MR. JUSTICE BROWNE-WILKINSON: In this case Mrs. Jenkins, a part-time worker, is claiming that she ought to be paid the same hourly rate is that paid to full-time male employees of Kingsgate (Clothing productions) Ltd. ("the Employers"). Her claim was originally brought solely under the Equal Pay Act 1970, but, as will appear, she now also relies on Article 119 of the E.E.C. Treaty.
Her claim was dismissed by an industrial tribunal sitting in London, .he industrial tribunal gave their reasons very shortly. However, this case was referred by the Employment Appeal Tribunal to the European Court of Justice for its ruling and the Order making that reference sets out many more facts than are contained in the findings of the industrial tribunal. We understand that the statement of facts set out in the order was agreed by the parties. They must therefore now be taken to be the established facts. They are as follows.
The Employers are manufacturers of ladies' clothing at a factory in Harlow, Essex, where they employ 90 workers. Prior to 1975 the Employers paid their male and female workers at different rates but there was no difference in the hourly rate of pay of "full-time" and "part-time" workers (whether male or female). By November 1975, the "full-time" rate of pay (that is the rate for those working 40 hours per week) was equalised for male and female workers. However, "part-time" workers .that is, those working for fewer than 40 hours per week) were paid 10 per cent, less than the "full-time" rate. The difference between the full-time and the part-time rates was introduced as a result of negotiations between representatives of the Employers and representatives of the relevant trade union whereby it was further agreed that the lower hourly rate would also be applicable to any full-time worker who persistently failed to work 40 hours per week.
The Employers maintained the difference in pay rates as between full-time and part-time workers to discourage absenteeism in their factory and to try to ensure that all their expensive machinery was being used for as many hours every day as was possible.
Mrs. Jenkins, who was regarded by the Employers as expert at her job, was engaged on like work with Mr. Bannan as a Special Machinist (Grade 2). Mrs. Jenkins worked either a little more or a little less than 30 hours per week. In the section where Mrs. Jenkins worked there were 17 machines and 5 machinists. None of the machines was regarded as being Mrs. Jenkins' own particular machine. Some of the machines were used more often than others, according to the work requirements, and when the work in hand did not require the use of a particular machine that machine would stand idle. Some of the machines were duplicated to cope with extra work. Mrs. Jenkins operated several machines, including the bluffing, basting and button holing machine. She might use four different machines in the course of two hours depending on the type of work to be done.
Overtime was available to full-time workers who worked more than 9 hours a day, their normal working week of 40 hours being divided into five days. Saturday morning overtime was available to both full-time and part-time workers and Mrs. Jenkins sometimes worked on Saturday mornings when she received her basic rate of pay plus a supplement of 37½ per cent, of her basic rate.
At the date of Mrs. Jenkins' application to the industrial tribunal ;he part-time workers were all women. At the date of the hearing before the industrial tribunal there was a male part-time worker who had recently retired and had unusually been allowed to stay on beyond normal retiring age. His was regarded as an exceptional case and he had worked 16 hours per week since 2nd January 1979, retaining his staff status and not clocking in but being paid at 10 per cent. less than the hourly rate he had received before retirement. He was a skilled craftsman capable of doing almost all jobs in the factory. It was a mutually convenient arrangement between him and the Employers but was subject to a. six to eight week trial period.
By its decision of 5th February 1979 the industrial tribunal held that:-
(1) They were bound to follow the decision of the Employment Appeal Tribunal in Handley -v- H. Mono Limited J1979] IOR 147;
(2) Mrs. Jenkins was working only 75 per cent, of a 40-hour week; and this was a substantial difference which justified the difference in the hourly rate of pay between herself and Mr. Barman;
(3) Any difference in the basic rates as between full and part-time workers "smacks of inequality among the sexes because by the very nature of things the part-time workers are bound to be mostly women, even though as in this case the Respondent had very good reason for paying the part-time workers less".
