United Kingdom Employment Appeal Tribunal

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Cite as: [1994] UKEAT 694_92_806, [1994] UKEAT 694_92_0806

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BAILII case number: [1994] UKEAT 694_92_0806

Appeal No. EAT/694/92

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 8th June 1994

Before

THE HONOURABLE MR JUSTICE MORISON

MR E HAMMOND OBE

MRS M E SUNDERLAND JP

STAFFORDSHIRE COUNTY COUNCIL APPELLANTS

MRS BARBARA FLORENCE BLACK RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

For the Appellants MR C LEWIS

(Of Counsel)

County Clerk and

Chief Executive

PO Box 11

County Buildings

Martin Street

Stafford

ST16 2LH

For the Respondent MR G CLAYTON

(Solicitor)

MR JUSTICE MORISON: This is an appeal and cross appeal from a Decision of an Industrial Tribunal held at Birmingham (entered in the Register on August 17 1992), which found in favour of Mrs Black, a teacher, in respect of her claim against the Staffordshire County Council [the Council] that she had been discriminated against by reason of her sex. Her claim under the Sex Discrimination Act 1975 was dismissed, but her claim under Article 119 of the Treaty of Rome succeeded and she was awarded compensation. The Council appeals against the finding under Article 119; Mrs Black cross- appeals against the rejection of her Sex Discrimination Act claim.

The background to this appeal may be summarised in this way.

Unless he or she makes other arrangements, a teacher employed by a Local Education Authority is entitled to pension arrangements provided for by statutory regulations: The Teachers Superannuation (Consolidation) Regulations 1988 [the Superannuation Regulations]. Those Regulations provide for a pension on retirement calculated by reference to the teacher's final salary multiplied by the number of years of service divided by 80. In other words it is a typical final salary pension scheme. Under it, provided a teacher was over 50 and less than 60 years of age and had served for at least two years, then on termination of employment due to redundancy [or a situation akin to redundancy] the teacher was entitled to an immediate pension. However, by reason of such a termination, the teacher would lose the benefit of the years of service he would otherwise have had between termination and his/her normal retirement age, and the immediate pension would be correspondingly less than the pension at normal retirement.

In 1989, Regulations were made by the Secretary of State for Education, in the exercise of powers conferred on him by the Superannuation Act 1972, called The Teachers' (Compensation for Redundancy and Premature Retirement) Regulations [the 1989 Regulations]. These Regulations give 'the employer' the right to make enhanced payments to teachers who become entitled to a redundancy payment under the Employment Protection (Consolidation) Act 1978, regardless of the age of the teacher who is made redundant and regardless of whether he/she was pensionable within the superannuation Regulations.

The 1989 Regulations further give to a 'deciding authority', which, generally, will be the LEA, the governing body or the governing body with the consent of the LEA, a discretion to credit a teacher with an additional period of service. The relevant pre-conditions for the exercise of such a discretion are that the teacher must have had at least 5 years of service in which he/she was eligible to participate in the superannuation scheme (whether or not he did so participate), be between the ages of 50 and 60 and be 'retired' by reason of redundancy 'or in the efficient discharge of the employer's functions'. Where those pre-conditions are fulfilled the 'deciding authority' may credit the teacher with an additional period of service. In this case it is common ground that under the 1989 Regulations the maximum period was 10 years. Where the deciding authority exercises its discretion, the teacher will be paid both a lump sum and an annual payment calculated as follows:

Lump sum:3/80 x average salary x the additional credited service

Annual sum: 1/80 x average salary x the additional credited service

Responsibility for making these payments is usually either the LEA or the Secretary of State for Education.

Guidance issued by the Department of Education at the time of the introduction of the 1989 Regulations suggested that 'deciding authorities' should use their discretion when determining the length of the additional credited service to make an appropriate adjustment where the teacher was engaged in part-time work. Thus, if the deciding authority would have credited 10 years for a full-time employee, a teacher who worked half-time should be credited with 5 years additional service, all other things being equal.

The employee in this case, Mrs Black, was a part-time teacher who had worked under a permanent part-time contract from May 1982 to the date of her dismissal due to redundancy on August 31 1991. During that period, under that contract, she worked each week slightly over one-half of the hours worked by a full-time teacher: .5151 [or %51.51]. In addition to her work under this permanent contract, Mrs Black also undertook additional teaching duties, such as covering for colleagues when they were off sick (supply work), and temporary full-time work when there were shortages of teachers. This additional work was not necessarily carried out at the same school or within the same LEA area where she normally worked. In relation to her permanent contract she was a member of the Superannuation Scheme governed by the Superannuation Regulations of 1988. As was her entitlement, she opted to treat as pensionable under those Regulations all her other additional duties.

