United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR JOHN BOWERS QC Instructed by: Joanna Powley Solicitor British Airways Plc Waterside PO Box 365 Harmondworth UB7 0GB
For the Respondents	MISS J McNEILL (of Counsel Instructed by: Ms S Gage Messrs Rowley Ashworth Solicitors 247 The Broadway Wimbledon London SW19 1SE


 


JUDGE PETER CLARK: We have before us an appeal by the employer, EOG and cross-appeals by the applicant employees, Mrs Moore and Mrs Botterill, against a decision of the London (South) Employment Tribunal, chaired by Mr R W Rideout, sitting on 9th-11th November 1998, promulgated with extended reasons on 11th December 1998 and corrected by a certificate under the hand of the Chairman dated 11th February 1999.

The Facts

1. The factual material before the tribunal consisted of an agreed statement of facts supplemented by oral and documentary evidence. In outline the facts are as follows:
2. On 7th March 1988 Mrs Botterill commenced employment as cabin crew with Dan Air Services Limited ['Dan Air'] based at Gatwick Airport. She was engaged on flying duties.
3. In 1992 British Airways PLC ['BA'] acquired the business of Dan Air in which Mrs Botterill was employed. That business continued to trade under the style of EOG, the appellant, a wholly-owned subsidiary of BA. Mrs Botterill's employment has been continuous since March 1988.
4. On 9th August 1993 Mrs Moore commenced employment with EOG as cabin crew.
5. At all relevant times both applicants were employed as pursers. Mrs Moore's basic pay was £12,799 p.a.; that of Mrs Botterill was £14,479. Both applicants became pregnant during 1997.
6. When on flying duties cabin crew are contractually entitled to certain allowances which we shall call, compendiously, flying allowances. Those allowances are not payable when cabin crew are grounded.
7. The relevant flying allowances are set out at paragraph 4 of the tribunal's reasons. The value of those individual allowances, as at 28th February 1998, are set out at paragraph 11 of the agreed statement of facts and further explained at paragraph 9 of the witness statement of Tracey Norris , the applicants' local trade union representative, which was before the Employment Tribunal and to which Mr Bowers QC has referred us in argument.
8. There was incorporated into the applicants' individual contracts of employment at all relevant times a memorandum of agreement dated 20th February 1986 collectively agreed between the employer and the recognised union, Transport and General Workers Union.
9. Schedule C of that agreement is headed "Maternity Leave, Maternity Pay, and the right to return to work following pregnancy". Under Schedule C the policy of the employer, then Dan Air, but maintained by EOG, in relation to those matters was, so far as is material, as follows. Air Stewardesses (female cabin crew) will not be employed on flying duties after the 16th week of pregnancy. At that stage she will be offered suitable alternative employment in a ground post where such suitable alternative employment exists. Where suitable employment is offered and accepted she will be paid the basic salary for her grade (including annual increments) or the salary for the alternative post, whichever is the higher. It follows that no flying allowances will be paid in these circumstances.
10. The tribunal found as a fact that where cabin crew, male or female, are seconded to ground administrative duties at their own request pursuant to the employer's policy of encouraging career development (the secondees) they receive an annual allowance to replace the benefit of flight allowances. At about the time of the applicants' transfer to ground duties that allowance, for pursers, was around £5,500 p.a..
11. In the case of Mrs Moore she informed the Fleet Administrator, Ms Nixon, that she was pregnant and told her that she would like to work in the Product Centre. That request was granted. Due to sickness related to her pregnancy Mrs Moore asked that she be grounded before her 16th week of pregnancy. Again the employer agreed. She commenced work, on the ground, in the Product Centre, on 22nd October 1997. She continued in that work until 27th March 1998. She then took annual leave until 25th April. Throughout the period 22nd October 1997 to 25th April 1998 she received her basic pay. From 25th April she received statutory maternity pay ['SMP']. Her baby was born on 3rd May 1998. She was due to return to work on 22nd Nov ember 1998.
12. Mrs Botterill, having announced her pregnancy to Ms Nixon, requested ground duties in the Fleet Office. The employer agreed. She commenced those duties on 1st August 1997. She stopped work on 28th December 1997. During maternity leave she also received SMP. Her baby was born on 4th February 1998. She returned to work on 23rd August 1998.
13. Neither applicant complained, at the time, about the ground work in which they were engaged, nor the receipt of basic pay only therefor, whilst so engaged.