The industrial tribunal accordingly upheld the Employers' defence under Section 1(3) of the 1970 Act and rejected Mrs. Jenkins' claim. Mrs. Jenkins appealed to the Employment Appeal Tribunal and initially contended that the proper interpretation of section 1(3) of the Act was that, as a matter of law, a mere difference in the number of hours worked each week was not capable of affording the Employers a defence.
In the course of argument, counsel for Mrs. Jenkins conceded that the cases of Kearns -v- Trust House Forte Limited (unreported), Handley -v- H. Mono Limited [ 1979] ICR 147 and Purrant -v- North Yorkshire Area Health Authority and the Secretary of State for Social Services [1979] IRLR 401 precluded him from succeeding under the Act of 1970 read in isolation from European Community law, but he reserved Mrs. Jenkins' right to contend on any appeal to the Court of Appeal that the previous cases had been wrongly decided.
Counsel for Mrs. Jenkins submitted that the equal pay provisions of Article 119 of the EEC Treaty and Article 1 of the Council Directive of 10th February 1975 affected the case and that there were questions of interpretation which ought to be immediately referred to the European Court of Justice. The Employers did not oppose this course and the preliminary ruling of the European Court of Justice was accordingly requested on the following questions:-
1. Does the principle of equal pay, contained in Article 119 of the EEC Treaty and Article 1 of the Council Directive of 10th February 1975 require that pay for work at time rates shall be the same, irrespective:-
(a) of the number of hours worked each week, or
(b) of whether it is of commercial benefit to the employer to encourage the doing of the maximum possible hours of work and consequently to pay a higher rate to workers doing forty hours per week than to workers doing fewer than forty hours per week?
2. If the answer to question 1(a) or (b) is in the negative, what criteria should be used in determining whether or not the principle of equal pay applies where there is a difference in the time rates of pay related to the total number of hours worked each week?
3. Would the answer to question l(a) or (b) or 2 be different (and, if so, in what respects) if it were shown that a considerably smaller proportion of female workers than of male workers is able to perform the minimum number of hours each week required to qualify for the full hourly rate of pay?
4. Are the relevant provisions of Article 119 of the EEC Treaty or Article 1 of the said Directive, as the case may Toe, directly applicable in Member States in the circumstances of the present case?
As appears from the decision of the European Court of Justice, in the United Kingdom 93 per cent, of all part-time workers are women. Therefore, not only in relation to this particular employer but in general, the impact of lower pay for part-time workers bears much more heavily on women than on men.
Two points should be noted at this stage. First, the agreed facts we have stated negate any intention by the Employers to discriminate against women. Secondly, there is no finding by the industrial tribunal or agreement between the parties that the pay differential was in fact effective or required to reduce absenteeism or to increase the utilisation of the Employer's machinery: the only finding or agreement is that it was for those purposes and with that intention that the Employers maintained the pay differential. The importance of those points will emerge in due course.
The Opinion of Advocate-General Warner (as he then was) was delivered on 28th January 1981 and the judgment of the full Court of the European Court of Justice was delivered on 31st March 1981: see 1981 IRLR 228. We will have to refer to this judgment again in due course, but at this stage it is sufficient to state the formal ruling of the Full Court, which is as follows:
1. A difference in pay between full-time workers and part-time workers does not amount to discrimination prohibited by Article 119 of the Treaty unless it is in reality merely an indirect way of reducing the pay of part-time workers on the ground that that group of workers is composed exclusively or predominantly of women.
2. Where the national Court is able, using the criteria of equal work and equal pay, without the operation of community or national measures, to establish that the payment of lower hourly rates of remuneration for part-time work than for full-time work represents discrimination based on difference of sex the provisions of Article 119 of the Treaty apply directly to such a situation.
The case now comes back before us to apply those rulings in the present case.
Section 1(2) of the Equal Pay Act 1970 implies into every contract of employment "an equality clause" which has the effect that where a woman is employed on "like work" with a man in the same employment her pay for such work must be at the same rate as the man's pay. There is 10 dispute that Mrs. Jenkins1 work was "like work" to that done by one of the full-time male employees. However, Section 1(3) provides as follows:
"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 difference (other than the difference of sex) between her case and his."
