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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Cumbria County Council v Dow & Ors (No 1) [2007] UKEAT 0148_06_2405 (24 May 2007)
URL: http://www.bailii.org/uk/cases/UKEAT/2007/0148_06_2405.html
Cite as: [2007] UKEAT 148_6_2405, [2007] UKEAT 0148_06_2405, [2008] IRLR 91
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- The Tribunal in this case was faced with a whole series of issues of varying complexity arising out of various equal pay claims. They included the existence and scope of various genuine material factor defences; issues about the application and effect of a job evaluation study; and various time points. The first Tribunal claim was lodged in November 2002 and over 3,000 claims have now been lodged.
- Initially attempts were made to resolve the dispute informally, but they failed. There were various case management discussions at which issues were identified and later modified. The Tribunal directed that there should be a single hearing dealing with all aspects of the claims except for the issue, which arose in some but not all of the cases, whether jobs were of equal value. For many cases, that remains in dispute and will have to be resolved at a later hearing.
- Initially the Tribunal gave two judgments, one dealing with the time points and one with the other issues. The latter has been referred to as the judgment on substantive issues. The decision on time limits was sent to the parties on 21 December 2005, and the decision on the substantive issues on 23 March 2006. Both judgments gave rise to appeals from both sides.
- There was a further hearing on 5 May 2006 at which the Employment Tribunal considered an application to review/clarify the judgment on substantive issues. This was pursuant to applications made by both parties. This led to a further judgment on 18 May 2006. One aspect of that judgment was a refusal to allow certain claimants permission to introduce new comparators to their claims. This judgment, "the comparator judgment", is the subject of a separate appeal by the claimants.
- Meanwhile, in the course of considering the Council's appeal lodged against the substantive judgment, the Employment Appeal Tribunal raised certain questions under the Burns/Barke procedure. HH Judge McMullen QC requested that further reasons be given and findings made in respect of some of the issues raised in the Council's grounds of appeal. This led to the Employment Tribunal providing further reasons on 12 January 2007.
- However, the Employment Tribunal felt unable to respond to the EAT request with respect to one issue, namely a market forces defence run by the Council, without first hearing further submissions from the parties. The Tribunal indicated that they were having difficulty providing further reasons because of a lack of recollection and they sought oral submissions on that matter. These were heard by the Tribunal on 28 March 2007.
- Even with the benefit of these submissions, the Tribunal still felt unable to provide further findings or reasons. Accordingly, they held a review hearing on 5 April, and judgment on the review was issued on 4 May 2007, just weeks before this hearing. That has been the subject of a separate appeal from the Council, and with the co-operation of all parties it has been possible for us to hear it in the course of the other appeals.
- The net result of this is that there are now six different categories of appeal. Both parties appeal aspects of the judgment on substantive issues; the Council appeals the judgment on time limit issues, and the claimants cross-appeal in respect of part of that judgment; the claimants appeal in respect of the comparator judgment of 16 May 2006; and finally, the Council appeals the judgment of 4 May 2007 on the review relating to the market forces defence. The time limits appeals are quite discrete from the other grounds. They were dealt with by a separate decision in the Employment Tribunal, and we have decided to follow their lead and give a separate judgment also.
- Counsel for the Council was Mr Jeans QC. Ms Gill acted for one group of claimants (who were members of the GMB trade union) and Mr Epstein QC for the claimants, who belonged to Unison. Ms Gill bore the brunt of the argument in relation to this appeal and Mr Epstein in relation to the time limits appeal. We are grateful to all counsel for their submissions.
- We start by setting out the relevant statutory background, and a brief summary of the legal principles relating to equal pay.
- The starting point is Article 141 on the Treaty Establishing the European Community (formerly Article 119). This is as follows:
- The implementation of Article 141 into domestic law is achieved by the Equal Pay Act 1970. Section 1, so far as is material, is as follows:
- Section 1(2) provides that the equality clause applies whenever the claimant and her chosen comparator are employed on like work, which is when work is of the same or a broadly similar nature; or on work that has been rated as equivalent under a non-discriminatory job evaluation scheme carried out by the employer; or on work which has been rated as of equal value in terms of the demands made on her work. They are specified in paragraphs (a), (b) and (c) respectively. The equal value claim under (c), however, can only be made if neither of the other two claims are available.
- The effect of the equality clause is to ensure that the contractual terms under which the woman is employed are no less favourable than those under which the man is employed.
- Section 1(3) is highly material to this case. It provides a defence to an equal pay claim where the employer can show – the onus being on him – that there is a genuine non-sex reason for the pay difference:
- It is trite law that the court is obliged to interpret the relevant provisions of the Equal Pay Act, which is the domestic implementation of Article 141, fully in compliance with that Article. Any inconsistency must be resolved in favour of EU law: see, for example, the speech of Lord Nicholls of Birkenhead Autologic plc v IRC [2006] 1 AC 118 paras 16-17.
- The obligation to construe the domestic law in accordance with EU law is of particular relevance when analysing the scope of s1(3). The reason is that the scope of discrimination in European law extends beyond direct discrimination, i.e. the case where the woman is paid less because she is a woman, and embraces also indirect discrimination. That is not an entirely straightforward concept, not least because there are different definitions of indirect discrimination, even in EU law itself. The essential point, however, for current purposes, is that indirect discrimination occurs where a pay practice in some way has a disparate impact on women or subjects them as a group to a particular disadvantage when compared with men. That is generally, but not necessarily, established by a statistical analysis of the relevant pools. The fundamental difference between direct and indirect discrimination is that (save arguably in very exceptional cases) direct discrimination can never be justified, whereas indirect discrimination can. An employer whose pay practices involve paying women less than men because of their sex is necessarily acting unlawfully; one whose practices have the effect of adversely impacting on women may be able to demonstrate that there is an objective justification for this difference in pay.
- The test which the courts must apply when prima facie indirect discrimination exists and the employer has to show objective justification is now well established. The classic definition was given by the European Court of Justice in Bilka-Kaufhaus Gmbh v Weber von Hartz [1987] ICR 110 and has been regularly repeated since. In a more recent decision of Cadman v Health and Safety Executive [2006] ICR 1623, the ECJ summarised it thus (para 33):
- This involves the application of a principle of proportionality, as Lord Nicholls recognised in Barry v Midland Bank [1999] ICR 859, 870E. Lord Nicholls described how he understood the principle would operate:
- In Rainey v Greater Glasgow Health Board [1987] 1 AC 224, the House of Lords considered the scope of the GMF defence in s1(3) of the Act where prima facie indirect discrimination exists and objective justification needs to be established. It adopted the approach of the European Court in Bilka. Lord Keith, giving the only reasoned speech in their Lordship's House, confirmed that there was no difference between European and domestic law on this matter.
- The scheme of the Equal Pay Act was expounded by Lord Nicholls in Glasgow City Council v Marshall [2000] UK HL 5; [2000] ICR 196 at 202 as follows:
- In short, once the work is established to be of equal value, the employer must satisfy the tribunal that any difference in pay is genuinely due to a material factor other than sex. Absent any indirect discrimination, that is all that he has to establish. However, where there is prima facie indirect discrimination, then objective justification is required. By "prima facie indirect discrimination" we mean the situation which triggers the obligation objectively to justify the difference.
- One of the issues in this case is whether the obligation objectively to justify the difference in pay arises once disparate impact is established, or whether it arises only where the disparate impact is established and the employer has failed to demonstrate that the difference in treatment is not tainted by sex.
- A similar issue arose in Middlesbrough County Council v Surtees [2007] IRLR 869. Judgment in that case was given after the arguments had been heard in this case. The EAT concluded that the employer had both defences available i.e. he could demonstrate that the material factor causing the difference was not tainted by sex, in which case there was no further obligation to justify. However, if he could not do that, then the obligation to justify arose.
- This followed the decision of the Court of Appeal in Armstrong v Newcastle Upon Tyne NHS Trust [2006] IRLR 124 which bound the EAT but which in any case the EAT respectfully considered to be correct. We will not repeat the reasoning here. It is set out in the Middlesbrough decision at paras 24-55. We adopt that reasoning and adhere to that conclusion. We do observe, however, that where there are pay arrangements which on their face appear to reflect historical sexist assumptions about what jobs and rates of pay are appropriate for men and women, it will be a rare case in practice where the employer is able to establish that the pay structure is not sex tainted.
- There are a series of quite distinct issues in this case and in large part we will deal with the particular facts as they bear on the specific issues under appeal, but some brief general background is necessary to set the issues in context.
- Traditionally, there were three principal categories of employees in the local authority sector and they were subject to different arrangements for determining terms and conditions. The terms and conditions for manual workers were fixed under what is known as the White Book; those for administrative, professional, technical and clerical ("APT and C)" workers under the Purple Book; and for craftsmen under the Red Book. Different national joint councils negotiated different terms and conditions for these different groups.
- Most of the workers covered by the White Book had been the subject of a job evaluation scheme. This was introduced in 1987. A number of jobs were assessed at national level and allocated to one of six grades. They were applied at local level by two processes; the first was assimilation, whereby a local job would be assessed by reference to an equivalent job which had been assessed nationally. The second was by assessment, which was adopted where direct assimilation was not possible. In that case the closest national job would be identified and there would be a detailed process of factor comparison between the two jobs to determine where in the pecking order the particular local job should stand.
- There were no separate job evaluation studies carried out either with respect to the Purple Book or Red Book workers. However, from 1 April 1997 White Book and Purple Book pay scales were amalgamated nationally into a single pay spine under a new scheme known as the Green Book. The intention was gradually to bring the terms and conditions of the two groups under the same set of negotiations. It was envisaged that job evaluation studies would be carried out locally, treating employees of the two groups as a single pool. That has not yet been completed in Cumbria so the new single status grades have not been implemented. The Red Book employees were not willing to become part of this structure and still remain outside the Green Book.
- The claimants in this case cover 23 different grades falling within three broad occupational groups who work in the care sector, in cleaning and in catering. The carers include those who work in disability and mental health residential homes, hostels and day care services; in residential homes for the elderly; and home carers who assist clients in their own homes. The cooks work in homes for the elderly and in primary and secondary schools. The cleaners are employed in various places as cleaners in charge. All these groups are either overwhelmingly or exclusively female. For example, the highest proportion of males found in any of these groups is amongst support workers in homes for the disabled, where they are one in four.
- Almost all the claimants were subject of grading under the White Book job evaluation scheme, although not quite all. Those not subject to such grading could not bring claims based on the job evaluation study.
- The comparators worked in the Council's direct services organisation which was formed in 1991 and is known as Cumbria Contract Services. The principal comparators are road workers (there are three different grades) and other comparators include grounds maintenance operatives, members of the highway response team, a street lighting attendant, a painter, a ganger and an assistant buyer. The comparators all worked in exclusively male occupational groups, save for one lone female who worked as a sign painter.
- Different claimants rely on different comparators and some claimants rely on more than one comparator. We have been provided with a matrix showing the comparators for each claimant. This was apparently finalised in the course of the Tribunal hearing itself.