The deciding authority, the Council, adopted a policy for exercising its discretion under the 1989 Regulations: first that in accordance with the guidance, part-time teachers, who were eligible, should have their compensation pro-rated to that of a full-timer who was similarly eligible, and, second, that no such compensation would be paid to teachers who were 'retiring' "in the interests of the efficient discharge of the employers' functions" but only to those who were 'retiring' "by reason of redundancy".

The policy was applied to Mrs Black, who was eligible, and the Council determined that she should be credited with 5.151 years of additional service. In making their decision, the Council did not give credit for the additional hours which she had worked on an ad hoc basis. The reason for this was that it was the requirements for work under the permanent part-time contract which had ceased or diminished, and not the requirements for the additional teaching duties she had undertaken from time to time. That work was still available to her in the future, and apparently, she has been offered such work.

It is common ground between the parties:

.The Council was not acting unlawfully in deciding as a matter of policy to exercise discretion only when there was a true redundancy situation, as opposed to exercising it also when there was a 'retirement' "in the interests of the efficient discharge of the employer's functions".

.There are many more women who are part-time teachers than there are men [756 as against 45] and the Council would exercise its discretion under the 1989 Regulations in the same way for both women and men who were part-timers; although this was not the appropriate comparison for the purpose of deciding whether there had been discrimination on the grounds of sex: Pickstone v Freemans Plc [1988] ICR 697. Of the pool of part-timers who were over the age of 50, which is the relevant qualifying age for the application of the 1989 Regulations, 19 were men and 120 women.

.It is irrelevant to the present decision that Mrs Black treated her extra work as part of her pensionable service; the same arguments and the same result would follow if she had not.

.There are more full-time female teachers than there are male [5,178 as against 3,062]. Of the women teachers over 50 years of age, 1,141, 1021 are full time, namely %89.5; and of the male teachers over 50 years of age, 631, 612 are full time, namely %97.

.Any teacher who works as a teacher after receiving a teacher's pension is not in pensionable employment and cannot treat that service as pensionable. In other words, if Mrs Black were to continue to work on an ad hoc basis, she could not elect to treat that service as pensionable.

The reasoning of the Industrial Tribunal may be summarised in this way:

A.Sex Discrimination Act ["the Act"]

.This is a case of indirect as opposed to direct discrimination. The condition or requirement applied by the Council to her under Section 1(1)(b) of the Act, and equally to other part-time men, was that in order to qualify for the maximum additional credit permitted under Regulation 6 of the 1989 Regulations, he/she must be a full-time employee at the date of dismissal [Decision: paragraph 4(d)].

.Having regard to the statistics, there was a difference of 7.5 percentage points between women who could qualify for the full amount and men who could so qualify [Decision: paragraph 4(f) and (g)].

.The Tribunal did not consider that difference to be such that it could be said that the proportion of women who could comply with it is "considerably smaller" than the proportion of men who can comply with it within the meaning of Section 1(1)(b)(i) of the Act [Decision: paragraph 4(g)].

.Accordingly, the claim under the Act failed.

B.Article 119

.There was no dispute that the additional service credit is "pay" within the meaning of that word in the Article [Decision: paragraph 5(b)].

.There was no dispute that Mrs Black and the full-time male comparator were engaged on equal work, and there could have been no such dispute because of Bilka-Kaufhaus Gmbh v Weber von Hartz [1987] ICR 110

"which held that differential treatment between part-time and full-time employees in respect of access to an occupational pension scheme breached the provisions of Article 119 where "that exclusion affects a far greater number of women than men".

[Decision: paragraph 5(b)]

.There is no doubt that Mrs Black had identified a man employed on like work who prima facie has received superior pay. That was all she needed to prove and it fell to the Council to show a genuine material factor other than sex to justify the difference in treatment.

.Full-timers have their loss calculated on the basis of their actual past reckonable service; whereas part-timers have their loss calculated only on the reckonable service covered by a permanent contract. Thus, Mrs Black did not have taken into account all her actual past reckonable service. If the only difference was between part-time and full-time employees then that did not provide justification because it is likely that more women than men are in part-time employment, as the actual figures show [Decision: paragraph 6].