Article 119 of the Treaty provides as follows:
"Each Member State shall during the first stage ensure and subsequently maintain the principle that men and women should receive equal pay for equal work.
For the purpose of this article pay means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind which the worker receives, directly or indirectly, in respect of his employment from his employer.
Equal pay without discrimination based on sex means:
(a) that pay for the same work at piece rates should be calculated on the basis of the same unit of measurement;
(b) that pay for work at time rates should be the same for the same job."
The questions which arise in this case as a result of the Judgment of the European Court of Justice are as follows:
(1) Is the fact that the woman is a part-time worker and the comparable man a full-time worker by itself, and without more, "a material difference" within Section 1(3) of the 1970 Act such as to prevent the equality clause from operating?
(2) Is the fact that the woman is a part-time worker and the comparable man a full-time worker an irrelevant factor in considering whether there is a material difference for the purposes of Section 1(3)? .
(3) Is the fact (if it be a fact) that the differential in pay between part-time workers and full-time workers encourages greater utilisation of the employer's plant and discourages absenteeism a relevant or sufficient "material difference" for the purposes of Section 1(3)?
(4) Is it sufficient for the purposes of Section 1(3) of the Act of 1970 and Article 119 for the employer to show only that he had no intention of discriminating or must he also show that the differential in pay is objectively justified for some other reason?
Before considering these questions we must say a word about the effect of Article 119 on the internal United Kingdom law. It is now established that Article 119 applies directly in the United Kingdom at least for the purposes of this case: see ruling 2 of the European Court )f Justice. Therefore, under Section 2(1) of the European Communities Let 1972, Article 119 is to be "recognised and available in law, and be enforced, allowed and followed accordingly". Under Section 2(4) of the Act "any enactment passed or to be passed ... shall be construed and have effect subject to the foregoing provisions of this section". Although difficult questions may arise in cases where the clear construction of the internal United Kingdom statute conflicts with Article 119, where there is any ambiguity as to the ambit or meaning of an internal United Kingdom statute it ought to be construed so as to accord with Article 119: see McCarthys Ltd. -v- Smith (Number 2) [1980] ICR 692 at p.694. In our view, there is an ambiguity as to the exact meaning of the words in Section 1(3) of the Act of 1970 "genuinely due to a material difference (other than a difference of sex) between her case and his". Therefore, to the extent that the judgment of the European Court of Justice indicates the effect of Article 119, Section 1(3) of the Act )f 1970 should be construed so far as possible as having the same effect, however, as we understand the matter, although the United Kingdom statutes are to be construed as far as possible so as to confer rights it least as great as those conferred by Article 119, there is in law no reason why the United Kingdom statutes should not confer greater rights than those conferred by Article 119.
We turn then to the four questions mentioned above.
(1) Is the difference between part-time and full-time work by itself a material difference?
The decision of the Employment Appeal Tribunal in Kearns -v- Trust House Forte Catering Limited (unreported) is in our judgment a clear decision that the difference between part-time and full-time work is by itself "a material difference" for the purposes of Section 1(3). In Handley -v- H. Mono Limited (above) there are passages in the judgment which indicate the same view, although the Kearns case was not apparently sited: Slynn J. (at page 155 F) referred to a part-time job being 'basically a different kind of job in the quantitative sense". But in that case there were other material points which this Tribunal took into account in holding that, on the facts of that case, there was "a material difference", as Slynn J. pointed out on the first hearing before the Employment Appeal Tribunal of this present case. Slynn J. also pointed out that there were material points (apart from the simple fact that the woman was a part-time worker) which arose for consideration in Durrant -v- Worth Yorkshire Area Health Authority (above).
In our judgment the decision of the European Court of Justice clearly establishes that a differential in pay cannot be justified simply by showing that the women are part-time workers. The ruling we have already quoted demonstrates that something more has to be shown. What that "something more" is, we will consider in dealing with question 4 below.