- Many, but no means all, of the comparators had their jobs evaluated under the White Book scheme. Some, including certain craftsmen such as a painter, had their terms covered by the Red Book and were not themselves subject to any job evaluation study. Others, such as comparators working in the Highways response team, were not covered by either White or Red Book terms. The significance of the status of claimant and comparator is this: it is only if both have been the subject of a job evaluation scheme that a claim for equal pay can be brought under s1(2)(b) of the Equal Pay Act. In other circumstances, any claim must be brought under the equal value provisions in s1(2)(c). In this case the effect is that any APT&C claimants have to make equal value claims, since they are not part of the job evaluation study; as do White Book claimants whose comparators have not been assessed under the scheme.
- Even where jobs are valued the same under the job evaluation study, it does not follow that the employees concerned have received the same pay. This is because there have been all kinds of special payments, such as incentive bonuses, shift allowances and so forth. The White Book positively encouraged local authorities to adopt bonus arrangements based on accepted work study principles, and emphasised their potential productivity benefits. Almost exclusively, these have been received by the comparator groups but not the claimants. In practice most of those bringing job evaluation study claims under s1(2)(b) have not complained about their basic pay, because in general it has been equalised with the comparator. (There are, however, exceptions for certain care workers caught by the 1994 collective agreement (see para 52 below)). However, they have claimed that they have been deprived of bonuses made payable to the comparators. Those bringing equal value claims under s1(2)(c) are typically claiming that they are being denied equality with respect to both basic pay and bonuses. In both sets of cases, the Council contended that there were genuine material factors which explained and justified the difference in pay between claimant and comparator.
- Bonuses were introduced very many years ago for many of the comparators, including road workers, grounds maintenance, street lighting and painting. These bonuses were paid as part of productivity schemes which went back over 40 years. Not surprisingly, there was scarcity of documentation for the earlier period as to precisely how they operated. Originally the schemes were based on "standard minute values" but in 1989 the basis of these schemes was changed with effect from April 1990. A simpler scheme, agreed with the trade unions, was adopted. It involves an annual assessment of each worker under a points system designed to measure productivity and effectiveness. The same bonus scheme was applied to all in receipt of bonuses, irrespective of whether they were White or Red Book workers.
- Exceptionally, bonuses have also existed for some of the claimants. Cleaners and caretakers - predominantly female and male respectively - received them until 1988 but they were removed at that time with the acquiescence of the trade unions. The Council contended that this was because of a fear of job losses if the bonuses had remained. None of the other claimant groups has ever had a bonus scheme.
- The Tribunal analysed the bonus schemes for various comparators, and in particular road workers, street lighting attendants and ground maintenance workers. The Tribunal heard evidence from various staff and they heard expert evidence, although they indicated that although voluminous, it had been of very limited value to them. The expert evidence was not assisted by the fact that apparently the experts offered comments about the existence or otherwise of sex discrimination. Experts ought to be assisting the Tribunal and not acting in a partisan manner. If they do not appear properly to comprehend their role then they can expect their evidence to receive short shrift.
- One of the issues the Tribunal had to determine as part of the GMF defence was whether the bonuses were paid to encourage higher levels of productivity and better use of plant and equipment, or whether they had simply become automatic additions to the basic pay.
- In the course of this analysis, the Tribunal also considered whether the claimant groups were amenable to a bonus of a similar type. They analysed cleaners, kitchen assistants and carers in this regard. They considered that similar schemes could have been applied to kitchen assistants and cleaners but productivity schemes of the same kind could not have been implemented for carers.
- For the most part, the Tribunal rejected the Council's GMF defences. A large part of this appeal challenges those conclusions. We return to consider the detailed arguments below.
- Certain care assistants also made claims for premium pay and, in some cases, for higher basic pay. These claims arise from the fact that the terms and conditions of these staff were adversely affected by two collective agreements in 1990 and 1994 respectively.
- The care staff were transferred to a direct labour organisation which is part of the council, namely Cumbria Care Unit, in 1994. This followed the implementation of the National Health and Community Care Act 1990 which, in very broad terms, envisaged that care for those suffering from mental health problems could be provided in the community. The pay of the care workers was subject to two important changes in 1990 and 1994. In each case it was with the acquiescence of the relevant trade union. It led to an alteration of basic pay and also the loss of enhancements. The Council alleged that these changes were forced upon them by economic circumstances and that without them they would have had to stop the service. Moreover, the trade unions agreed to the changes. The claimants contend that these alterations were sex tainted and that there was no legitimate justification for effecting them.
- The Tribunal dealt with many issues, and only some are the subject of appeal. We will not lengthen this judgment by summarising those conclusions not now in issue. We simply set out briefly the Tribunal's analysis on the GMF defences and summarise the findings material to this appeal. More detailed analysis of the decision will be made with respect to particular grounds of appeal where that is necessary.
- At the heart of this case was the Tribunal's consideration of the bonus schemes. They analysed with some care these schemes as they applied to different categories of comparator. They first considered the road workers. They accepted that under the pre 1990 scheme, which was based on weekly assessment and monitoring, pay was genuinely based on an increased level of performance although they were not satisfied that it was entirely self-financing. The 1990 scheme, however, involved annual assessments which bore little relation to individual performance. For example, supervisors did not typically keep notes of ongoing performance, and the link between bonus and performance was inevitably considerably weakened. Indeed, there was only one example of a bonus being reduced for poor performance and that was in a very exceptional case.
- The conclusion was that whilst there was evidence of improved productivity, this was because of factors such as better management and improved technology and was related in only the most tenuous way to an improvement in personal performance. The Tribunal concluded para (22.9):
- The Tribunal then separately considered the bonuses for Mr Meloy, the painter, and the street lighting and groundsmen comparators and came to an even clearer conclusion that they established no link at all between increased productivity and bonus.
- They then analysed the amenability of bonus schemes for the claimant groups. They held that cleaners and caterers were in principle capable of being subject to a similar scheme, but that carers were not. As to cleaners, there had, as we have mentioned, been such a scheme in place for a short period in 1988, although admittedly for only a small group. It had been discontinued at the request of the trade unions because there was a fear that it would lead to job losses. However, the Tribunal considered that this established that in principle there was a clear possibility of adopting a bonus scheme similar to that adopted for the road workers.
- As to kitchen assistants, it was accepted that there was little scope for kitchen assistants to move onto other jobs if they performed their tasks more efficiently, because the work in any particular school was finite. However, the Tribunal concluded that there was room for increasing efficiency by having the same work performed by fewer staff. The comparator groups had had a reduction in staff whilst maintaining or increasing bonuses and the Tribunal considered that a scheme similar to road workers could have been adopted.
- However, they were persuaded that care workers could not be subject to a similar scheme. The majority of performance indicators could not be measured, the nature of the work was inimical to it, and the claimants had not been able to identify any productivity scheme or bonus scheme of this nature for any care worker anywhere in the country.
- The Tribunal then considered the position with respect to the carers affected by two collective agreements made with the trade unions in 1990 and 1994. First, with effect from 1 July 1990 the pay of certain staff employed in elderly residential care such as night care staff,
- Then in 1994 there was a further agreement covering home carers, night care assistants, day care assistants, domestics and cooks. New lower basic rates were introduced. They maintained a differential between week and weekend working for existing home care staff but removed that differential for new staff. This arrangement also covered home carers for the first time. As with the earlier arrangement, a lump sum payment was made to staff in recognition of the overall longer term reduction in their pay.
- The carers adversely affected by these changes claimed equality. One of the issues determined by the Tribunal was that this group of carers could still be considered subject to the White Book job evaluation study, and there is no challenge to that. However, the Council contended that the economic circumstances which gave rise to these agreements, and the fact that they were agreed with the unions, distinguished their position from that of their comparators and constituted a material factor defence.
- The Tribunal then sought to set out their conclusions with respect to the GMF defences
- The other two conclusions now under appeal were not determined at the substantive hearing. They are:
- Although the specific rulings of the Tribunal which are under challenge fall within a relatively narrow compass, the grounds on which it is alleged the Tribunal erred in reaching its conclusions in these matters are extensive. We think they may be fairly represented as follows. The Council appeals on the following grounds:
- The claimants appeal with respect to two decisions where the Tribunal found against them:
- Mr Jeans makes three inter-related submissions which he submits demonstrate that the approach of the Tribunal in this case was so fundamentally flawed that its decision should not be allowed to stand. There are, he submits, fundamental procedural errors which demonstrate a degree of unfairness and/or misapprehension by the Tribunal of the case being advanced before it such as to cast serious doubt on the conclusions reached. The three matters are these.
- First, Mr Jeans relies upon the fact that the Tribunal took into consideration evidence which was not properly before it and which had not been tested in cross-examination. Second, he contends that the decision of the Tribunal demonstrates that it fundamentally misunderstood the nature of the bonus schemes that were in operation within the Council. Without a proper appreciation of those schemes, it was not possible for the Tribunal properly to make an assessment of the GMF defences. Third, he contends that the way in which the Tribunal dealt with the market forces defence betrays a clear failure to act fairly or, in any event, justifiably causes the Council to have a lack of confidence that that particular issue has been dealt with fairly. Even if the rest of the decision can stand, this challenge stands as an independent ground in its own right and vitiates the Tribunal's conclusions with respect to market forces.
- The background to this submission is this. The parties initially placed before the Tribunal a large number of witness statements. However, it was accepted in relation to the substantive hearing that only those witness statements where the witnesses were called to give evidence should be considered by the Tribunal. This was not so in relation to the witness statements with respect to the time points. There it was accepted that much of the evidence adduced in those witness statements was accurate and no cross-examination was required.
- In fact, it is clear that in determining the substantive issues, the Tribunal did have regard to some witness statements which they ought not to have considered. This is obvious from the decision of the Tribunal itself. They refer to the evidence of a Mr Cook and also a Mr Pearson, both of whom submitted witness statements on behalf of the claimants, but neither of whom gave evidence. As a consequence of this, when the case management hearing was held before His Honour Judge McMullen in the course of this appeal, he directed that the Tribunal should indicate which witness statements from witnesses not called, other than the statement of Mr Cook, had been taken into account by the Tribunal when reaching its decision, and in what way. (At that stage it had not been picked up that there was a reference in the judgment to the evidence of Mr Pearson.)
- The Chairman answered that it was only Mr Cook's evidence that had been considered, and that this was for a very limited purpose. He noted that there was little evidence as to how the bonus scheme had been operating with respect to street lighting attendants. Mr Cook was one of these and his evidence provided some limited assistance. He added that the evidence had not materially affected the Tribunal's conclusions. In fact, the Chairman's response was not accurate for, as we have said, there is also a reference in the decision to another witness, namely Mr Pearson, whose evidence was looked at in another context in the decision.
- Mr Jeans places heavy reliance on paragraph 8.1 of the Tribunal's decision, where they said this:
- He says it is clear from this contemporaneous record that the Tribunal are treating the evidence of all the claimants' witnesses as relevant evidence in the case. Plainly the Tribunal had forgotten precisely to what extent they had relied upon these witness statements and the answer the Chairman gave to the questions posed by the Employment Appeal Tribunal could not be considered reliable. (We should emphasise that he does not suggest a deliberate attempt by the Chairman to mislead this Tribunal.)