The complaints

14. Before the tribunal the applicants raised the following four heads of complaint:

(a) unlawful deductions from their wages contrary to s.13 of the Employment Rights Act 1996 ['ERA']. ['The deductions claims].

(b) breach of their right to remuneration on suspension on maternity grounds, as provided for in ss.66-70 ERA. ['The remuneration claims'].

(c) breach of the Equal Pay Act 1970 ['EqPA'] and/or Article 119 of the Treaty of Rome. ['The equal pay claims'].

(d) unlawful sex discrimination contrary to the Sex Discrimination Act 1975. ['The sex discrimination claims'].

The tribunal decision

15. The tribunal dealt with each head of claim in turn. Their conclusions may be summarised as follows:

(a) Both applicants failed to make out their deductions claim;

(b) both applicants succeeded in establishing liability for their remuneration claims. The issue of remedy was adjourned for a further hearing which has not yet taken place pending the outcome of these appeals;

(c) Mrs Moore's equal pay claim succeeded; that of Mrs Botterill failed and was dismissed;

(d) both sex discrimination claims were dismissed.

The Appeal and Cross-Appeals

16. We have had the advantage of early detailed skeleton arguments from Mr Bowers and Miss McNeill, both of whom appeared below. We have also seen, in our papers, the written closing submissions presented by Counsel to the tribunal below.
17. During the course of oral submissions before us, which took up one full day, we identified, without dissent from Counsel, three points of law which we considered required our determination in the first instance and received full argument on those issues. We shall hereafter refer to them broadly as the remuneration point, the deductions point and the equal pay point. There is no cross-appeal against the tribunal's finding on the sex discrimination claims.
18. The remuneration point

The Pregnant Workers Directive 92/85 ['PWD'] was implemented into United Kingdom domestic law by an amendment to the Employment Protection (Consolidation) Act 1978 effected by the Trade Union Reform and Employment Rights Act 1993. The relevant employment provisions are now contained in ss.66-70 ERA. Reference should also be made to the Management of Health and Safety at Work Regulations 1992.

19. It is common ground in the present case that both applicants were suspended from work on maternity grounds within the meaning of s.66 ERA. Cf. the facts in Iske v P & O European Ferries Dover Ltd [1997] IRLR 401.
20. By s.67(1), where an employer has available suitable alternative work the employee has the right to be offered that alternative work before being suspended from work on maternity grounds.
21. What is suitable alternative work for the purposes of the section is defined in s.67(2) as follows:

"(a) the work must be of a kind which is both suitable in relation to her and appropriate for her to do in the circumstances, and

(b) the terms and conditions applicable to her for performing the work, if they differ from the corresponding terms and conditions applicable to her for performing the work she normally performs under her contract of employment, must not be substantially less favourable than those corresponding terms and conditions."

22. It will be seen that the two requirements under s.67(2) are conjunctive. The kind of work must be suitable and the corresponding terms and conditions applicable to the alternative work must not be substantially less favourable than the terms and conditions applicable to the work which the employee normally performed. We shall refer to these separate requirements as the kind of work of requirement and the corresponding terms and conditions requirement.
23. It is common ground that the tribunal implicitly, if not expressly, found that in each case the employer here satisfied the kind of work requirement. There is no challenge by the applicants to that finding. However, the tribunal went on to find that the employer failed on the corresponding terms and conditions requirement. It is to that latter finding that Mr Bowers' appeal on the remuneration point is directed. We must first examine that attack on the tribunal's decision.
24. First, he raises a point of construction on s.67(2)(b), applied to the facts in this case. He submits that there was no difference between the terms and conditions applicable to the applicants' work in the air and on the ground. The position was governed by Schedule C of the memorandum of agreement incorporated into the individual contracts of employment. Schedule C provided that where an employee is grounded due to pregnancy she will receive her basic pay only.
25. We reject that argument. It is quite clear to us that when carrying out their normal flying duties the applicants were entitled to flying allowances. Those were the terms and conditions applicable to their normal work. When engaged on alternative duties on the ground they were entitled, under Schedule C, to their basic pay only. These are the relevant corresponding terms and conditions for the purposes of the s.67(2)(b) comparison.
26. Next he submits that the tribunal failed to make adequate findings of fact in relation to the nature of the flying allowances. It was the employer's case that those allowances were solely pre-determined expenses. They did not form part of cabin crew's pay. That was the evidence of Mr Porteous, called on behalf of EOG.
27. The applicants' case was that whilst the allowances contained an element of pure expenses, there was also a profit element in the hands of the cabin crew.
28. The tribunal's findings, helpfully summarised by Mr Bowers, were as follows:

"there was an element of expenses in the in flight allowances" [reasons para. 30];

"it would be proper to look at the entire range of in flight allowances as a single package deduction referable to expenses" [para. 30];

"at least some part of the cabin staff flying allowances should be treated as remuneration" [para. 32];

"some part is obviously attributable to expenses … a considerable part of them is profit." [para. 39].

29. Mr Bowers contends that those findings are contradictory and in any event inadequate. It was necessary for the tribunal to carry out the exercise (not explored by the parties in evidence) to determine what part of the allowances represented expenses and what part profit in the hands of the recipients. In fact, the exercise which the tribunal put off to the remedies hearing (reasons. para. 34). Further, the tribunal failed to ask itself the correct statutory question under s.67(2)(b). They asked themselves whether the offer of alternative work to the applicants "did not contain a significant benefit which had been available to them in their previous job" and therefore could be regarded as an unsuitable offer, rather than applying the substantially less favourable test under the Act.
30. Again we reject Mr Bowers' approach. It is important that we should not be distracted by the tribunal's findings on the different question of law raised in the deductions claims. We say that because both Counsel, for the purposes of their different arguments, have submitted that the tribunal is guilty of inconsistent findings. Indeed, Mr Bowers submitted that in these circumstances the tribunal's decision ought to be set aside and the remuneration and deductions claims be retried before, presumably, a different tribunal. We disagree. In our view, when properly analysed, the tribunal's findings are entirely consistent, given the different questions of law arising on the various claims.
31. Dealing with the remuneration claims we are quite satisfied that it was not necessary, for the purposes of determining liability, for the tribunal to embark on a breakdown of the various allowances and their monetary value, to determine the substantially less favourable question posed by s.67(2)(b). It is enough, looking at the nature of the payments, that the tribunal concluded, permissibly, that taken as a whole a considerable part of those allowances represented profit in the hands of the cabin crew recipient. They were entitled to take into account, as they did, that purser secondees received an annual allowance of about £5,500, which they describe as a "significant amount". In the context of the applicants' basic pay, to which we have referred, plainly it was. That it represented compensation for loss of flying allowances to seconded cabin crew in the view of EOG is demonstrated, as Miss McNeill points out, by the memorandum dated 5th August 1997 relating to a secondee, Mrs Helen L Wilson, at page 208 of our bundle.
32. We are not persuaded by Mr Bowers that the tribunal lost sight of the statutory test. The difference between basic pay on the ground and basic pay plus flying allowances in the air were such to allow the tribunal to conclude that the terms and conditions applicable to the alternative work offered to and accepted by the applicants were substantially less favourable that the corresponding terms and conditions for their normal cabin crew work as pursers. The finding that the applicants were not offered suitable alternative work within the meaning of s.67(2) ERA discloses no error of law in our judgment. Accordingly the applicants are entitled to an assessment of the remuneration due to them, calculated in accordance with s.69. That calculation will, as the tribunal observe in paragraph 34 of their reasons, be based on the principles identified in S & U Stores v Wilkes [1974] ICR 645.
33. In so concluding we have also considered and rejected Mr Bowers' further point that it cannot be said that the employer failed to provide suitable alternative employment for the purposes of s.67(2) in circumstances where the applicants volunteered for the ground duties to which they were deployed and made no complaint at the time about the pay applicable thereto. In our judgment, by identifying the jobs which they preferred on the ground and by accepting the rates of pay provided for in their contracts of employment under Schedule C it cannot be said that the applicants have waived their statutory right to suitable alternative employment as provided for in s.67(2).
34. The deductions point

The primary finding by the tribunal, expressed at paragraphs 28-29 of their reasons, in dismissing the applicants' deductions claims, is that they agreed to basic pay only for ground work by accepting Schedule C as a term of their contracts of employment.

35. That must, in our view, be correct. Miss McNeill argues that such a proposition could only be correct if the applicants were offered suitable alternative employment under Schedule C and the tribunal have found that it was not suitable alternative employment. That is an example of confusion between the different questions of law with which the tribunal was faced in this case. The tribunal found that for the purposes of s.67(2), whilst the kind of alternative work was suitable, the terms and conditions relating thereto were not when compared with the corresponding terms and conditions for normal work as cabin crew.
36. However when construing the terms of Schedule C it was plain to us that the reference there to suitable alternative employment is a reference to the kind of work only. That, the tribunal implicitly found for the purposes of s.67(2)(a), was suitable. Schedule C then goes on to provide, by agreement, for the level of pay for that alternative work. The applicants agreed to basic pay. That is what they received. There were no unlawful deductions under the terms of the contract.
37. Before us Miss McNeill sought to take a further point which, we are satisfied, was not taken below. She drew attention to s.27(1)(f) ERA, which provides that "wages" includes remuneration on suspension on maternity grounds under s.68 ERA. In these circumstances, she submits, regardless of the contractual point referred to above, the tribunal ought to have upheld the deductions claims on the basis of their finding that the remuneration claims succeeded.
38. We are not prepared to entertain that new point for the first time on appeal. Jones v Burdett Coutts School [1998] IRLR 521. In any event, the claim, put in this way, adds nothing to the applicants' successful remuneration claims.
39. Accordingly the cross-appeals against the tribunal's decision to dismiss the deductions claims fail and are dismissed.
40. The Equal Pay Point

In the course of his written closing submissions to the tribunal, developed in oral argument, Mr Bowers took a fundamental objection to the applicants' equal pay claims. He argued, in terms, that maternity pay is a self-contained code, borrowing that expression, by analogy, from the judgment of Neill LJ in Clark v Secretary of State for Employment [1997] ICR 64, 74G, where his Lordship referred to the maternity leave provisions under the United Kingdom domestic legislation as a separate code, excluding any parallel claim under EqPA/Article 119.

41. Further, he relied, again by extension, on the European Court of Justice decision in Gillespie v Northern Health [1996] IRLR 214, submitting that the applicant's argument that there was here a breach of Article 119/EqPA meant that Gillespie was wrongly decided.
42. When we turn to the tribunal's reasons it is plain that the tribunal have not ruled on this important preliminary point. Indeed, we think that it is significant that at paragraph 13 of their reasons as originally promulgated, summarising the argument for EOG on the equal pay claims, they attribute to the employer the contention that the case of Gillespie was wrongly decided. In fact, it was the employer's contention that the case advanced on behalf of the applicants implicitly challenged the correctness of the Gillespie decision.
43. That error was pointed out by EOG's solicitor in a letter to the tribunal dated 25th January 1999. As a result the Certificate of Correction was issued on 11th February 1999, simply deleting the sentence in paragraph 13:

"The case of Gillespie is wrongly decided."

44. No further attempt was made by the tribunal to deal with the employer's argument that the maternity pay provisions under s.66-70 ERA and an equal pay claim are mutually exclusive.
45. Miss McNeill accepts that the tribunal failed to deal with the point; however, since it is a pure question of law we are invited to determine that point ourselves, rather than remit the case to the Employment Tribunal for that purpose. We shall adopt that course.
46. We begin with the PWD. Article 5 provides that where there is a risk to the safety or health of a pregnant worker the employer shall take the necessary measures by temporarily adjusting her working conditions to avoid that risk or by moving her to another job. If those steps are not possible she shall be granted leave in accordance with national legislation. Article 8 provides for national legislation entitling a pregnant worker to continuous maternity leave of at least 14 weeks.
47. By Article 11, in cases referred to in Articles 5 and 8, among others, the worker's employment rights relating to the employment contract include the maintenance of a payment to and/or adequate allowance for workers in accordance with national legislation. Article 11.3 sets out the minimum payment regarded as adequate for workers on maternity leave; it shall be at least equivalent to her entitlement to sick pay.
48. It is not suggested in this case that the provisions of ss.66-70 ERA are incompatible with the PWD. In particular, that the right to remuneration as defined in s.69 is not an adequate allowance for the purposes of Article 11.
49. In Gillespie, a maternity leave case, one of the questions referred to ECJ by Northern Irish Court of Appeal was whether Article 119 or the Equal Pay Directive or Equal Treatment Directive required that whilst a woman was absent from work on maternity leave she be paid the full pay to which she would have been entitled had she had been working normally for the employer. We pause to observe that those Directives had direct effect in that case, the respondent being an emanation of the state; they do not apply directly in the instant case, EOG being a private employer.
50. The ECJ answered that question in the negative. The principle of equal pay laid down in European Community law does not require that women should continue to receive full pay during maternity leave. At paragraphs 16-17 of their judgment the Court says this:

"It is well-settled that discrimination involves the application of different rules to comparable situations or the application of the same rule to different situations (see, in particular, Finanzamt Köln-Alstadt v Schumacker, C-278/93 [1995] ICR I-225, paragraph 30).

The present case is concerned with women taking maternity leave provided for by national legislation. They are in a special position which requires them to be afforded special protection, but which is not comparable either with that of a man or with that of a woman actually at work."

51. Gillespie was applied by the Court of Appeal in Clark. There the applicant employee was absent on maternity leave when her employers became insolvent. She received the remainder of her maternity pay (at the rate of 90% of normal pay) from the Department of Health and Social Security. She claimed the difference between her normal pay and maternity pay from the Secretary of State for Employment under s.122 of the 1978 Act. The Employment Appeal Tribunal (Mummery J presiding) upheld that claim. That conclusion was reversed on appeal. Neill LJ said at page 74G:

"In my judgment it is now clear that Community law entitles member states to make special provisions for women who are absent from work because of pregnancy or confinement. The provisions that are made then become a separate code. The code provides pregnant women with special protection but when in receipt of payments under the code their protection cannot be "compared" with that of a man or with that of a woman in work."

52. The applicant was not entitled to recover the difference between her basic wages and maternity pay during her period of maternity leave.
53. Gillespie has been further explained by the EAT in Banks v Tesco Stores Ltd [1999] ICR 1141. There, the applicant commenced part-time employment in January 1994 and left on maternity leave in December 1994. She was refused SMP because her normal weekly earnings were below the lower earnings limit for the purposes of s.164 of the Social Security Contributions and Benefits Act 1992. She had no claim under Article 119 for the reasons given by Morison J at paragraph 19 of his judgment.
54. Based on these authorities Mr Bowers submits that whether an employee is physically absent from work on maternity leave (or parental leave. See Lewen v Denda [2000] IRLR 67) or suspended on maternity grounds, as in this case, her right to pay is governed by domestic legislation, here s.66-70 ERA. No distinction is to be drawn in principle between the worker who is physically absent from work on leave and one who is suspended from her normal work on maternity grounds but is moved to alternative work in the interests of her health and safety. Just as these applicants would have no equal pay claim in respect of a period of maternity leave where adequate allowance was made under national legislation; so they can have no claim during a period of suspension from normal work on maternity grounds where they are entitled to adequate allowance in the form of remuneration under ss.66-70.
55. Miss McNeill submitted at first that the principle in Gillespie and Clark ought to be limited to cases of women absent from work on maternity leave, although she later withdrew any distinction between working and non-working. She referred us to the ECJ decision in Pederson v Kvickly Skive [1999] IRLR 55. However we accept Mr Bowers submission that that case is not helpful, dealing as it does with the incompatibility of certain Danish employment legislation with the PWD.
56. In our judgment the proposition advanced by Mr Bowers is correct. Where a worker is suspended on maternity grounds the position is governed by the code embodied by ss.66-70 ERA, which is itself compatible with the PWD. No separate equal pay claim arises under EqPA/Article 119 in relation to alternative work performed by that worker in these circumstances. Accordingly the tribunal ought, in our judgment, to have dismissed the equal pay claims for this reason.
57. It is therefore unnecessary for us to consider the further arguments to be deployed on both sides in relation to the tribunal's findings on the equal pay claims. They simply do not arise in these cases.

Conclusion

58. It follows that the appeal of EOG is allowed to the extent only that we shall dismiss Mrs Moore's equal pay claim. The cross-appeals are dismissed. The result is that these cases will return to the Employment Tribunal for a remedies hearing on the remuneration claims of both applicants only.

Leave to Appeal

59. At the conclusion of the hearing in this case we announced our decision on the three points that we have identified without giving our reasons. Thereafter Mr Bowers sought leave to appeal to the Court of Appeal on the remuneration point and Miss McNeill sought leave on the equal pay point. We dismissed both applications on the grounds that, for the reasons now given, neither proposed appeal has in our view any real prospect of success.