Therefore, in our judgment, where the circumstances are such that part-time workers are wholly or mainly women, an employer cannot justify paying less for like work to a part-time woman than to a full-time man by simply relying on the fact that the woman is a part-time employee. Kearns -v- Trust House Forte Catering Limited (above) can no longer be regarded as good law.
(2) Is the difference between full-time and part-time work an irrelevant factor in considering whether there is a "material difference"?
We are not sure whether Mr. Lester (for Mrs. Jenkins) ever put his case as high as to submit that the difference between part-time and full-time work was wholly irrelevant when considering the question whether there was a "material difference" for the purposes of Section 1(3). The judgment of the European Court of Justice certainly establishes that this is a relevant consideration which can in some circumstances justify a differential in pay. What those circumstances are we will again consider when dealing with question 4 below.
(3) Is the fact that a differential in pay between part-time and full-time workers achieves greater utilisation of plant or reduces absenteeism a "material difference"?
We mast emphasise that this question arises only if the employer proves that the differential in pay in fact produces these results: it does not deal with the case where the employer intends to produce these results without showing that the results are in fact produced.
Mr. Lester submitted, in reliance on the decision of the Court of Appeal in Clay Cross (Quarrying Services) Limited -v- Fletcher [1979] , that the attainment by the employer of other objectives which relate solely to the profitability of his business were extrinsic factors and could not be regarded as relevant "material differences". In the Clay Cross case, the employer relied on the fact that the man who was receiving higher pay had been the sole applicant for the job and had demanded higher pay. The employer submitted 'that this constituted "a material difference". The Court of Appeal rejected this submission, saying that to constitute a material difference one had to look at the personal equations of the woman and the man (i.e., matters personal to them and to their work) and that reasons "personal to the employer" or economic factors" were irrelevant. By analogy, Mr. Lester argued that considerations such as increasing the utilisation of plant were economic factors personal to the employers which could not constitute a "material difference".
The first question put to the European Court of Justice was directed to this submission. Before us, Mr. Lester accepted that the decision f the European Court of Justice really concluded the point against him. Paragraph 12 of the judgment gives as an example of a case where a pay differential may be justified "where an employer is endeavouring on economic grounds which may be objectively justified to encourage full-time work irrespective of the sex of the worker."
Therefore, in our judgment a differential in pay between part-time workers (who are predominantly woman) and full-time male workers can be justified as being due to a material difference by showing that the pay differential does in fact achieve economic advantages for the employer.
(4) Is it sufficient for the purposes of Section 1(3) of the Act of 1970 and Article 119 for the employer to show only that he had no intention of discriminating or must he also show that the differential in pay is objectively .justified for some other reason?
This is the question which has caused us the greatest difficulty. It is highlighted in this case because of the findings of fact of the industrial tribunal and the facts agreed by the parties. No one has yet apparently considered whether the payment of a lower rate of pay to part-time workers, in this case is, in fact an effective or necessary way to reduce absenteeism and increase utilisation of the Employers' machinery. All that has been found is that the pay differential was introduced with that intention thereby negating an intention to discriminate against women. Therefore, in order to decide this appeal, we have to answer this question: unfortunately it is not one on which the judgment of the European Court of Justice gives us clear guidance.
It is desirable first to state the sense in which we are using certain terminology. We use the phrase "direct discrimination" to mean cases where a distinction is drawn between the rights of men and the rights of women overtly on the grounds of their sex. "Indirect discrimination" covers cases where, because a class of persons consist wholly or mainly of women, a difference drawn between that class and other persons operates in fact in a manner which is discriminatory against women, e.g., the present case. Indirect discrimination may itself be either intentional or unintentional. It is intentional if the employer (although not overtly discriminating) treats the class differently because he intends to differentiate on grounds of sex, i.e., he is dissimulating his real intentions. Indirect discrimination is unintentional where the employer has no intention of discriminating against women on the grounds of sex but intends to achieve some different purpose, such as the greater utilisation of his machinery.
