and the appointment of SLAs to the regraded post of SPLO on 3 January 2006, she had the same SPLO experience as all of them and that it took her 2½ years to become fully proficient as a SPLO.
(3) Under cross-examination the claimant’s evidence varied from:-
(i) her acceptance that there should be a “small learning curve” following appointment; to
(ii) if the respondent is saying that experience should count, why stop at 9 points instead of 20 or 25 points; to
(iii) Grade 6 employees who are performing well should be at the top of their scale within 5 years; to
(iv) her view that in light of her own performance it was very difficult to understand what purpose an incremental pay scale has.
(5) At paragraph 5 of her written report, Ms Hastings, while pointing out the potential discriminatory impact of lengthy pay scales and wide pay ranges, acknowledged that in both law and employment practice, differences in experience can and should justify differences in pay.
(6) During cross-examination of Mr Baker, Mr Potter suggested that a senior lawyer “may get to optimum” after 3 years.
(7) When cross-examining Mr Paulin on how long it takes a Grade 6 to become fully competent, Mr Potter stated “no one will argue with you that we all grow with experience and become more effective everyday, no argument, because evidentially true”.
(8) At page 2, paragraph 9 of his first written submission, Mr Potter submitted that the length of the Grade 6 pay scale should recognise that “incumbents quickly attain proficiency in post (hitting the ground running or at the very least walking at Olympic pace)”.
(9) On 2 occasions in his first written submission and one occasion in his second written submission, Mr Potter submitted that it was the claimant’s case that the pay scale should be no longer than 3-5 years.
(10) At page 8 paragraph 5 of his first written submission, as pointed out by the respondent, Mr Potter submitted that “at such senior levels of the Government legal service where appointees will already have substantial experience in law and have met the required aptitudes and competencies in the appointments process, … such people will be able to hit the ground running and perform effectively and proficiently within a relatively short period of time, months rather than years and even then no more than a few years.”
(11) At page 8 paragraph 7 of his first written submission, Mr Potter submitted that “at the higher levels where everyone has substantial experience, it is submitted that aptitude and intelligence correlate with better performance rather than length of time in the post”.
93. In terms of loyalty and motivation, the claimant’s evidence was that an incremental pay scale was not an appropriate way to achieve those objectives. When cross-examining Mr Baker, Mr Potter suggested that being a good lawyer was sufficient motivation. In his first written submission at page 15 paragraph 17(e), Mr Potter submitted that senior lawyers receiving good terms and conditions required little motivation and that discriminatory pay practices disproportionately de-motivate. However in his second written submission, at page 9 section 3 paragraph (c)(iv), Mr Potter submitted that loyalty and motivation “do not appear to be factors justifying a pay scale longer than 3-5 years”.
94. In terms of openness and transparency the claimant accepted that these were legitimate objectives but disputed the need for an 8 year pay scale to achieve them.
95. In terms of cost, the claimant accepted that the respondent did have to have regard to budgetary constraints when operating its pay scale but that that was subject to compliance with the Government’s own legislation with regard to equal pay. During his cross-examination of Mr Baker, Mr Potter suggested that the respondent could have saved money by capping the pay scale in 2006 until employees started to catch up. In his first written submission Mr Potter submitted that the respondent has been able to address pay disparities reducing the scale from 13 to 9, but could have addressed disparities more cost effectively by red circling, freezing or reducing higher salaries. In his second written submission, Mr Potter submitted that cost was not a prohibitory factor.
96. Doing the best it can in light of the evidence and submissions set out above, the tribunal concludes that the claimant was not disputing the legitimacy of the respondent’s objectives. Nor was the claimant disputing that the respondent’s use or operation of its pay scale for up to 5 years was a proportionate means of achieving those legitimate objectives. The claimant’s contention was that the respondent’s pay scale, which had been reduced to 9 years by the date of the Hearing, was too long and was disproportionate in light of its discriminatory effect.