.Applying the test of justification as laid down in Bilka-Kaufhaus Gmbh the method of dealing with the exercise of discretion was not necessary nor the only practicable method and was far from being objectively justified [Decision: paragraphs 7 - 9 inclusive].

.The compensation should be calculated by taking into account the actual number of hours Mrs Black worked and averaging it out over the ten year period [Decision: paragraphs 10 & 11].

We have had the benefit of able arguments on both sides in this appeal and are grateful to the advocates for their assistance.

On behalf of the Council it is submitted that the Industrial Tribunal erred in its approach to Article 119 and that they wrongly stated the test that had to be applied where there was a difference in treatment between full-time and part-time employees. The essential submission was that the same approach was to be taken to a case of indirect discrimination under the Act and to a case of 'indirect discrimination' under Article 119.

In Jenkins v Kingsgate (Clothing Productions) Ltd [1981] ICR 592, the employers, in order to discourage absenteeism and to encourage greater productivity, paid their full-time employees %10 more per hour than their part-time employees. All of the latter group, except one, were women. The Industrial Tribunal held that the fact that the full-time male comparator was a full-time worker whereas the female applicant worked part-time was a material difference other than the difference of sex, and thus the equal pay claim failed by reason of Section 1(3) of the Equal Pay Act 1970. The EAT, on appeal, referred certain questions to the European Court. In its Decision the European Court said this:

"By contrast, if it is established that a considerably smaller percentage of women than of men perform the minimum number of weekly working hours required in order to claim the full time hourly rate of pay, the inequality in pay will be contrary to Article 119 of the Treaty where, regard being had to the difficulties encountered by women in arranging to work that minimum number of hours per week, the pay policy of the undertaking in question cannot be explained by factors other than discrimination based on sex."

In other words, if full-timers are paid more than part-timers, then it may be a difference due to sex if it is shown that a considerably smaller number of women than men do the full-time work. If considerably less women than men work full-time, that shows that part-time work is 'women's work' and the pay differential cannot be explained by factors other than sex. But if as many women as men work full-time, then the difference in rates between full-time and part-time may be shown to be a difference other than sex, as many women as men being able to earn the higher rate.

In Bilka-Kaufhaus Gmbh, the department store employer employed people on a part-time and full-time basis. Part-timers did not qualify for the employers' occupational pension scheme; full-timers did. One of the questions referred to the European Court by the Bundesarbeitsgericht was

"May there be an infringement of Article 119 ... in the form of "indirect discrimination" where a department store which employs predominantly women excludes part-time employees from benefits under its occupational pension scheme although such exclusion affects disproportionately more women than men?"

In paragraph 24 of its Decision the Court referred to that question, substituting for the words "disproportionately more women than men" the words "a far greater number of women than men". And at paragraph 29 the court said:

"If, therefore, it should be found that a much lower proportion of women than of men work full-time, the exclusion of part-time workers from the occupational pension schemes would be contrary to article 119 of the Treaty where, taking into account the difficulties encountered by women workers in working full-time, that measure could not be explained by factors which exclude any discrimination on grounds of sex."

Thus it is said that the Industrial Tribunal asked the right question when considering the claim under the Act but erred when considering what is effectively the same question under Article 119: namely what is the proportion of women to men doing full-time work. If that proportion is much lower, then explaining the difference in treatment by reference to a distinction between part-time work and full-time work does not exclude the factor of sex.

Where the Industrial Tribunal erred was to treat the question which had been referred by the German Court as the answer given by the European Court. The citation from Bilka-Kaufhaus Gmbh in paragraph 5(b) of their Decision has been taken from the question and not the answer and reflects a misunderstanding of the point: the fact that more women than men work as part-timers does not lead to the conclusion that the difference in treatment between full-timers and part-timers is based on sex unless it can be shown that women have, effectively, been given less chance than men to work on a full-time basis.

Further, it is said that there is no room for a conclusion that there has been discrimination, whether one has regard to the one comparator chosen or to a combination of other comparators. A male full-timer who did extra duties over and above his permanent contractual duties would be treated in just the same way as a female part-timer. Only the permanent work was redundant; each would be free to continue to take on additional work in the future and neither would be able to claim that such work was pensionable.

Finally, the Industrial Tribunal failed to apply the test of justification properly. It is common ground that the test is that set out in Bilka-Kaufhaus Gmbh, namely is the difference in treatment based on objectively justifiable grounds; are the measures chosen appropriate to achieve the aims of the undertaking and are they necessary to achieve those aims. Effectively, the policy of the Council was to treat the discretion as a means whereby the savings in salary due to redundancy could be given back to the employees affected. The effect of the Industrial Tribunal's Decision is to force the Council to find extra money because the ad hoc work can still go on and will have to be paid for in the usual way. There is nothing discriminatory in the policy or its implementation and it is outwith the competence of the Tribunal to try and put forward its own policy and spend the Council's money for it.