The fact that indirect discrimination is unintentional does not necessarily mean that it is lawful. Thus, under the Sex Discrimination Act 1975, indirect discrimination is rendered unlawful "by Section l(l)(b) :even if it is unintentional. To escape acting unlawfully, the alleged discriminator has to show that the requirement which operates in a discriminatory fashion is justifiable because, viewed objectively, the Requirement is reasonably necessary to achieve some other purpose. The same is true in relation to racial discrimination under the Race Relations Act 1976, and under the law of the United States of America: see Griggs -v- Duke Power Company [1971] 401 U.S. 424. The question we have to decide is whether the same principle applies to Section 1(3) of the Act of 1970, or whether for the purposes of Section 1(3) it is enough to show that the employer had no actual covert intention of discrimination against women.
Were it not for the judgment of the European Court of Justice, we would have held that Section 1(3) requires an employer to do more than disprove an intention to discriminate. The equality clause implied by Section 1(2) of the Act of 1970 operates to counteract all discrimination whether direct or indirect and whether intentional or unintentional: it looks at the effect of the contractual terms, not at whether they are expressed in overtly discriminatory words or with any particular intention. Section 1(3) then operates by taking out of subsection (2) those cases where the variation in the terms between men and women is "genuinely due ;o a material difference (other than the difference of sex) between her case and his". The words "genuinely" and "other than the difference of sex" plainly prevent an employer who is intentionally discriminating (whether directly or indirectly) from escaping the effect of the equality clause. In our view, for the variation in pay to "be "due to" a material difference it would have to be shown that there was some other matter which in fact justified the variation. It would not be enough simply to show that the employer had an intention to achieve some other legitimate objective (although this might disprove any intention to discriminate): the employer would have to show that the pay differential actually achieved that different objective.
This view is supported by authority. In Shields -v- E. Coomes (Holdings Ltd) [1978] ICR 1159, the Court of Appeal held that so far as possible the Sex Discrimination Act 1975 and the Equal Pay Act 1970 should be construed together so as to produce a harmonious result. Bridge L.J. (at p.1178 E) said this:
"In the sphere of employment the provisions of the Sex Discrimination Act 1975 and the Equal Pay Act 1970 aimed at eliminating discrimination on the ground of sex are closely interlocking and provide in effect a single comprehensive code. The particular provisions designed to prevent overlapping between the two statutes are complex, and it may often be difficult to determine whether a particular matter of complaint falls to be redressed under one Act or the other. But what is abundantly clear is that both Acts should be construed and applied as a harmonious whole and in such a way that the broad principles which underlie the whole scheme of legislation are not frustrated by a narrow interpretation or restrictive application of particular provisions."
To make Section 1(3) of the Act of 1970 accord harmoniously with Section l(l)(b) of the Sex Discrimination Act 1975 requires that it should be construed as imposing on the employer the onus of proving that the variation in pay is in fact reasonably required to achieve some other objective.
Moreover, in the Clay Cross case (above) Lord Denning M.R. treated the principles laid down in the Griggs case (above) as applicable to Section 1(3) of the Act of 1970. The principle of the Griggs case is, as we have said, that requirements which operate in an indirectly discriminatory fashion have to be objectively justified as being required for some purpose other than a purpose linked to the sex of the person on whom the requirement is imposed. This again indicates that Section 1(3) is not satisfied merely by the employer showing that he had 10 intention to discriminate.
However, when one turns to the judgment of the European Court of Justice one is left in considerable doubt as to the effect of Article 119 in. relation to unintentional indirect discrimination. There are massages in the judgment which support the view that it is not enough :or the employer simply to show that he had no intention of discriminating. Thus in paragraph 11, the judgment states that in cases where both male and female part-time workers are paid less than full-time workers "the 'act that work paid at time rates is remunerated at an hourly rate which varies according to the number of hours worked per week does not offend against the principle of equal pay laid down in Article 119 of the Treaty insofar as the difference in pay between part-time work and full-time work is attributable to factors which are objectively justified and are in no way related to any discrimination based on sex." This approach is again reflected in paragraph 12 of the judgment and echoes the opinion of the Advocate-General. He adopted the approach of the United States Supreme Court in the Griggs case and plainly required that indirect discrimination must be objectively justified irrespective of the employer's intention.