97. The claimant challenged the length of the pay scale primarily because she believed that by 2008 she was providing high quality services and did not need any more experience/time to become fully proficient, as evidenced by her annual appraisal reports. They demonstrated that she has consistently performed to the highest level as evidenced by her box 1 marks and by the comments of her reporting and countersigning officers. For example in June 2008 Mr Doherty, who was her reporting officer, described her application of skills as “first class” and assessed her as suitable for promotion to the next grade. Mr Paulin who was her countersigning officer commented that he had “come to rely very much on her knowledge and judgment”.
98. The respondent fully accepted that the claimant has consistently provided outstanding performance as evidenced by her performance appraisals. However, Mr Baker told the tribunal that while the respondent had recognised that the 2002 pay scales, including the 13 point pay scale for Grade 6 were too long, the respondent considered that given the depth and breadth of skills and experience which had to be developed at Grade 6, an 8 year pay scale was necessary and that following negotiations, the trade union agreed with this.
99. Mr Paulin confirmed this position in his evidence. Mr Paulin who is the Departmental Solicitor and Head of Government Legal Services for Northern Ireland has been a solicitor with the Northern Ireland Civil Service for over 34 years since qualifying in 1976. He worked from 1976 to 1989 in the Criminal Injuries Branch. He then worked from 1989 to 1992 in the Crown Solicitor’s Office as a Senior Legal Assistant. In 1992 he was promoted to the Senior Civil Service as Assistant Crown Solicitor. In 2002 he was appointed Crown Solicitor for Northern Ireland and in February 2007 he was appointed the Departmental Solicitor and Head of Government Legal Services for Northern Ireland. As pointed out by the claimant, Mr Paulin is the claimant’s countersigning officer and he has worked quite closely with the claimant on a number of projects. As set out above, he commented in the claimant’s June 2008 appraisal that he had come to “rely very much on her knowledge and judgment”. In light of the above, the tribunal is satisfied that Mr Paulin has a very good understanding of the length of service a Grade 6 lawyer needs to become a fully proficient performer.
100. Mr Paulin explained to the tribunal that although Grade 6 lawyers are expected to be effective from the start of their employment, having met the required competences, they needed to:
(i) develop their knowledge;
(ii) improve their skills;
(iii) develop and grow into their post or another post, if transferred;
(iv) improve their network of contacts;
(v) develop their ability to influence others
and that the incremental pay scale, which was 9 years long at the date of the Hearing, was necessary to enable them to do so.
101. Mr Paulin did not accept that a box 1 performer could not continue to develop and gain further experience which he considered to be necessary to become a fully proficient performer. On the contrary, Mr Paulin explained that a box 1 performer, like the claimant, could continue, through time, to develop and gain experience which would be useful not only to the individual but to the organisation. He also explained that new problems are always arising and that as a Grade 6 lawyer gains experience, they gain more confidence, become more effective and are given tasks which would not be given to less experienced members of staff at the same grade.
102. Mr Paulin considered that the learning curve was steeper after initial appointment and that it eased as the Grade 6 lawyer progressed up the pay scale. Mr Paulin also explained that a Grade 6 lawyer’s performance was assessed on an annual basis against the agreed objectives for that particular year and that it could improve or deteriorate, particularly where a Grade 6 lawyer was transferred to another post with different duties.
103. In relation to the claimant, the tribunal was satisfied that although she had been involved in a judicial review application, she was not responsible for judicial review litigation in her role in Law Reform and her experience of such litigation was not therefore relevant. The tribunal is also satisfied that the claimant has experience of the full Westminster Order in Council legislative process but at the date of the Hearing did not have experience of the complete Northern Ireland Assembly legislative process which is relevant to her post. The tribunal was also satisfied that at the date of the Hearing the relationship with the newly formed office of the Attorney General had still to be developed.
Cost/Affordability
104. The claimant did not dispute that cost/affordability could amount to a legitimate aim. However she did not accept that the respondent’s operation of its pay scale, that is the length of it, was a proportionate means of achieving that aim in light of its discriminatory effect.
105. The tribunal is satisfied that cost/affordability can amount to a legitimate aim provided it is not the only aim or objective of the pay system: Cross –v- British Airways (2005) IRLR 423. The tribunal is also satisfied that an employer cannot establish unaffordability by mere assertion. The respondent should provide the tribunal with sufficient detail of the costs and the financial context of those costs. However that requirement need not involve an exhaustive review of the respondent’s finances provided that the tribunal is in a position to assess the broad picture.