For Mrs Black it was argued that her claim under Article 119 had been correctly dealt with by the Industrial Tribunal and that its reasoning cannot be faulted. Effectively Mrs Black is being deprived of the benefit of service which the male comparator was able to count. If she had worked, overall, taking into account her ad hoc work, for as long as a man there was no reason in law or equity in her being treated differently just because she was a part-timer. Most part-timers are women and the difference in treatment can be attributed to that fact and has a greater effect on women than men.

The Industrial Tribunal has found as a fact that the difference in treatment between part-timers and full-timers was not justified on grounds other than sex and the EAT should not disturb that finding.

In relation to the claim under the Act, the Industrial Tribunal erred in treating the percentage difference as falling short of the need to show that a "considerably smaller" proportion of women could comply with it. It was suggested that 'considerably' meant worthy of consideration. It was also argued that Mrs Black should have been given the full ten years of credit, regardless of the number of hours she had actually worked.

We can set out our conclusions on these arguments relatively shortly:

.We are satisfied that the Industrial Tribunal correctly dismissed the claim under the Act. What is or is not a 'considerably smaller proportion' is a matter for the Industrial Tribunal. The figures speak for themselves. Overall, there are more full-time women teachers than men. No doubt for historical reasons, there are proportionately slightly less women than men in the over 50 age range, although, again, in absolute terms there are more women than men doing full-time work in that bracket. A difference of 7.5 percentage points, in the context, is very small. We reject the suggestion that "considerably" means worthy of consideration; we do not think it useful to find other words to those used by Parliament. "Considerably smaller" are both ordinary words in common usage. It is not unhelpful to keep in mind that the European Court refers to "a much lower proportion" or a "considerably smaller percentage".

.The Industrial Tribunal have plainly misdirected themselves as to the effect of the Bilka-Kaufhaus Gmbh decision. It was this error which has, we think, led them to a false conclusion, which clearly caused them some surprise. They noted at paragraph 5(c) that there were a great many more female full-timers than male full-timers and concluded, without reasons, that that fact was irrelevant, although they expressed the view that "it does seem to make the law of equal pay something of a nonsense ..." If they had correctly understood the true ratio of the European Court's decision, as set out in paragraph 29, they would have realised that they had missed out a crucial stage in the process of deciding whether there had been indirect discrimination under Article 119. What the Industrial Tribunal have done is to jump from the proposition that more women worked part-time than men to the conclusion that the Council's decision was for that reason unlawfully discriminatory. What they should have done was to apply the same test as they had applied when considering the position under the Act: namely to identify the condition which was applied and to ask themselves whether the proportion of women who could comply with it was considerably smaller than the proportion of men. Looked at in this way the conclusion would have been exactly the same as they had reached on Mrs Black's claim under the Act.

.We are unable to see any discrimination in this case. Men and women were treated in exactly the same manner. The Council compensated people for the loss of the work due to redundancy and not for work which was not lost but could continue. That applied equally to male part-timers and male full-timers and to women full-timers and women part-timers. There are no grounds for thinking that there is any difference due to the sex of the teacher concerned. If a male full-timer did additional work, that work could not be added to his service for pension purposes; whereas Mrs Black was able to count it. That fact is not, ex concessis, a material difference. The question whether she was discriminated against cannot depend upon how she elected to treat her additional work for pension purposes.

.Finally, we respectfully beg to differ with the Industrial Tribunal on the question of justification. We consider that they have substituted their own discretion for that of the Council to whom Parliament entrusted it. Whilst the Industrial Tribunal may have thought that it would be more equitable to take account of the extra work which Mrs Black did, which had not ceased or diminished because of redundancy, we can see good policy reasons for the Council's decision. We are of the view that such a policy was objectively justifiable and can see that it might realistically be described as necessary, having regard to the Council's desire not to find extra money to fund the 1989 Regulations. We agree with the proposition that it is for the Council and not the Industrial Tribunal to decide how it is to spend its resources. Had it arisen, we would have been prepared to say that the conclusion of the Industrial Tribunal on justification was perverse.

It follows that we are of the clear view that this appeal should be allowed and the cross-appeal dismissed.