On the other hand the formal ruling of the full Court (which we lave read) seems to approach the matter on the basis that if (by showing some other intention) the employer negates any covert intention to discriminate there will be no infringement of Article 119; this same approach is reflected in paragraphs 14 and 15 of the judgment.
We will assume (without deciding) that Article 119 as construed by the European Court of Justice does not apply to cases of unintentional indirect discrimination. How then are we to construe the United kingdom statute? Although we must construe the United Kingdom Legislation so as not to conflict with Article 119 and so far as possible to make it accord with Article 119, it does not necessarily follow that the United Kingdom legislation must in all respects have the same effect as Article 119. It would not contravene Section 2 of the European Communities Act if the United Kingdom statutes conferred on employees greater rights than they enjoy under Article 119. Since the Act of 1970 is an integral-part-of one code against sex discrimination and the rest of the code plainly renders unlawful indirect discrimination even if unintentional, it seems to us right that we should construe the Equal Pay Act 1970 as requiring any difference in pay to be objectively justified even if this confers on employees greater rights than they would enjoy under Article 119 of the Treaty. We therefore hold that in order to show a "material difference" within Section 1(3) of the Act if 1970 an employer must show that the lower pay for part-time workers is in fact reasonably necessary in order to achieve some objective other than an objective related to the sex of the part-time worker.
To sum up, an industrial tribunal in considering cases of part-time workers under the Act of 1970 will have to consider the following points:
(1) Do the part-time workers consist mainly of women?
(2) Do the part-time workers do "like work" to full-time male employees of the same employer?
(3) If the answers to (1) and (2) are 'yes' the equality clause will apply unless the employers can justify the differential in pay by showing a material difference for the purposes of Section 1(3).
(4) If the industrial tribunal finds that the employers intended to discriminate against women by paying part-time workers less, the employers cannot succeed under Section 1(3).
(5) Even if the employers had no such intention, for Section 1(3) to apply the employer must show that the difference in pay between full-time and part-time workers is reasonably necessary in order to obtain some result (other than cheap female labour) which the employer desires for economic or other reasons.
Applying these principles to the present case, the industrial tribunal decided in favour of the Employers on the short ground that the fact that Mrs. Jenkins was a part-time worker whereas the comparable man was a full-time worker was, by itself, a material difference for the purposes of Section 1(3). As we have said, that is not a correct approach in law. We must therefore allow the appeal. We will remit the case to the industrial tribunal to find whether the lower rates of pay for part-time workers paid by the Employers in this case was in fact reasonably necessary in order to enable the Employers to reduce absenteeism and to obtain the maximum utilisation of their plant.
We are conscious that our decision may have far-reaching consequences. In particular it is likely to involve many industrial and other employers in increased labour costs at a time when they and the country can ill afford it. This in turn may lead to a decrease in the total number of women employed. But is not our function to weigh these factors (even if we were capable of assessing them) against the merits of the social policy reflected in the Acts of 1970 and 1975.
Our function is simply to seek to apply the law as it now is. It is unfortunate that in a case of such importance we have not had the advantage of legal argument on behalf of the Employers and we would welcome an early consideration of the matter by a higher court.
Finally we remit this case with considerable reluctance. The Employers are not a large company and, without having any evil discriminatory intentions, have been caught up in a long test case raising questions of fundamental importance to the Equal Opportunities Commission and to women employees in general but of small importance to the Employers. Not surprisingly, they have felt unable to go on incurring legal costs in these proceedings. We suggest that before the Equal Opportunities Commission and Mrs. Jenkins put this small Company to even more expense and trouble by a further hearing before the Industrial tribunal, consideration might be given to whether it is not possible to reach agreement as to whether, in this particular case, the Employers can or cannot satisfy the requirements we have sought to summarise above.
P. A. HASWELL, 5 CASTLE HILL VIEW, BARDSEY, LEEDS LS17 9EE. VERBATIM REPORTER AND TAPE TRANSCRIBER