- He supports this submission by pointing to the fact that the Tribunal noted that a large proportion of the care staff were part time. Mr Jeans submits that the evidence actually adduced before the Tribunal simply did not support any such finding and that the Tribunal could only have made the observation it did by having regard to the witness statements which were not properly before them.
- Moreover, Mr Jeans submitted that it could not be assumed that the evidence was irrelevant or merely supportive of the other evidence in the case. If these statements from witnesses not called were considered, it could have had a significant impact on two issues in particular; first, on whether there were genuine benefits from the productivity bonus schemes; and second, whether the cleaners or kitchen staff were actually pressing for similar bonus schemes.
- Ms Gill, for the claimants, contends that Mr Jeans is making an unjust and unfair reading of the Tribunal's decision. She accepts that it was wrong for the Chairman to have had regard to Mr Cook or Mr Pearson's evidence at all. She points out, however, that the Tribunal plainly recorded the relevant parts of that evidence on which it was relying and she submits, and we agree, that the evidence really was of very limited significance. She contends that it would be wholly unjust to this Tribunal to infer from paragraph 8.1 that the Tribunal must have had regard to all the witness statements, notwithstanding the unambiguous statement from the Chairman that they had not.
- She notes that paragraph 8.1 identifies other evidence that was before the Tribunal but to which no reference was made and on which no reliance was placed, namely the Tribunal's comment that there was extensive evidence in the bundles of which only a small proportion was referred to the Tribunal. She also notes that the Tribunal carefully set out in paragraph 8.2 precisely who did give evidence in the case.
- Ms Gill submits that the reasonable reading of paragraph 8.1 is that the Tribunal was there simply identifying the volume of material lodged before it, rather than seeking to identify the evidence which was properly before it for its consideration. We agree that this is a possible reading of that paragraph and is supported by the Chairman's response to the question posed by the EAT. We are not prepared to accept that the Chairman could simply have forgotten that the Tribunal had placed weight on, or had regard to, all the witness statements, as Mr Jeans urges us to do. The Chairman said that the Tribunal did not do so, and we do not think that the fact that he had forgotten that the Tribunal had also commented on the evidence of Mr Pearson, as well as Mr Cook, gives any proper reason to doubt that response.
- As to the reference to the fact that a substantial number of care workers were part timers, Ms Gill contends that this was wholly consistent with the claimants' witness statements in the time limitation issue. Those statements were properly before the Tribunal and they supported - and this is not disputed – the Tribunal's observations.
- Mr Jeans responds by submitting that this material would not necessarily provide an accurate or reliable picture of the extent of part time work amongst carers because the claimants who were selected for an analysis of the time limitation points were precisely those where there was some change in status or hours. Accordingly, he says, it is more likely that there will be part timers in that category and the witness statements are not a representative sample of the group.
- That may or may not be right, but in our judgment it is not material to this point. The issue we are determining here is whether it is reasonable to suggest that the Tribunal made its observation that a large proportion of the caring staff were part time staff from evidence properly before them. Whether they should properly have made that inference, given the particular circumstances in which the witnesses had been selected with reference to the time point action, is neither here nor there. It may have been an unjustified inference - although we doubt whether it was - but it seems to us that the finding relating to part timers can be explained by material that was properly before the Tribunal. It follows that we reject this root and branch attack on the Tribunal's conclusions.
- The related ground depended upon Mr Jeans satisfying us that the Tribunal had fundamentally misunderstood the nature of the bonus scheme in place. There had been one scheme up until 1990 and another introduced at that point. As we have noted, thereafter the same bonus scheme was in fact introduced for all the comparators subject to these bonus arrangements. Mr Jeans puts considerable weight on a statement in the decision (para 22.11) where the Tribunal said, with respect to two categories of comparator (groundsmen and street lighting attendants) that "there is a notable absence of evidence as to how these bonus systems worked both pre and post 1990". The Tribunal went on to observe, for example, that no work sheets or time sheets had been produced with respect to these categories and there was little evidence whether the bonus was constant or variable.
- Mr Jeans contends that this, and indeed another paragraph (para 22.10) where the Tribunal expressed similar difficulties in understanding how the bonus worked for a painter, Mr Meloy, shows that the Tribunal was acting under a complete misapprehension of the evidence and was assuming that those comparators were subject to a different productivity scheme.
- Ms Gill submitted that this was a misreading of the Tribunal's decision. She said that there were other passages in the judgment (in particular para 15.4, which deals with the bonus schemes for road workers, street lighting attendants and grounds maintenance without distinction) which demonstrate that the Tribunal were clearly aware that there was a single bonus scheme in place which changed in 1990. She submits that all the Tribunal were indicating in the passages relied upon by Mr Jeans was that whilst they had heard extensive evidence about how the scheme actually worked in practice with regard to road workers, such as what system there was for assessing performance on an annual basis and monitoring it, such evidence in relation to the other two groups was at best sparse.
- Mr Jeans responds by saying that this could not be what the Tribunal was intending to say because there was in fact evidence before them about how bonus assessments had been made for these other comparators, and both Mr Meloy and Mr Watling had given evidence about the variations which occurred in their bonus.
- We prefer the submission of Ms Gill. It would be extremely surprising if the Tribunal had misunderstood such a fundamental point, and we do not accept that the judgment shows that they did. The Tribunal plainly were aware that they had some evidence about the reasons why on occasions the bonus would be increased or decreased. That was found in documentation which had been retained by Mr Wilson, who had been a supervisor of street lighting attendants and this was placed before the Tribunal. Far from ignoring this evidence, the Tribunal referred to it. We agree with Ms Gill that a fair reading of the decision shows that the Tribunal were concerned that they had little evidence with respect to certain comparators about how the productivity scheme actually worked on the ground so as to ensure improved performance on an individual basis. They were not under the mistaken impression that there was more than one scheme.
- The third point relates to the way in which the Tribunal dealt with the market forces defence. As we have indicated, this argument is advanced both as an aspect of the broad fairness challenge and also as a separate complaint in its own right.
- In order to understand the basis of the appeal in connection with this ground, it is necessary very briefly to reiterate the procedural history.
- The Tribunal considered this defence in the context that it was one of a number of GMF defences raised by the Council. In the initial substantive decision, this issue was dealt with in a relatively succinct fashion. The Tribunal outlined the Council's case, as put in its oral submissions, and then summarised their conclusions. These were essentially that they were not satisfied that the fact that the workforce, or some of them, would have left without receiving the bonus was particularly material; and that even if market forces were in principle capable of justifying a differential, that would not justify making the higher payment by means of bonus payments.
- The Council appealed the Tribunal's reasoning. In the course of the Burns/Barke procedure the Tribunal was expressly asked to identify what findings it made on the market forces defence and on certain evidence which was uncontradicted in relation to that issue. This evidence was summarised in an appendix to the order. It is to be noted that, as is usual in an order of this kind, the Tribunal was empowered to hold a review to assist it in responding if necessary.
- The Tribunal made an order on 21 December for written submissions with respect to this issue to be lodged by 10 January. The order stated in terms that the Tribunal recognised that they did not give full consideration to this potential defence in the first decision. Subsequently on 2 February, the Tribunal directed that there should be a case management discussion on 28 March at which further oral submissions could be made. The Tribunal informed the parties that it was still not able to recollect precisely all the facts that it had found in relation to this matter, or its reasoning. Since the purpose of the Burns/Barke order is to enable it to supplement its findings by what it had in mind at the time, and not to create a fresh basis for its decision, it considered that it could not properly respond to the order. It heard representations as to the procedure it should follow and having done so, it determined to convene a review hearing to enable it to reconsider the matter afresh. In convening the review, the Tribunal acknowledged that it could no longer recall "all the facts it found in relation to the market forces defence."
- That review was held on 18 April 2007 when further oral and written submissions were made by all parties. The Council had sought to argue that the review should be limited to the agreed oral evidence reproduced in the appendix to the Burns/Barke order. It contended that if it was necessary to go beyond that material, there could not be a fair review given the passage of time since the hearing (now some eighteen months earlier). There was no transcript of the original evidence and the Tribunal itself admitted that it could not remember all the facts in relation to this matter. The Council also submitted that it was unrealistic to expect the parties in those circumstances to make fresh submissions on evidence heard so long ago. However, the Tribunal rejected this approach and held that the scope of the evidence should be unlimited and that the parties should refer to any evidence they thought appropriate.
- The Tribunal then considered the evidence before it. They again rejected the market forces defence but for wholly different reasons than had been given earlier. They accepted that there was clear evidence that the market rate was higher than the basic rate, but there was no statistical evidence of any kind identifying what the market rate was. In the circumstances, whilst in principle accepting that it was well established that the market forces could be used to justify part of the difference in pay, the council had failed to discharge the burden of establishing precisely what proportion could be so justified.
- The Council's first submission was that a review of any kind was not appropriate or in the interests of justice. It contended that if the Tribunal was unable to recall properly its reasons then it should simply accept that consequence. As Ms Gill submitted, the logic of the argument is that the Tribunal should have allowed the issue to go on appeal which would necessarily have succeeded in view of the Tribunal's admission that it had not adequately considered the matter. The inevitable consequence was that the Employment Appeal Tribunal would have had to remit the matter for further consideration. Given the history, Ms Gill says that it is almost inevitable that it would have been sent back to the same Tribunal in any event.
- Furthermore, she contended that the possibility of a review was clearly envisaged by the Order of the Employment Appeal Tribunal. Moreover, the EAT has emphasised that the tribunal's power of review should not be read narrowly: see Willams v Ferrosan Ltd [2004] IRLR 607. Accordingly, justice was plainly served by there being a review in the manner proposed without the additional cost and delay necessarily involved in an appeal which would almost certainly have led to the same result.
- Ms Gill further submits that it is wholly unrealistic to believe that there was any relevant evidence not considered in fact. She wholly rejected Mr Jeans' contention that there was a vast hinterland of evidence available for consideration. Mr Jeans was entitled to adduce such evidence as he wished to rely upon. The crucial feature of the evidence was that there was nothing comparing rates paid by the Council with competitors; without such evidence, the defence could not succeed.
- We agree with Ms Gill's submissions to the extent of accepting that in principle a review was a perfectly acceptable way of dealing with the difficulty in which the Tribunal found itself. Any appeal would inevitably have succeeded and it seems to us highly likely that the decision would have been sent back to the same Tribunal, particularly given its deep involvement in the matter. In any event, it was obviously desirable for the Tribunal to seek to put matters right if it could.
- We do not, therefore, consider that it was wrong in principle for the Tribunal, in the interests of justice, to review its original decision. Strictly, Mr Jeans is right to say that the Tribunal ought in terms to have noted that it considered a review to be in the interests of justice and why, and this it did not do. However, he accepts that if we were of the view that the review was in principle appropriate - as we are - then this was not a complaint of any significance. There was plainly no other basis on which the review could be held but the interests of justice.