106. The tribunal is satisfied that the respondent did not rely on mere assertion. Having considered:-
(1) the oral evidence of Mr Baker;
(2) the documentary evidence in the form of:-
(i) Her Majesty’s Treasury 2006 Civil Service Pay Guidance;
(ii) the ministerial briefing dated 24 May 2006;
(iii) the August 2006 draft business case to the Treasury; and
(iv) the agreement reached between management and trade union side;
the tribunal is satisfied that:-
(a) the respondent was proposing to restructure its pay scales against the backdrop of a major reform of public services which included a target of £250 million procurement savings for 2006;
(b) the respondent did not have a limitless budget to restructure the pay scales;
(c) the respondent had to operate its restructured pay scale within the constraints of the financial limits set by Her Majesty’s Treasury in 2006;
(d) the respondent realised that it could not carry out its proposed restructuring within the financial parameters set by Her Majesty’s Treasury in 2006 and successfully made the case for a higher pay remit to commence the restructuring over a 3 year period with a commitment to continue to reduce the Grade 6 pay scale until it reached 8 points;
(e) the figures set out in the business case to the Treasury indicated that over half the annual remit increase for each of the 3 years 1 August 2006-31 July 2009 was to be used to meet the cost of annual pay progression.
107. Although Mr Potter submitted that radical measures such as red circling, freezing or reducing pay could have been used to equalise pay, no evidence was adduced to enable the tribunal to assess whether any of these alternatives would have been more appropriate. The tribunal is satisfied that such measures could have had a detrimental effect on the loyalty and motivation of employees.
Trade Union Agreement
108. In her closing oral submissions, Ms McGrenera submitted that the fact that the 2002 incremental pay system and its 2006 restructuring were the subject of collective agreements with the trade union side, while not conclusive, was a relevant factor to be taken into account by the tribunal when determining justification. In Pulham & Others –v- London Borough of Berking and Dagenham (2010) IRLR184, the EAT held that:-
“While a tribunal is certainly entitled to have regard, in assessing the justifiability of a discriminatory measure, to the fact that it has been negotiated with the representatives of the workforce, it cannot abdicate the responsibility of itself carrying out the necessary proportionality exercise.”
Conclusion
109. The tribunal is satisfied that the respondent has established that it had a real need to provide and operate a pay system which would meet its stated objectives which the tribunal is satisfied are legitimate. The tribunal is also satisfied that the respondent’s provision of an incremental pay system was an appropriate way to achieve those legitimate objectives.
110. In the Wilson case, Arden LJ stated, at paragraph 34:-
“It may be difficult for a Court to determine whether the use of a service-related criterion was justified. That would be a reason for the court giving the employer a “margin of appreciation”, that is, a margin within which it would defer to his commercial judgment but it is not an argument for excluding review by the Courts altogether.”
111. Given the nature and range of the respondent’s objectives and allowing the respondent a “margin of appreciation”, the tribunal is satisfied that an 8 year pay scale for Grade 6 lawyers was reasonably necessary, notwithstanding its discriminatory effect. In light of the financial constraints imposed on the respondent, the tribunal is also satisfied that:-
(i) the respondent’s progressive reduction of the number of pay points (the Grade 6 pay scale had been reduced from 13 to 9 points by the date of Hearing and was to be reduced further to 8 points);
(ii) the larger financial increases at the lower points of the pay scale; and
(iii) the setting of the amounts of the non-consolidated bonuses for box 1 and box 2 performers (£150 box 1; £50 box 2);
was a proportionate means of addressing its legitimate objectives and minimising any discriminatory effect. The tribunal is satisfied that the fact that the trade union side agreed the respondent’s 2006 restructuring proposals, including the length of the Grade 6 pay scale, supports the respondent’s justification defence. The tribunal therefore concludes that, if the respondent had been required to do so, it would have established objective justification for the operation of its incremental pay scale as well as its provision.
______________________________________
E McBride CBE
President
Date and place of hearing: 6-9 December 2010, 17 December 2010,
7 January 2011 and 6 September 2011, Belfast
Date decision recorded in register and issued to parties: