United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR PAUL STADDON (Of Counsel) Instructed by: London Borough of Newham Legal Services Newham Town Hall East Ham London E6 2RP
For the Respondents	MR MARK WALSH (Of Counsel) Instructed by: Messrs Edwards Duthie Solicitors 292-294 Plashet Grove East ham London E6 1EE

SUMMARY

Equal Pay

Equal pay claim. Did the Tribunal have a proper evidential basis, and make appropriate findings of fact, to conclude that the employer had failed to establish the material factor defence? Held that it did not.


 


THE HONOURABLE MR JUSTICE ELIAS

1. This is an appeal against the Tribunal sitting in Stratford, in which it found that the Claimant, who is the Respondent to this appeal, had been employed on work of equal value to that of her comparator, and that the employers, the London Borough of Newham, had not satisfied the Tribunal that the variation between her contract and her comparators was due to a material factor which was not the difference of sex within the meaning of section 1(3) of the Equal Pay Act 1970.
2. The background to the case is as follows.
3. Miss Louise Jacklin was, and indeed, continues to be, employed by the London Borough of Newham. Between February 1996 and December 1999 she was employed in the Leisure Department of LBN as policy development manager. In January 2000 she was seconded away from the Leisure Department to the Chief Executive Department, as a best value corporate consultant.
4. At the time this was a temporary transfer but one that she wanted. As the Tribunal found, she had been refused early retirement, and wanted to leave the Leisure Services Department where she had not been happy for some time. Whilst she was on secondment, around July 2000, the Leisure Department was re-structured. There was no consultation with her about this, either directly or indirectly. The re-structuring included the deletion of her post as the policy development manager, and the creation of a new post which was termed "strategic policy and projects manager". She was told of the deletion of her job by her immediate superior and she was placed on the redeployment register.
5. Shortly thereafter, she was interviewed for a permanent position in the Chief Executive's Department where she had been temporarily on secondment, and she secured the permanent post of senior corporate projects manager. She accepted that appointment on 7 August 2000. Her comparator, Mr Robinson, a male employee who had been on secondment to the Leisure Department was assimilated into the new post of strategic policy and projects manager and he took up that position as from 1 September 2000.
6. Ms Jacklin's case essentially was that the post of strategic policy and projects manager was really no different to the job of policy development manager that she had formerly been undertaking. She had carried out that job between 1996 and 1999. She felt that the duties she was carrying out were essentially the same, albeit described rather differently, to those which Mr Robinson was carrying out. In the circumstances, she felt understandably that she should have received the same pay.
7. She had been graded at PO6 but Mr Robinson's new post had been graded at PO8. There is a potentially significant difference between the two grades in financial terms particularly when taken over the period during which she was carrying out her job. She raised a grievance with the Council about this but it was rejected as having no merit. Accordingly, she took proceedings for the Employment Tribunal. She lodged an Originating Application on 7 May 2002, that is almost 2 years after the events concerned. In that Originating Application she made a claim for equal pay and also, for the first time, a complaint of sex discrimination. This was cast in the following terms:

"The Respondent has treated me less favourably on the basis of gender and that I was not informed about, nor afforded the opportunity to apply for, nor offered the post of Strategic Policy and Projects Manager. Mr Robinson was."

8. There was a Preliminary Hearing to determine whether her complaint of sex discrimination was in time. In a decision dated 23 December 2003, the Tribunal found that it was not, and it declined to extend time on the grounds that it was just and equitable to do so. She has not appealed that decision. Accordingly, her claim before the Employment Tribunal which heard the substantive matter was limited to an equal pay claim. Originally this was pursued both on the like-work and equal-value limbs of equal pay, but by the time of the Tribunal hearing, only the equal-value aspect was pursued.

The hearing before the Tribunal

9. The employer's claim before the Employment Tribunal was that the jobs were not of equal value; but even if they were there were material differences other than sex which explained the difference in pay. Six potential material factors were identified. They were described in the Tribunal's decision as historical reasons, special skills and experience, ability shown during the period of secondment, longer contractual hours, the effects of pay increases, the combined effect of longer contractual hours, pay increases.
10. The employer's claim on the question of equal value was that Mr Robinson had certain responsibilities which Miss Jacklin had not had to perform; in particular he had a responsibility for larger capital projects. The Tribunal heard evidence from an independent expert who refuted this and the Tribunal accepted his evidence. The independent expert concluded that it was "a shift of emphasis rather than one of an expanded job role", and he also observed that there had been "a lot of fudging going on". He did not think that Mr Robinson's job was a bigger job.
11. The Tribunal also considered and rejected each of the genuine material factor defences.
12. In its appeal to this Tribunal, the employers initially contended that the Tribunal had erred both in its conclusion that the jobs were of equal value and also in relation to one of the material factor defences, namely that relating to what is, perhaps slightly inelegantly, described as "historical reasons".
13. There was a Preliminary Hearing before this Tribunal chaired by HHJ McMullen QC and he held that the ground of appeal in relation to the value of the jobs should not go forward to a full hearing. There has been no appeal against that ruling. Accordingly, the only issue before us today concerns the Tribunal's approach to the genuine material factor defence.

The Law

14. We can deal with this briefly because the essential legal principles are not an issue before us. Section 1(1) of the Equal Pay Act 1970 is as follows:

"1. Requirement of equal treatment for men and women in same employment

{1(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one."

15. Section 1(2) then sets out the effect of the equality clause, namely that where a woman carries on equal work of equal value to a man, then any term in her contract which is less favourable to the corresponding term in the man's contract is modified; so as to make the terms the same.
16. Section 1(3) is as follows:

"[(3) [An equality clause falling within subsection 2(a), (b) or (c) above 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 within subsection (2) (a) or (b) above, must be a material difference between the woman's case and the man's; and

(b) in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference.]"

17. The effect of Section 1(3) and the manner in which an employer is able to satisfy a Tribunal that there is a material factor other than sex is considered by the House of Lords in the case of Glasgow City Council v Marshall [2000] IRLR 272. In the course of his speech, Lord Nicholls dealt with the interpretation of section 1(3) in the following way:

"18

…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 this 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 s.1(2)(c), may be a 'material' difference, that is, a significant and relevant difference, between the woman's case and the man's case.

19

When s.1 is thus analysed, it is apparent that an employer who satisfies the third of these requirements is under no obligation to prove 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 impact 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.

20

Some of the confusion which has arisen on this point stems from an ambiguity in the expression 'material factor'. A material factor is to be contrasted with an immaterial factor. Following the observations of Lord Keith of Kinkel in Rainey v Greater Glasgow Health Board [1987] IRLR 26, 29, the accepted synonym for 'material' is 'significant and relevant'. This leaves open the question of what is the yardstick to be used in measuring materiality, or significance and relevance. One possibility is that the factor must be material in a causative sense. The factor relied on must have been the cause of the pay disparity. Another possibility is that the factor must be material in a justificatory sense. The factor must be one which justifies the pay disparity. As already indicated, I prefer the former of these two interpretations. It accords better with the purpose of the Act. The distinction may not greatly matter in practice when an employer is having to justify the disparity in pay. But the matter stands differently when sex discrimination is not under consideration. Then the distinction may be of crucial importance, as the present case exemplifies. The industrial tribunal, in the course of its self-direction on the applicable law, held that a purely historic explanation of the pay difference between sexes is insufficient. That is correct, when justification is in point. It is not correct when, as in the present case, the absence of sex discrimination was not in issue."

18. Since this was a case of direct discrimination the issue was simply whether the employers could show, the onus being on them, that the explanation of the difference in pay had nothing to do with sex. We accept the submission of Mr Walsh that this means in this context that there must be no taint whatsoever of sex discrimination in the fixing of pay for these two posts.
19. Having first dealt with the historical situation, whereby the Claimant left the Leisure Services Department temporarily and then obtained permanent employment in the Chief Executive's Department, the Tribunal continued as follows:

"114 The Tribunal is satisfied that the Claimant only found out about the new post which had been devised in the Leisure Services Department in or about August 2000. This is confirmed in the e-mail that she sent to Mr Parkinson in that department requesting a copy of the job description. The Tribunal is satisfied that that e-mail was sent shortly after her becoming aware of the existence of the new job. She was initially told that the job description was still being drafted then on 6 September it was forwarded to her.

115 The Tribunal heard from Brenda Whyte. She could not recall evaluating the job in the Leisure Services Department under the Whitley Job Evaluation Scheme but her records showed that she had done so on 4 September 2000. It was sent for external verification and it was returned on 5 September 2000, a one day turnaround. The job of Ron Robinson was graded LPO8. The Claimant had been on LPO6. Mr Rice indicated in evidence that the normal practice would have been to indicate to Brenda Whyte when submitting the job and person specification to her for evaluation an indicative grade in view of the job requirements. He could not remember if one had been indicated in this case.

116 The Respondent's position is that they were assisting the Claimant in progressing her to a permanent role in the Chief Executive's office and indeed Mr Rice's statement is peppered with references to how fortunate she was.

117 The Tribunal finds that it may well have ended up being to the Claimant's advantage in that she obtained a post at LPO8 in the Chief Executive's office. However, it also suited the Respondent's ends and means. It is clear that it ended up with them being able to achieve what they wanted to do in offering the post in the Leisure Services Department to Ron Robinson.

118 The Tribunal is satisfied that the Claimant was treated less favourably than the comparator Ron Robinson, a man, in not being considered, offered or consulted with over the new role.

119 The only explanation given by the Respondent's for this is, as they put it in the Notice of Appearance, "the way things happened" and they rely on the chronology to show that this was an open and transparent process. The Tribunal is satisfied that was not the case and finds the process tainted by sex discrimination. They are left with the fact that the Claimant, as a woman, had been seconded away from her original department and a role which Mr Kennedy accepts was a role of equal value to the one she had performed was offered solely to Ron Robinson, the comparator, without any discussion or contact with the Claimant. Indeed she was not aware of this until August.

120 The Respondent's primary submissions therefore in relation to the genuine material factor defence are dismissed."

20. A little later, at paragraph 130, the Tribunal referred to Glasgow City Council v Marshall and concluded that the Council had not shown to the Tribunal's satisfaction that the difference in pay was at the material time due to the reasons which it put forward to the Tribunal.
21. There are two points to note about the analysis adopted by the Tribunal. First, it treated the contention that there was sex discrimination in the appointment process itself as decisive of the finding of unequal pay. This, we think, is the inference that must be drawn from paragraph 120 of the Tribunal's decision. Because they found the appointment process tainted by sex discrimination, therefore they concluded the genuine material factor defence had to fail. Second, this conclusion concerning sex discrimination related to the very matter which was originally part of the case before the Employment Tribunal but which had been held at the Preliminary Hearing to be out of time. Apparently, it was raised as part of the general context in which the issue of equal pay had arisen. It seems to have figured significantly in the Tribunal's decision at this point.

The Grounds of Appeal

22. Mr Staddon for the Council submits that the reasoning of the Tribunal in the paragraphs that we have set out is wholly inadequate. First, he says that the Tribunal do not properly identify why the employer has lost. Referring to the well-known decision of the Court of Appeal in the Meek case, he submits that the employers do not know whether, and if so why, the defences which they advanced before the Tribunal have been rejected. Second, and perhaps more substantially, he submits that the Tribunal has failed to analyse whether or not the employer's reason for not consulting, considering or appointing the Claimant was because of the genuine belief that she was not interested in coming back to the Leisure Services Department and because, as was recounted in an e-mail from Mr Rice, one of the Council's witnesses, she had been expecting this eventual outcome. Mr Rice indicated that she had expected that her job would be deleted and that she would go on to the redeployment register which was a necessary step in her obtaining permanent employment in another department.
23. The Tribunal found in terms that this was Mr Rice expressing his own view and that she had not in fact been expecting this. But they made no finding to the effect that that view was not a genuine view held by Mr Rice at the time. Mr Staddon points out that she had been unhappy in the Leisure Services Department and, indeed, by the time Mr Robinson officially took up his post in September, she had already been offered and accepted a different job in the Chief Executive's Department. That, he submits, is at the very least evidence which the Tribunal had carefully to consider before inferring that the failure to consult and ultimately offer the job to Miss Jacklin was sex based.
24. Finally, he submits that in any event the Tribunal simply failed to address the question of genuine material factor at all. He says that a finding in relation to discrimination in the appointment of the job does not thereby demonstrate, without more, that there was no genuine and proper evaluation of the job free from sex considerations. The employers gave evidence about the way in which the job had been evaluated. Their contention was that it was in accordance with the normal processes which were employed under the Whitley Council Procedures. Mr Staddon recognises that there were findings made by the Tribunal which might have justified an inference that the exercise being carried out was a sham. Some comments arguably point in that direction. We will deal with those later. But he submits that if there were to be such a conclusion, it must be stated unambiguously and unequivocally, and in this case it has not been. Indeed, he says the Tribunal has not really engaged with the employer's evidence as to how it carried out the process of evaluation that job at all.
25. Mr Walsh, for Miss Jacklin, submits conversely that the Tribunal was entitled to infer that the employer's unreasonable conduct in not considering or consulting with the Claimant over the re-structuring within the department, justified an inference of sex discrimination in relation to her appointment. He submitted that the Tribunal was entitled to look at the whole exercise of the appointment and the salary fixing in relation to the new job as essentially one activity. It was open to the Tribunal to do that and if, as the Tribunal found, the appointment itself was tainted by sex then it was a perfectly proper conclusion for the Tribunal to say that so had been the exercise by which Mr Robinson's pay had been determined.
26. In any event, he says that this was evidence of probative value which even if not by itself sufficient to prevent the employers from rebutting the presumption of sex discrimination, supported the Tribunal's conclusion. He identified a number of other matters which he said plainly justified the inference that the employers here had failed to rebut the presumption of sex discrimination. He referred, in particular, to the fact that as the Tribunal noted in paragraph 115, Brenda Whyte had not been able to recall evaluating the job but merely had some evidence that she must have done so; that the Tribunal had commented in relation to verification that this was a "one-day turn around" job; and that Mr Rice had indicated that it was his normal practice to give an indication of what grade he expected to result from the evaluation. He also pointed out that there was a sad lack of any documentary evidence before the Tribunal to support the employer's case. There was no documentary evidence relating to the grading or about the verification process. He submits that in the circumstances the Tribunal was plainly entitled to conclude that the employers had failed to rebut the presumption imposed upon them by section 1(3).
27. Putting it more broadly, he submits that looking at the Tribunal's decision in the round, it was clear that they had concluded that the employer had been seeking to manage Miss Jacklin out of her position and to place Mr Robinson into it. We would only point out that in any event that would not of itself establish that the reason would be sex discrimination because there could, of course, be a number of reasons why the employers would wish to do that. Although having said that, such a clear finding from the Tribunal might properly constitute sufficient evidence from which they could infer that the presumption of sex discrimination had not been rebutted.
28. We have concluded, in this case, that the Tribunal's reasoning is not adequate. Its findings in relation to the conclusion that there was sex discrimination in connection with the appointment process simply did not, we think, address the employer's key contention, namely that they genuinely believed that Miss Jacklin would not be interested in the post. This was, after all, not a fanciful belief; she had chosen to leave the department because she was unhappy there and it was presumably known, at least by the time anyone was being considered for the post and before it had been taken up, that she had already obtained a PO8 post, which is indeed of the same rank as the re-valuated job carried out by Mr Robinson. The Tribunal seems to have reasoned that because she was not in fact treated as she ought to have been, that this justified an inference of sex discrimination.
29. The Tribunal was entitled to find, insofar as the appointment process was concerned, that there were facts which called for an investigation. But having been given one, the Tribunal had to engage with it if they were going to reject it and they had to say why they were rejecting it. Mr Walsh suggests that the finding in paragraphs 116 and 117 of the Tribunal's decision is an answer to this point. The Tribunal there find that the outcome of this whole exercise was to enable the Council to achieve its objective. He says that the inference is that the Tribunal is there accepting that the whole process was a manipulated one and that the ostensible reason given for not consulting her was not the genuine reason.
30. We do not think that that is a fair reading of the Tribunal's decision. It is not after all inconsistent for the employer genuinely to believe that Miss Jacklin was not interested in being consulted about the post, and mistakenly having the view that she was expecting this and that it would be no surprise to her but, at the same time, being pleased that they could more readily achieve their objective without having to go through the consultation process. As we say, if the Tribunal were going to reject that evidence then we think that they had to do so unequivocally.
31. Even if, therefore, Mr Walsh is correct to say that the Tribunal can properly treat this as one whole process, we find that they have erred in law in the way they have approached this question of whether there was discrimination in relation to the appointment process.
32. Mr Walsh, however, has his second string to his bow. As we have said, he relies on what he says is an independent basis on which the Tribunal's decision can be justified, namely the conclusion which he says one can fairly draw by inference that the actual job evaluation exercise itself was a sham. He relies on the matters referred to in paragraph 115 of its decision.
33. We do not think that that is a fair reading of the Tribunal's decision. It is not surprising perhaps that Miss Whyte could not recall evaluating the job because it was some four and a half years after she had done so that she was giving evidence before the Tribunal. Again, it may be that Mr Walsh is right in suggesting that the Tribunal was intending to be implicitly critical of the fact that the verification process was turned around in one day. But it does not say so. Similarly, in relation to Mr Rice's evidence that it was his normal practice to give an indicative grade in relation to a proposed job evaluation. That may have been an undesirable practice, although apparently a practice that he normally engaged in.
34. We accept Mr Staddon's submission that paragraph 115 is of itself doing no more than re-counting certain facts. We do accept that the points made by Mr Walsh are factors which could be urged before a Tribunal as a justification for drawing the inference which he says this Tribunal has indeed drawn. But we are all of us satisfied that reading this decision fairly it is a jump too far to say that the Tribunal has made the finding of a sham which Mr Walsh suggests they have.
35. For these reasons, therefore, we have reluctantly concluded that this decision cannot stand. We say reluctantly because the events in relation to which this case is concerned occurred now some 6 years ago. It is deeply unsatisfactory that a case has to be remitted so long after the event. We are conscious it makes the task of the Tribunal very difficult. It makes the job of the parties difficult as well but we see no real option. We think that the matter should be remitted to a fresh Tribunal. We make it plain that it is only in relation to this material factor defence. The determination on equal pay stands and cannot be reopened. And we obviously hope the matter can be determined as soon as possible. We would only add this: we would all of us strongly urge the parties constructively to try and consider whether there could be at this stage some compromise of this claim. We are concerned that there are going to be additional costs and time involved in going back to a Tribunal so long after the event. But, for the reasons we have given we have felt that there is no real option but to remit the matter. Whether the parties can reach a compromise must ultimately, of course, be a matter for them.