- Indeed, during the course of his submissions it became clear that the Council's real objection was not so much to the principle of holding a review, but to the way in which it was carried out. Two points in particular were emphasised. First, its reasons second time around are quite different from those given in the initial decision, and there is no attempt to reconcile them. Ms Gill says that it is clear that the second decision should now be relied upon, and she did not seek to defend all the reasoning in the first decision. Second, it was never clear to the parties, and on the Tribunal's own admission was no longer apparent to them either, precisely what the original evidence had been. In effect, the Tribunal was simply reformulating its reasons as a result of further submissions, but in circumstances where by its own admission it was relying upon a defective recollection of the evidence.
- Mr Jeans submits that on any view this is unsatisfactory. Even if the decision itself is correct - which he disputes - the appearance of justice has not been achieved. He relies upon the well known principles adumbrated by the House of Lords in Porter v Magill [2002] 2 AC 357; he submits that a fair minded and informed observer acquainted with the material facts would conclude that there was a real possibility that justice had not been done.
- We agree with that submission. Porter is not directly on point since that is concerned with appearance of bias, and that is not the issue here. But we are satisfied that the Tribunal reached a decision without being in a position to be sure that it was in command of all relevant facts. This was a potentially very important defence and the evidence and argument have been bifurcated in an unacceptable way. We have considerable sympathy for the Tribunal which was plainly exercised by the dilemma it faced and sought to adopt a practical solution to it. Had it heard evidence afresh we would have found that it was a fair procedure. But in our judgment it could not rely on its unreliable recollection of the relevant evidence as the basis for its decision.
- We do see considerable force in Ms Gill's submission that there was relatively little, if any, material evidence in fact that was not in the appendix, and that in any event the parties could be expected to have had well in mind the principal evidence supporting their respective cases. But the Tribunal did not limit itself to the material in the appendix, and we certainly cannot be sure, since the Tribunal itself was not, that they had all the potentially relevant evidence in mind. In these circumstances we cannot be sure that the Tribunal would inevitably have reached the same decision. Even if we could, we doubt whether that fact could in these circumstances defeat this ground of appeal. In our view the Council is entitled to have its defence considered on the basis of all the evidence and it is far from clear that they did.
- Furthermore, it is unsatisfactory that the status of the original decision was not specifically dealt with. We assume that it is intended to be ignored and replaced by the review decision, as Ms Gill submits. That would normally be the position, but then the review will usually involve an obligation to take into account some factor or principle not originally born in mind by the Tribunal. In this case, in the absence of hearing evidence again, or alternatively obtaining an agreement as to what evidence was relevant, the Tribunal is simply reaching a different conclusion on exactly the same, but now inadequately recalled, material. It is not obvious why any greater weight should be given to the second decision than the first; indeed, given that the first was when the evidence was closer to mind, it should perhaps be treated as the more reliable decision. Yet Ms Gill accepts that that decision is not legally defensible.
- In the circumstances, in our judgment the procedure adopted has been defective and therefore this issue must be remitted for a further hearing. Given the history, and the fact that this is a discrete issue, we are in no doubt that this matter should go to a fresh tribunal. (Indeed, we suspect that it would be cruel and unusual punishment to inflict it upon the same Tribunal a third time!) The new tribunal will, of course, have to consider the whole matter afresh, including the evidence, save to the extent that admissions can be agreed between the parties on the basis of the evidence already heard. We do not take this step lightly, and are at least consoled by the thought that in a case of this nature, where the potential costs are so significant, it is in principle both desirable and just that if there may be a market forces argument which can properly be advanced, to explain either a part or the whole of the difference in pay, then it is desirable that it should be fully ventilated.
- Mr Jeans made a separate submission that the decision of the Tribunal in any event disclosed an error of law. He submitted that the new reasons themselves are unsustainable in the light of very clear evidence from both management and the union side that the pay awarded to the comparators was necessary both to maintain and retain the workforce. This issue is no longer strictly in play, given our conclusion that the matter should be remitted for procedural reasons. However, we have heard argument on the point and consider it briefly.
- It was established by the ECJ in Enderby v Frenchay Health Authority [1994] ICR 112 that market forces are in principle capable of constituting a justification for a differential in pay, even if the effect is adversely to affect women, provided the market does not operate on sexist principles. Moreover, as in Enderby itself, even if the whole of the differential cannot be justified by the need to pay a market rate, the employer can rely on such differential as is justified by that need.
- As we have said, the Tribunal in this case initially rejected the defence on one basis and on review reached the same conclusion but substituted an entirely different set of reasons. In essence the original reasons were that evidence of men leaving would not have been relevant to the issue, and that in any event it would not have been justified to pay the market differential by means of a bonus. Ms Gill does not seek to uphold the reasons initially given, and we need say no more than that we agree that they are not sustainable.
- However, Mr Jeans submits that the second set of reasons also display fundamental defects. The Tribunal first accepted that the market rate was above the basic rate:
- The Tribunal then noted that whilst ease or difficulty of recruiting might be an indicator of market forces operating, there was no evidence of any difficulty with respect to the comparators. They then summarised their conclusions as follows:
- Mr Jeans submits that the precise market rate was irrelevant. Virtually all the witnesses, including those giving evidence for the claimants, had given unequivocal evidence that without the bonus payments there would have been a drain on the workforce and the operations could not have been sustained. There were comments stating in terms that it would have been "commercial madness" and "commercial suicide" to have removed the bonuses.
- Conversely, there was no evidence, he submits, that the comparators were overpaid. Accordingly, the Council had established the necessary conditions for demonstrating a material factor defence. He accepted that this was not the basis originally for adopting the productivity schemes, but it is well established that it is not necessary for a reason which constitutes a justification to have been held by the employers at the material time; it is enough that it does in fact justify the difference in pay: see Schönheit v Stadt Frankfurt [2004] IRLR 983 (ECJ) and Health and Safety Executive v Cadman [2005] ICR 1546 (CA). Mr Jeans further contended that the fact that there was no recruitment problem was precisely because the market rate was being paid. It is only if it is not paid that such problems should arise.
- Ms Gill contends that the decision is manifestly sustainable. It is for the employer to show not merely that some differential is justified by market forces, but to satisfy the Tribunal also what is that differential. In this case the Tribunal were willing to infer from the evidence identified by Mr Jeans that there was indeed some justified differential, but they were left entirely in the dark about precisely what the market rates were. The employers had made some reference to the rates paid by Amey Infrastructure but they had taken over the business of the Council in 2005, and therefore were not truly competitors since they acquired the staff on TUPE terms. They were successors and not competitors.
- Furthermore, there was no evidence of Amey rates paid to non transferred employees. Moreover, this evidence was of pay rates well after the periods of time in issue in most of the claims. It was legitimate for the Tribunal to have regard to the fact that market forces was not a reason why the schemes were initially adopted. A tribunal is entitled to look with particular care at an ex post facto justification defence advanced in those circumstances, as Mummery LJ made clear in Elias v Secretary of State for Defence [2006] IRLR 934, para. 133.
- We agree with Ms Gill. There was a lack of evidence from which the Tribunal could properly infer what was the market rate was; and the Tribunal was entitled to treat the fact that this was not a reason relied upon at the time as a material consideration in assessing the justification defence. It is not enough to establish that some differential is justified without giving the Tribunal a proper evidential basis for determining whether it is the whole amount or something short of that.
- Furthermore, it is not true to say, as Mr Jeans does, that the lack of recruitment problems establishes that the market rate was being paid. That fact is indeed consistent with that hypothesis, but is equally consistent with the Council paying over the odds. It was for the employer to show that the market dictated the higher pay; it was not for the claimants to show that the pay was too high. Hence the reason why the Tribunal was left in doubt as to the market rates.
- It follows that had we concluded that the Tribunal's decision on review could stand, we would have rejected the submission that they erred in law in rejecting the market forces defence.
- Mr Jeans submits that there is clear and unambiguous authority from the Court of Appeal in Armstrong v Newcastle Upon Tyne Borough Council that the mere fact that a pay practice impacts adversely upon women is not sufficient to establish prima facie indirect discrimination sufficient to trigger the obligation objectively to justify the difference in pay. It is only if the employer fails to satisfy the tribunal that the discrimination is not sex tainted that the question of justification arises. As we have indicated, we accept that this proposition accurately states the law. However, it is also plain in our view that the Tribunal accepted that in terms. At para.21(2)(v) of the decision the Tribunal said this:
- There are observations in para 22(3), which it is unnecessary to set out, to similar effect.
- The Tribunal's finding that there was sex tainted discrimination with respect to the payment of bonus was summarised in the following two paragraphs:
- Mr Jeans submits that there is a fundamental error in this analysis. Following the Armstrong case it is not legitimate to infer sex tainting merely from the statistical information alone. The focus must be on the cause of the different treatment; the statistics simply identify the consequence. It is true that the Tribunal identified the fact that the claimants are not in predominantly female group by accident; large proportions are part time and furthermore the claimants are doing work which is classically perceived to be women's work.
- Conversely, the comparators are all doing jobs traditionally perceived to be men's work. That again, says Mr Jeans, tells us nothing about the reason why there is a difference in pay in this case. This was not a case, for example, where the principle adopted for determining pay necessarily adversely impacted on women, such as where part timers are paid less. If the Council satisfies the Tribunal that the reason for introducing the productivity schemes in the manner adopted had nothing to do with sex, which is what they were contending, that is an end to the claim.
- He submits that that is the conclusion which the Tribunal was compelled to reach here had they engaged with the Council's case. It was not suggested that the reason for providing the bonuses to the male groups was a sham; they were designed to achieve greater productivity, and this was transparent. Accordingly, even assuming that the Tribunal purported to apply the principles in Armstrong, in fact they did not properly do so. Having noted that there must be sex tainted discrimination and disparate impact before the question of objective justification arises, they wrongly inferred the sex tainting from the disparate impact alone.
- It does seem to us that Mr Jeans is in fact running two inconsistent arguments. He has submitted that it was not possible to confer similar productivity benefits on any of the claimant groups and indeed, appeals against the Tribunal's finding that it was possible to adopt productivity schemes for caterers and cleaners. If he is right about that, then in our view the only conceivable finding is that there was sex tainting. If the benefit is given only to those who perform traditionally male jobs and cannot be conferred on the claimants doing traditionally women's work, then prima facie indirect discrimination inevitably arises. On that premise, only the predominantly male groups can benefit from the way the pay arrangements are structured. It is akin to paying more to full timers than part timers. The differential may be justified, but the need to justify plainly arises.
- The position is potentially otherwise if the claimant groups could also have been given similar arrangements. The reason why one group ends up with the benefits and another does not could in principle be for reasons independent of sex, although it is likely to be difficult for the employer to establish this where the pay practice reinforces the adverse effect of deeply structured sexual stereotyping.
- It seems to us, therefore, that it is only on the assumption that there is the possibility of claimant and comparator being subject to the same schemes that it can even be contended that the explanation for treating them differently has nothing to do with sex. It follows that if Mr Jeans were to succeed on his appeal with respect to the finding that cleaning and catering could also be subject to the same scheme, he must perforce fail on this ground. Conversely, if Ms Gill succeeds in her appeal against the Tribunal's conclusion that carers could not be subject to a similar scheme, it opens up the possibility of this defence succeeding against them also. Without that appeal succeeding, it seems to us that this ground of appeal must fail so far as the carers are concerned. To that extent, therefore, the grounds of appeal interrelate.
- We will consider the argument here on the assumption that the Tribunal's other findings are sustainable (as indeed we find that they are). Ms Gill submits that even assuming that the Armstrong interpretation of indirect discrimination is correct - and she does not concede that it is - the decision of the Tribunal is wholly justified on this point. The Tribunal is not simply noting that a single predominantly male group is in receipt of higher pay. The workers in the categories who receive such pay are virtually all male, and those who work in the categories who do not are virtually all female; the sex make up is not simply accidental but reflects deep seated assumptions about what is appropriately men's and women's work; the differentials are significant; and there are other features, such as the 1990 and 1994 agreements, which suggest that the Council has historically dealt with female staff in a different and less favourable way than it has dealt with male staff. These factors taken together, says Ms Gill, are sufficient to sustain the Tribunal's decision.
- We agree. In Middlesborough Council v Surtees [2007] IRLR 869 the EAT (Elias P) identified three different kinds of situations where there is prima facie evidence of sex tainting. This case falls into the third in which an employer chooses to benefit a predominantly male group - in this case groups - and did not give that opportunity to a predominantly female group. (We assume that in principle it would have been possible to do so). The EAT pointed out that whilst this need not reflect sex tainting, the onus will be firmly on the employer to show that it is not, and this may involve not only showing why the benefits were given to the male group, but why they were denied to the female group (para.55). There was no evidence here, save that it is said that there was no request for productivity schemes from the female workers.
- The real issue is whether the employer has satisfied the Tribunal that there is no element of traditional stereotyping, either consciously or unconsciously, in the fixing of wages. In our view, the Tribunal was fully entitled to find that the employers have failed to discharge that burden here. We accept that the Tribunal's decision could on one interpretation be taken to be saying that the degree of disparate impact was of itself sufficient to rebut the Council's contention that the productivity payments were paid and applied in a sex free way. That would be wrong; the Tribunal would need to engage with the specific reason put forward as to why that inference was not justified in the particular case, even in circumstances where there was job segregation along traditional sex lines. That fact does not inevitably mean that the particular differential must be sex tainted although in such cases the difficulty of establishing otherwise is a heavy one.
- Here, however, the Tribunal did not just rely on those factors but also upon the fact that the payments were made to a number of male groups and to none of the female groups; that the bonus payment made to the predominantly female cleaners in the past had been removed in 1988; and that there were other occasions, notably with respect to the care workers, when women had been treated differently from the way in which they envisaged men would have been. In the light of these factors it seems to us that there was manifestly evidence to justify the Tribunal's conclusion that they were not satisfied that the employers had rebutted the prima facie inference, which the statistics in the circumstances strongly supported, that the pay differentials may be sex tainted. The evidence in this case was, in truth, very powerful.
- Ms Gill ran a further argument in support of the Tribunal's decision. She submitted that in order to constitute a s1(3) defence, the difference in pay must be genuinely due to the reason relied upon. Here it is that the bonus scheme was self-financing and generated significant productivity. The Tribunal found, however, that it was not self-financing and furthermore that any incentives which it secured for ensuring that individuals worked harder were limited. She contends therefore that it cannot properly be said that the difference is due to a genuine productivity scheme because the scheme has failed in its fundamental objective.
- We do not accept that. To say that the payment must be genuinely due to a factor other than sex is merely requiring that there should in fact be no sex tainting in the decision, whether conscious or unconscious. Her argument requires that the employers satisfy the additional step of showing that it is reasonable. That will be relevant at the justification stage, but not when the issue is whether there is discrimination at all. In our judgment that is determined by the passage from the judgment of Lord Nicholls in the Marshall case, which we have set out at para 21 above.
- The Tribunal concluded that there was disparate impact. Mr Jeans has challenged the Tribunal's reasoning with respect to this finding on two grounds. First, in reaching that conclusion the Tribunal made reference to the fact that the carers were predominantly part time.
- Second, Mr Jeans says that the Tribunal erred when carrying out the statistical analysis by making an assumption that the jobs of the claimants and comparators were of equal value. In principle, however, as Ms Gill pointed out, that is the assumption that is made for the purpose of assessing as a preliminary point whether the GMF defence applies. It is only on that assumption that the defence is necessary.
- More particularly, he complained that it was wrong to take into consideration a group of kitchen assistants and other workers who were graded on the lowest grade and for whom there was no equivalent comparator who was paid more. They had made their claims under the equal value comparison against those rated at a higher grade in the White Book job evaluation study. Since there was no question in their case of an equal pay claim succeeding, they ought not to have been taken into consideration in the determination of whether there was a disparate impact or not. Ms Gill observes that it was not clear until the Tribunal's decision that these claimants' cases were bound to fail and that it was legitimate for them to be taken into account.
- We prefer Mr Jeans' argument here. It seems to us that it must have been plain that certain claimants could not succeed in establishing that their jobs were of equal value from an early stage, and they should not thereafter have been treated as potentially statistically significant. It cannot be right to make an assumption that the claimants may be able to establish equal value when it is plain that the assumption is false. No doubt that will only rarely be the case, but here is an example.
- However, nothing turns on this error. Even if one takes out of account the grade one female workers as he suggests, this is plainly still a situation where the comparators are almost exclusively male and the claimants are very predominantly female. The figures, which we need not set out here, are striking.
- Mr Jeans floated in argument the suggestion that without the grade one claimants being taken into consideration, the relevant statistics were not significant, being too small to justify any legitimate inference of disparate impact. Again that is not reflected in the evidence and the point was not pursued. In truth, the finding of disparate impact here was inevitable given the sex balance in the claimant and comparator jobs.
- The Tribunal analysed the operation of the bonus scheme in considerable detail. As we have said, they concluded that the link between performance and bonus was tenuous. Mr Jeans submits that the Tribunal's analysis is defective. They had made the point with respect to the road workers that there were improvements in productivity since the adoption of the current bonus scheme in 1990, but concluded that it is likely that it stemmed not from improved performance of the individual worker but rather from improved management performance or beneficial changes in technology. Mr Jeans contends that this was wholly unrealistic; it would never be possible for an employer to be able to identify with precision to what extent improvements in productivity could be attributed to these different elements.
- We reject this submission. The Tribunal analysed the evidence advanced by the Council as to the justification for the bonus scheme with considerable care. There was plainly a proper basis for their concluding that the bonus scheme failed to achieve its objective at all with respect to the street lighting attendants and groundsmen. The evidence with respect to these groups was scant in the extreme, but such as there was did not show any proper attempt to monitor productivity. Looking at the matter objectively, it was then not possible to say that the productivity scheme was an appropriate means of achieving a legitimate objective.
- The road workers were in a different situation, as the Tribunal recognised. Whether some differential in pay may have been justified as a consequence of greater productivity from the comparator work force might have been a more difficult question, but the Tribunal was not satisfied the difference in pay here, which was significant, could be justified by the difference in levels of performance. They reached this conclusion after hearing evidence from experts who expressed views on whether productivity had increased and why.
- Mr Jeans further contends that the basis of the Tribunal's analysis was what he termed an absurd proposition that the failure on occasions properly to monitor or enforce the productivity agreement on an individual basis meant that it was not justified. This submission seems to be based on a sentence in the Tribunal's decision where they say that "the essential question was …whether the performance of the worker was nonetheless maintained on an individual basis."
- We do not read that as requiring proof of productivity improvements with respect to each worker, nor do we think that the Tribunal were saying that the occasional lapse in enforcement would defeat the defence. They were seeking, as in our view they were entitled to do, evidence that productivity had increased as a result of improvements in the performance of the workers themselves. That was in our opinion the correct approach. The purpose of the productivity scheme was to improve standards of performance, and the differential between those operating the schemes and those who did not was said to be justified by this consideration. The Tribunal found that the productivity schemes were no longer achieving the purported objective, namely to improve the productivity of the workforce subject to them.
- In our judgment it could not conceivably be said that it was a perverse finding. Nor do we accept Mr Jeans' submission that the Tribunal made the error of a kind identified by Elias P in Cleveland and Redcar Borough Council v Bainbridge [2007] IRLR 91 of finding that the reason ceased to be justified as a result of time alone. In Redcar the Employment Tribunal had concluded that an employer is under an obligation to seek to equalise pay even where there is a genuine material defence justifying the difference. As the EAT noted, there is no such obligation for as long as the GMF continues to explain the difference. The right is to equal pay unless there is a GMF defence; where the GMF defence applies, there is no obligation on an employer to manufacture some artificial basis to seek to secure that the pay is equalised, however long the GMF operates.
- However, that is not this case. The Tribunal was making the point that there were initially real productivity gains when the productivity schemes were first introduced, but the schemes had ceased to be applied in a rigorous way. It was not the same GMF defence losing effect merely because of the passage of time; it lost effect because of the failure of the Council to implement and apply it sufficiently rigorously. In truth, the payments had in practice become automatic additions to the basic wage.
- Given this finding, it was in our view plainly open to the Tribunal to find that if there was a need objectively to justify the difference; it had not been established here. The legitimate aim of improving productivity still remains, but the means used must be proportionate to that aim. Without a proper application of the scheme, the benefits were not being achieved. It cannot be proportionate to pay bonuses to achieve a legitimate objective if that objective is not in any meaningful way being realised.
- This raises the issue of the cross-appeal, but is linked to the question whether the claimants could have been the subject of similar productivity schemes to the comparators. We agree with the claimants that the consequence of the Tribunal's conclusion that the productivity schemes do not meet their objective is that the difference in pay cannot be justified even if it is not possible to adopt similar productivity schemes for the claimants. In effect, the Tribunal has found that there was no legitimate reason for differentiating between the pay of the claimant and comparator groups in the way that has been done here.
- The objective of improving productivity was not achieved. This is not dependent at all on the question whether the claimants could be subject to a similar scheme. This is particularly significant with respect to the carers because their claims failed with respect to the road workers because of the fact that no productivity scheme could be introduced for them. That might be material if the comparators bonus payments were justified; it would raise the issue whether it might have been proportionate to have applied a similar scheme to the claimant group. But this issue is not even engaged where the bonus payment actually made cannot be justified.
- The Tribunal recognised this with respect to the street lighting attendants and the groundsmen, but not the road workers. This appears to have been because there was at least some productivity improvement which had historically been achieved by the operation of that scheme. However, if that does not constitute a justification for the differential, we see no basis on which the position of this comparator can be distinguished from the other comparators.
- This is the other strand of what we have identified as the seventh ground of appeal. As we have said, the Tribunal, in our view wrongly, placed emphasis on this question. If, as we believe, this was an unnecessary precondition to securing equality once the Tribunal had concluded that the productivity schemes did not genuinely secure their objective, it follows that these conclusions were strictly unnecessary.
- The Tribunal's conclusions can be summarised as follows. They found that there could be similar productivity schemes for cleaners and caterers but not for carers. All these findings are challenged. The question here is whether there was a proper evidential basis on which the Tribunal could conclude that it was possible (or not in the case of carers) for these claimants to have such a scheme applied to them. We are not here to reassess the evidence.
- We have no doubt at all that they reached legitimate conclusions with respect to the cleaners and carers. The fact that there was a productivity scheme for cleaners in the past, albeit for a short while in 1989, is itself evidence that a scheme of this nature could in principle be constructed. Moreover, the Tribunal gave perfectly cogent reasons for their view.
- The claimants contend that the Tribunal erred in finding that the carers could not have been subject to a similar scheme. That is if anything an even more difficult conclusion to challenge on a perversity basis. As the Tribunal noted, there was no evidence that a productivity scheme of this nature has ever been adopted for care workers, and it is difficult to see how it could be.
- A care worker who works properly is subject to the demands and requirements of the patient and cannot sensibly dictate the speed of working; moreover, the personal nature of the service makes productivity difficult to measure. As the Tribunal recognised, it might be possible to come up with a scheme which rewards competence or qualifications in some way, but not productivity. In our view, this ground of appeal was always grossly optimistic.
- We confess that we found more force in the criticisms of the conclusion with respect to the caterers. The Tribunal recognised that caterers could not be as flexible as the comparator groups but concluded that it was not an area where productivity was in principle excluded. They felt that it could have been improved, albeit at the expense of job losses. Mr Jeans notes that there is no reason to suppose that caterers would necessarily choose to accept productivity arrangements in such circumstances. That may be right, but it does not affect the question whether in principle a similar scheme could have been adopted for them. We think on balance that the Tribunal were entitled to reach the conclusion that they could; it cannot be said to be perverse.
- The Tribunal found that the GMF defence failed both with respect to the basic rates (only advanced in some cases), which had departed from the White Book scales, and also the enhancements. These related to unsocial hours and overtime. It is the rejection of the GMF with respect to enhancements which is the main subject of this appeal, although basic rates are also in issue for certain care workers affected by the 1994 agreement.
- As indicated above (paras 51-52) the effect of these agreements was to remove certain enhancements from particular groups of care workers with an improvement in basic pay (save for new starters who were set lower basic pay under the 1994 agreements). However, altogether it led to a reduction in their pay, and for this reason a one off lump sum was paid to the workers affected. The explanation why the Council entered into these agreements was given by Mr. Siegal, the Deputy Chief Executive and former head of Social Services.
- The immediate pressure arose from the National Health and Community Care Act 1990 which introduced the concept of care in the community. It established what the Tribunal described as a "mixed economy in care services". It led to a number of Council reviews to ensure that the Council could remain competitive. Staff costs were a very significant element in the cost of residential home services and economies had to be made if the service were to be maintained. The trade unions made it plain that they only reluctantly accepted the deterioration in terms but, as a memorandum from the GMB union to management following the 1994 agreement noted , the trade unions "were aware of the financial difficulties and they clearly understood" the reasons for the proposals.
- The Tribunal then set out their conclusions on this part of the appeal as follows (para 25):
- The Tribunal then elaborated on this in its response to the request from the EAT for further details as to why it had rejected the GMF defence, given that the uncontradicted evidence was that the changes were necessary to maintain a viable service and avoid the potential closure of care homes:
- Mr Jeans submits that the evidence plainly established that these were collectively agreed arrangements which were meeting an acknowledged practical imperative. It was quite wrong to say that the unions had agreed under protest; that was a wholly inaccurate description of their position. They had only agreed with reluctance, but that was a different thing. Plainly they would only ever reluctantly accede to an adverse change in the terms and conditions of their members, but nonetheless they did it here because of the obvious threat to jobs if they had not agreed to this alteration. He submitted that this caused the Tribunal wrongly to conclude that the Council could not rely upon the decision of the ECJ in the Specialarbejderforbundet I Danmark v Dansk Industri, acting for Royal Copenhagen A/S [1995] IRLR 648. In that case the ECJ had held in terms that "the fact that the rates of pay have been determined by collective bargaining or by negotiation at local level may be taken into account by the national court as a factor in its assessment" of whether there is objective justification. Mr Jeans submitted that it was an important factor here and reinforced the fact that there were very real cost pressures and job threats.
- Mr Jeans was also critical of the fact that the Tribunal expressed the view that they had some "doubts" that the alternative to removing these enhancements would involve the closure of care homes. There was plain evidence to that effect and it was unjust to assess the issue of justification on the basis that they doubted this important premise. Moreover, the Tribunal made a fundamentally false analysis by assuming that the compulsory competitive tendering principles applied. It was never suggested that they did.
- Finally he criticises the Tribunal for putting such weight on the House of Lords decision in the Ratcliffe case. In Ratcliffe a number of catering assistants were dismissed and reemployed at lower rates. The Council did this because they considered it necessary to reduce the pay in order to be able to compete in the compulsory competitive tendering exercise which they were obliged to carry out. They were concerned that without these changes the work would be lost to the private sector. The House of Lords held that the employment tribunal had been entitled to find that the difference in pay between them and their chosen comparators was not objectively justified. The evidence was that the market was almost exclusively female, and the assumption in North Yorkshire was that women should only fit work around their domestic commitments. That was an entirely different case, submits Mr Jeans. The rates of pay in Ratcliffe were imposed upon the employees, who were overwhelmingly female; there were no compensating advantages; and the rates paid were those which were perceived in the market to be women's rates. This was a crucial finding in the reasoning of the House of Lords.
- By contrast, in this case the changes were collectively agreed; they were not applied across the board to all those in care, but were applied only to a particular category of care worker where costs savings had to be made; there were buy out arrangements in place; and there was no evidence that the rates being adopted were discriminatory market rates or that the Council, or indeed anyone else, understood that they were adopting what might be termed "women's rates" for the job. In effect, the Tribunal was concluding that the rates had been changed to a discriminatory rate merely because the group affected was largely female. That was an impermissible assumption.
- Ms Gill submitted that the Tribunal was fully entitled to reach the conclusion it did. They were entitled to say that the trade unions only accepted the changes under protest, and that in the circumstances the Copenhagen case did not assist the Council. The Tribunal was not suggesting that it could never be justified to reduce pay to protect jobs where they were predominantly female jobs. The Tribunal had evidence to support their conclusion that had these jobs been male, the Council would have acted differently. In the circumstances the Ratcliffe case was treated by the Tribunal not as a binding precedent, but as a guide to them in reaching their decision. They were entitled to give that decision considerable weight, and there was no error of law in their determination.
- We do not find this aspect of the decision satisfactory. We accept Mr Jeans' submission that the Tribunal could not properly attach no significance to the fact that the agreements were secured collectively merely because the union, quite understandably, was a reluctant party to an agreed deterioration in terms. The Tribunal expressly stated that there was no connivance by the trade unions in any deliberate discrimination. Their agreement to the changes was therefore a relevant consideration to be weighed in the exercise.
- Crucially, there was no independent evidence at all that the pay was being reduced to a rate which could properly be described as women's rate. There was no evidence, or at least none referred to by the Tribunal, as to the sex distribution in the private market at the material time. It is difficult to avoid the conclusion that the Tribunal simply assumed that the reduction of pay in a predominantly female market necessarily involved adopting a discriminatory rate.
- As Buxton LJ pointed out in the Armstrong case (para 121) Ratcliffe turned on its own facts. He expressly stated that the case was not authority for the proposition that "to adjust wages or conditions in order to compete in a predominantly female labour market was necessarily discriminatory either as a matter of fact or as a matter of law." Nor do we consider that the Tribunal could justify its conclusion by the bald assertion that in the case of males in a similar situation cuts were achieved by maintaining pay and making job losses. There would have to be evidence that there was the potential for jobs to be reduced whilst maintaining the necessary level of service - and there are, as Mr Jeans pointed out, certain minimum standards required in homes of this nature.
- We recognise that Ratcliffe does support the proposition that it is not necessarily an objective justification to reduce pay even where the option is that a service will be lost if they are not. However, it is an exceptional case which turns on the particular findings of the employment tribunal in that case. We fully recognise that the employment tribunal is the body charged with determining the facts, but in our view it did not have a sound evidential basis for the conclusions it reached with respect to this issue.
- This is an argument which is said to provide an additional basis for supporting the Tribunal's decision that the carers could not enjoy equality because they could not be subject to a similar productivity scheme. Given our conclusion that the Tribunal erred in treating this as relevant to the question of justification, this ground takes on greater importance.
- In essence the argument is as follows. Under the terms of s1(2) of the Equal Pay Act the equality clause can only bite where the comparator's contract either has a term of a similar kind to that in the claimant's contract, or alternatively there is a corresponding term that can be transposed. The alternative provisions are as follows:
- Mr Jeans gave as an example of a similar term one where both claimant and comparator were entitled to a car but the claimant was entitled only to an inferior model. A right to a corresponding term would be where the comparator was entitled to a benefit which could be applied in a similar way to the claimant, such as a share option. However, if there is no similar term nor a corresponding term, then the Act cannot bite. Reliance is placed on an observation of the Lord Chancellor, Lord Mackay, in Hayward v Cammell Laird [1988] ICR 464, 471 D where he said that the provision in question must be "one which is capable of being compared from the point of view of the benefit it confers with a corresponding provision in the other contract."
- Similarly Lord Goff said (p 478C):
- In this case there is neither a similar nor corresponding term for the carer because the productivity scheme cannot be applied to them in the same way. If the operation of the term would be inimical to the job, as it would if one tried to apply the productivity scheme to carers, then there is nothing on which the equality clause can bite. Mr Jeans gives the example of a comparator who is entitled to protective clothing. There would be no similar or corresponding term in the contract of someone working on a job where such clothing was not necessary. Moreover, the practical difficulties would be insurmountable. It would be impossible for a tribunal to give equality without entering into some arbitrary wage fixing function which it is not equipped to carry out, and for which no guidance is provided. The Tribunal rejected this argument on the basis that the position was covered by the GMF defence under s1(3). They summarised their conclusions as follows:
- The claimants submit that this analysis is right, but that in any event the issue simply does not arise here The Tribunal found that the productivity schemes were not in fact being properly operated. In substance the comparators were merely being paid more by way of basic wage. The similar term is therefore the term fixing the basic wage; the reference to the productivity scheme is simply a red herring and therefore this submission, even if correct, does not assist the Council.
- We agree with that preliminary submission. Since the Tribunal found that the pay of the comparators was not in fact fixed in any meaningful way by reference to the productivity criteria, the difficulty of applying those criteria to the claimants does not arise. Where the payment cannot be justified, it is in essence part of the basic wage. On any view in those circumstances bonus plus basic must be treated as a single term. The decision of the Court of Appeal in Degnan v Redcar and Cleveland Borough Council [2005] IRLR 615 is authority for that very point: see the judgment of Maurice Kay LJ at para.12.
- Further, in our judgment the Tribunal were right to reject the argument. As they pointed out, if Mr Jeans' argument were correct, it would too readily allow evasions of the principle of equal pay. If the comparators only have the benefit of a term if they are productive, then it will be easy to establish a GMF defence if claimants who are not productive in the same way, for whatever reason, seek to secure the same benefit. Mr Jeans advanced certain examples where he submitted that this argument might succeed where a GMF argument would fail. Given our conclusion that this issue does not strictly arise, we will not explore them but simply observe that like the Tribunal, we did not find them convincing.
- This is the appeal from some of the claimants concerning the refusal by the Tribunal to allow them to amend their claims. This was not a determination in the substantive judgment. The application to amend was made under the Tribunal's invitation to clarify its judgment, but in reality it was a simple application to amend, as the Tribunal stated and the claimants accept.
- The application related to two quite different comparators. The first was Mr Cook. He had been identified by some claimants as a street lighting comparator under s1(2)(c) of the Equal Pay Act but not under s1(2)(b). The Council always contended that he should be treated as a s1(2)(b) comparator because they considered that he had been the subject of a job evaluation scheme. The Tribunal agreed with them. So these claimants after the judgment sought to make him a comparator under a s 1(2)(b) claim instead.
- The Council objected, not least because they said that they may have chosen to adduce further evidence had the application been made at the appropriate time. The claimants had deliberately chosen to put their case in a particular way and should not at such a late stage be allowed to adopt a different claim once the original claim had failed. There has already been very extensive latitude given to the claimants to amend their claims and identify fresh comparators, but there had to be a limit to this process.
- These claimants accept that they should really have identified the claims in the alternative. The reason that they sought to make a s1(2)(c) claim is that the Council itself was contending that the comparison under the job evaluation scheme was only appropriate with respect to the basic pay fixed pursuant to that scheme. The Council was contending that it was not appropriate for assessing whether bonus payments should be made.
- The claimants' principal submission was that the Council's analysis was wrong - as indeed the Tribunal found - but that if it were correct then there should be a right to make an equal value claim with respect to these workers. However, on the assumption that the Council was wrong, the job rated as equivalent claim should have been pleaded as an alternative to the equal value claim, but by an oversight it was not. Ms Gill submits, as she did to the Tribunal, that it is obvious that there is now no prejudice to the Council in allowing the s1(2)(b) claim to go ahead. She disputes that any further evidence could possibly be required since the Council has conceded that the jobs are rated as equivalent.
- A second group of amendments sought to allow certain claimants to make equal value claims against Mr Watling, a grounds maintenance operative. The principal difference between this amendment and that relating to Mr Cook was that the claimants now seeking to make this comparison had not formerly identified Mr Watling as a comparator at all. Indeed, in the case of the carer claimants they had not even identified any comparator doing work in the same category as Mr Watling. Mr Jeans strongly argued that the Council may well have conducted its case differently if it had realised that Mr Watling would play such a potentially significant role. As he somewhat graphically put it, the claimants were seeking to be allowed a second bite of an (already swallowed) cherry.
- The Tribunal rejected both amendments. They referred in particular to a passage from the judgment of May LJ in Jones v MBNA Bank (CA 30 June 2000) in which he noted that it will be an extremely exceptional case where an amendment would be permissible after final judgment in a civil trial (para 52):
- The Tribunal relied specifically on this principle. It thought that to allow the amendment at such a very late stage "would amount to moving the goal posts after the referee has blown the final whistle". The claimants had presented a very wide selection of comparators; the respondents had made clear the position with Mr Cook; the claimants had been legally represented, and furthermore - and we think this is on any view a decisive factor in the exercise of their discretion - the Tribunal considered that this was not a case where the claimants would be bound to succeed and a further hearing would be necessary, with the additional time and costs involved. They also accepted the Council's submission that they may have wished to adduce further evidence had the amendment been allowed at an earlier stage. The Tribunal summarised its conclusions as follows:
- The Tribunal considered a number of other authorities concerning amendments which we do not think it is necessary to rehearse here. A tribunal has a wide discretion to allow an amendment in the interests of justice. In general this tribunal can interfere only if there is a clear misdirection or the decision is perverse: see e.g. Medallion Holidays v Birch [1985] ICR 578. We think that is an impossible claim to make here. In particular, with respect to Mr Watling, the amendment appears to have arisen because of a sudden realisation that a claim against him as a comparator might succeed.
- In our judgment this ground of appeal fails.
- The Council's appeal succeeds on two grounds and the claimants' appeal on one. The matter must be remitted to a fresh tribunal to consider two issues afresh. The first is whether, and to what extent (if any), market forces may objectively justify a difference in pay between claimants and comparators in those cases in which it has been relied upon. The second is whether the Council can objectively justify the difference in pay for those care workers covered by the 1990 and 1994 collective agreements.
- The claimants who are carers and have compared themselves with road workers succeed to the extent that the Council cannot rely upon a GMF defence on the basis that the care workers could not have been subject to a similar productivity scheme. In circumstances where the productivity scheme for the road workers was not achieving its objective, it is irrelevant whether a similar scheme could have been adopted for these care workers or not.
| At the Tribunal | |
Before
THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)
MRS A GALLICO
MR R LYONS
(UKEAT/0148/06/MAA)
CUMBRIA COUNTY COUNCIL APPELLANT
MS E DOW and Others RESPONDENTS
(UKEAT/0463/06/MAA)
MRS M F JOSS and Others APPELLANTS
CUMBRIA COUNTY COUNCIL RESPONDENT
((UKEAT/0464/06/MAA)
CUMBRIA COUNTY COUNCIL APPELLANTS
1) MS R ELLIOTT and Others
(2) MRS M F JOSS and Others
RESPONDENTS
(UKEAT/0465/06/MAA)
MRS M F JOSS and Others APPELLANTS
CUMBRIA COUNTY COUNCIL RESPONDENT
(UKEAT/0256/07/MAA)
CUMBRIA COUNTY COUNCIL APPELLANTS
1) MRS M F JOSS and Others
(2) MS R ELLIOTT and Others
RESPONDENTS
CUMBRIA COUNTY COUNCIL |
APPELLANT |
| RESPONDENTS |
|
MRS M F JOSS and Others |
APPELLANTS |
| RESPONDENT |
|
CUMBRIA COUNTY COUNCIL |
APPELLANTS |
(2) MRS M F JOSS and Others |
RESPONDENTS |
MRS M F JOSS and Others |
APPELLANTS |
| RESPONDENT |
|
CUMBRIA COUNTY COUNCIL |
APPELLANTS |
(2) MS R ELLIOTT and Others |
RESPONDENTS |
Transcript of Proceedings
JUDGMENT (No. 1)
APPEARANCES
| For CUMBRIA COUNTY COUNCIL | MR CHRISTOPHER JEANS (One of Her Majesty's Counsel) and MR PAUL CAPE (of Counsel) Instructed by: Cumbria County Council Legal Services Unit The Courts CARLISLE Cumbria CA3 8LZ |
| For the UNISON Claimants | MR PAUL EPSTEIN (One of Her Majesty's Counsel) and MS HELEN KNOTT (of Counsel) Instructed by: UNISON Employment Rights Unit 1 Mabledon Place LONDON WC1H 9AJ |
| For the GMB Claimants | MS TESS GILL and MS BETSAN CRIDDLE (of Counsel) Instructed by: Messrs Thompsons Solicitors The St Nicholas Building St Nicholas Street NEWCASTLE-upon-TYNE NE1 1TH |
SUMMARY
Equal Pay - Material Factor Defence.
The Tribunal considered a whole series of GMF defences and rejected most of them. There were numerous appeals and cross appeals and the Council contended that the Tribunal's decision portrayed a misunderstanding and there were procedural defects which together rendered the whole decision invalid. The EAT held that the decision was not vitiated, but certain appeals and cross appeals were successful.
See also: Cumbria County Council v Dow & Ors (No 2) [2007] UKEAT 0148_06_2505 (24 May 2007)
THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)
The law
"1. Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied."The implications of that principle are then set out in the remainder of Article 141, read with the Equal Pay Directive, (Council Directive 75/117) whose purpose is to implement and supplement Article 141.
"(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."
"An equality clause shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor—(a) in the case of an equality clause falling 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."(The slightly different formulations in (a) and (b) are historical accidents arising from the gradual way in which European law was implemented into domestic legislation. The differences are not material. The employer will in all cases have to prove that the difference in pay is genuinely due to a material factor other than sex ("the GMF defence").)
"The justification given must be based on a legitimate objective. The means chosen to achieve that objective must be appropriate and necessary for that purpose".
"In other words, the ground relied upon as justification must be of sufficient importance for a national court to regard this as overriding the disparate impact of the difference in treatment, either in whole or in part. The more serious the disparate impact on women, or men as the case may be, the more cogent must be the objective justification. There seems to be no particular criteria to which the national court should have regard when assessing the weight of the justification relied upon."
The structured analysis of equal pay cases.
"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 section 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.When section 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."
The background
Bonuses.
The special position of certain care staff.
The findings of the Tribunal in the substantive hearing.
The Tribunal's analysis.
"We do not accept that it is established that the road workers are working any faster or harder. The maintenance of productivity is likely to be the result of increased mechanisation and increased management efficiency, and the link between extra effort on the part of the workforce and any particular level of bonus payment is not established."
cooks, and domestics, was transferred so that their pay was no longer fixed by reference to the White Book scales but they were allocated to a range within the Purple Book pay scale. This affected pay of different staff in different ways. The basic level of basic pay increased, although the net effect was a reduction in the overall pay bill for these groups of workers. Indeed, there was a one-off lump sum payment made to those who suffered loss as a result of this change. Terms and conditions, other than pay, continued to be fixed by reference to White Book terms.
in the light of these findings. Essentially they were as follows:(1) They accepted the submission of the Council that in accordance with the decision in Armstrong objective justification did not arise if the Council was able to show that the difference in pay was not genuinely due to a difference in sex.(2) They also accepted that the onus was on the claimants to establish disparate impact, following Nelson v Carillion Services Ltd [2003] IRLR 428.(3) They were satisfied that there was ample evidence from which they could identify disparate impact here. The comparator groups receiving a bonus consisted exclusively of men (save possibly for one woman) whereas the claimants were overwhelmingly female.(4) They were not satisfied that the different treatment with respect to bonuses was wholly untainted by sex discrimination. Accordingly they found that objective justification was required.(5) Such justification was not established here. There was a significant adverse effect on the females, and the benefit to the council of making the productivity payments was at best tenuous.(6) Similar schemes could have been provided for the cleaners and caterers as with the road workers, and therefore there was no justification available as against them with respect to any comparators. However, a similar scheme to that adopted by the road workers could not have been established for the carers and therefore the Council made good their GMF defence with respect to those claimants.(7) However, since there was no link at all between the bonus and productivity with respect to Mr Meloy, the painter, or the street lighting attendants or groundsmen, the Council could not rely upon their GMF defence against the carers with respect to these comparators.(8) In relation to the basic level of pay of claimants affected by the 1990 and 1994 agreements, and in relation to loss of enhancements under these agreements, the Employment Tribunal rejected the genuine material factor defence based on the combination of the need to avoid retrenchment and home closures and to save jobs and on the fact that the changes were agreed pursuant to collective bargains. The Tribunal found that the unions had with considerable reluctance entered into the agreement; and that the situation was similar to that considered by the House of Lords in Ratcliffe v North Yorkshire County Council [1995] ICR 833 in which their Lordships held that it was unlawful to reduce the pay of certain catering staff even in order to compete in a competitive tendering exercise because the market itself was biased against women.
(9) The Tribunal did not accept a GMF defence based on market forces. This was a decision confirmed for different reasons on review.(10) The Tribunal refused certain applications to amend by altering the comparators after the judgment had been delivered, and the claimants appeal against that ruling.The issues on appeal
(1) There is a fundamental challenge to the fairness of the proceedings because of certain alleged failings by the Tribunal, notably, misunderstanding the evidence, having regard to evidence which was not properly before them, and dealing unfairly with the Council's market forces defence. It is alleged that this vitiates the whole decision.(2) Alternatively, even if the decision itself can stand, the procedural failings arising from the manner in which the Tribunal dealt with the market forces defence vitiates the conclusion on that issue.(3) Further, even if the Tribunal's conclusion on the market forces defence was not vitiated, the rejection of the defence was perverse and contrary to the weight of evidence.(4) The Tribunal misdirected itself in law when analysing whether the other GMF defence applied. In particular, the Tribunal reached its conclusion on the assumption that the need to establish the defence of justification was triggered by the mere fact that statistically women were disadvantaged. It is contended that the Tribunal ought not to have adopted that approach and should first have considered whether the explanation for the difference in pay, namely the attempt to achieve productivity gains, was for reasons which had nothing to do with sex. It is only if the Tribunal is not satisfied on that prior question that it should go on to consider the issue of justification. The allegation is that the Tribunal missed out that vital stage.(5) The Council alleges that the Tribunal erred in their approach to the statistics in any event. In particular, they had regard to a category of claimant, the lowest graded in the White Book scale, for whom there was no comparator. In considering the question whether there was disparate impact, the Tribunal ought not to have had regard to this category at all.(6) The Tribunal wrongly analysed the issue of justification. It imposed an unrealistically heavy burden on the employers by requiring them to establish in each individual case that the productivity objective had been achieved. What it ought to have done was to ask whether, in general terms, it was achieving the legitimate aim of improving productivity. Furthermore, the Tribunal erred in that, having found that the scheme was originally justified at its inception, it was not entitled thereafter to conclude that it had subsequently ceased to be so.(7) The Tribunal's finding that there could have been a similar productivity scheme with respect to the catering and cleaning claimants was unsustainable on the evidence before them. It would have been impossible to have had a similar productivity scheme as that applied to the comparators, as the Tribunal ought to have found. The claimants cross appeal on the finding that the carers could not have had the same bonus arrangements as the road workers. Moreover, they contend that in any event, it matters not whether the claimants could have been subject to the same or similar productivity schemes once the Council had failed to demonstrate that the productivity schemes did not improve the performance of the comparators: (see point (10) below).(8) The Tribunal erred in concluding on the facts before it that the GMF defence failed with respect to the basic rates and loss of enhancements of those carers who were affected by the 1990 and 1994 collective agreements. In particular, the Tribunal wrongly relied by analogy upon the case of Ratcliffe v North Yorkshire County Council when, in fact, the circumstances were significantly different from those which arose in that case.(9) The final ground of appeal is an alternative defence with respect to the carers. It is alleged that the Tribunal ought to have found that even if there were no GMF defence by reference to any particular comparator, it was not possible to envisage a term in the carer's contract of employment which could be said to "correspond" to the comparator's term within the meaning of s1(2). This ought to have defeated these claimants' claims at the outset.
(10) It is alleged that the Tribunal erred in concluding that the carers were not entitled to the benefit of bonus payments because it was not possible to have an appropriate productivity arrangement of a kind which had been introduced for the comparators. This ought to have been immaterial once it was established that the supposed benefits which the productivity arrangements ought to have produced were not, in practice, achieved.Further, and in any event, the Tribunal erred in concluding that there was no appropriate productivity scheme that could be introduced for the carers. (This is linked with ground (7) and we will deal with it below in that context.)(11) The Tribunal erred (in the comparator judgment) in refusing certain amendments which had been sought.There were other conclusions which were formally appealed but which we have not had to determine. In particular, the Tribunal found that a claimant could compare herself in a s.1(2)(b) claim with a person graded lower than her within the same job evaluation scheme. Mr Jeans accepted that the judgment of the EAT in Redcar v Bainbridge (No.1) [2007] IRLR 92 was against him on this point, and he reserved his rights before the Court of Appeal. In fact that court has now upheld the EAT's judgment on this point: see [2007] EWCA Civ 929.We shall deal with each of the above issues in turn. (The numbering to the side-headings refers back to this list of grounds of appeal. Grounds (7) and (10) have been dealt with together.)1. Fundamental challenge: procedural errors.
Was improper evidence considered?
"The respondent, who went first, relied upon 14 witnesses 13 of whom gave oral evidence. Their witness statements occupied 172 pages. The claimants had 50 witnesses, 12 of whom gave evidence and their witness statements occupied 158 pages. In addition two experts were called, one on each side, Mr Beddoe for the claimant whose report was 96 pages in length; and Dr Whitmore for the respondent whose report was 48 pages in length. We record at this stage that their reports were far too long and their evidence, in our estimation, added little to the strength of either party's case, providing to us little assistance in deciding the issues to which the reports related which was not otherwise canvassed in the lay evidence and in the extremely lengthy submissions. The Tribunal's task was made no easier by the production of no less than 13 lever arch files of documents containing thousands of pages, only a very small proportion of which have, in the end, been referred to."
Misunderstanding the bonus scheme.
2. The procedure with respect to market forces.
3. Should the Tribunal have rejected the market forces defence?
"8 We recognised that there is a considerable body of evidence, which we accept, that if the bonus had been removed and not replaced, there would have been a reduction in productivity and a considerable amount of the workforce, certainly the most productive of them, would have left. This came not only from the respondent's witnesses Messrs Graham, Gyte and Felc, but there was considerable agreement from the claimant's witnesses, Mr Arthur the former road worker and trade union convenor who had transferred to AMEY, Mr Watling, Mr Hardesty and Mr Meloy. This is a very clear indication that the basic rate of pay (without bonus) for the County Council was below the market rate for the job. The workforce, or certainly the more efficient part of the workforce, would have found similar work in the private sector on higher pay. This establishes that the market rates for these parts of the workforce were clearly above the basic rate paid to them. The essential question we have to ask is whether the respondent has satisfied us that the total remuneration package of the Council was or equated to the market rate…"
"In conclusion we are satisfied, having reviewed the relevant evidence that our conclusion in the original judgment was correct. The respondent has established that the market rate was higher than the basic rate of pay without bonus but it has not established how much higher and we have not been provided with the evidence from which we could reach any sensible conclusion as to what part of the difference can be attributed to such a factor. In this connection, no evidence has been offered by the Council that at any time meetings or discussions took place amongst managers in County Contracting Services indicating that the Council had in mind that some supplement was necessary to recruit a shortfall or retain the existing workforce. The Council's positive evidence was almost exclusively restricted to the productivity issue."
4. Was there a misdirection on when justification is required?
"If there is evidence from which the Tribunal could find discrimination, such as evidence showing disproportionate effect, has the respondent proved the complete absence of sex discrimination, as to which see below, or that the difference in pay is objectively justified applying the Bilka test."
Mr Jeans says that this formulation of the relevant principles is wrong. It suggests that the duty to justify applies once a gender imbalance is established. We do not agree that this is what the Tribunal is saying. The Tribunal states that where there is gender imbalance then the employer can either show an absence of sex discrimination, or that the difference in pay is justified. They are alternatives. Accordingly, we agree with Ms Gill that there was no misdirection by the Tribunal. The only issue is whether they properly applied the directions they had given themselves.5. Did the Tribunal err in finding the reason for the difference sex tainted?
"22.1 …Applying the tests set out in paragraph 20.3 above, we were satisfied that there was ample evidence from which we could infer, in the absence of an explanation, the existence of sex discrimination, at least in relation to bonus. First, the statistical evidence demonstrates that all of the comparator groups, which contained at most only one female, did receive a bonus, and a bonus which averaged some 27% across the board in highways according to Dr Whitmore. The claimant groups not in receipt of a bonus were overwhelmingly female; the lowest majority being 4 to 1 amongst the 281 support workers in DMH Group Homes. We take into account that the total number of male employees in receipt of a bonus is 218 out of 650 male comparators, shown in the statistics set out at Volume 1 pages 469-470 under the heading Group 8 comparators, which is not a list of all male White Book employees of the Council. Equally that document shows that there are 4,497 white book, or former white book female employees and only one in receipt of a bonus. It is not necessary for the underpaid group to be "almost exclusively female" which were the facts in Enderby, it is sufficient if a significant majority of the disadvantaged group are women. Secondly, we have considered the nature of the jobs done principally by the claimant groups. Although the precise figures have not been given to us, there is clear evidence from the claimant's witness statements including those for the time points that a large proportion of the carers, cleaners and kitchen assistants are part-time. They are jobs traditionally done by women and fit around child care responsibilities. There is no evidence that any of the comparators, doing traditionally male jobs, outside in the open air and requiring physical strength, were done part time. There is, of course, no evidence that any woman has been refused access to such jobs, but by their nature, they are jobs which are unlikely to be attractive to women and would not fit in with part time working. We conclude that there is in these respects clear evidence from which we could conclude the presence of indirect discrimination at least.22.2 There is another pay differential to consider. That is the removal of other pay enhancements from the carers affected by the 1990 and 1994 agreements, and new staff in those employments after 1994, again the figures demonstrate that these groups are overwhelmingly female. There is no evidence that any predominantly male groups ever had enhancements removed, although numbers of road workers and grounds maintenance operatives have reduced over the years. The only evidence possibly pointing away from discrimination is the fact that some of the claimants' jobs in care in the field of DMH did not have enhancements reduced. It is not entirely clear why this part of the group was excluded and we did not consider it right to speculate. We find nevertheless, that the evidential threshold has been achieved in respect of the group of carers who had pay enhancements removed."
6. Disparate impact.
Mr Jeans says that the evidence simply does not sustain that, and indeed one of the witnesses, a Ms Page gave evidence that they were almost all full time. As Ms Gill pointed out, that evidence only related to a particular category of carers; and there was evidence in the witness statements adduced in the time limit issues which sustained the Tribunal's findings. Moreover, it was not formally challenged on appeal. We accept all these submissions.
7. Justification.
7.1 and 10. Productivity for the claimant groups: does it matter?
140. Mr Jeans makes the legitimate point that there is no justice in the claimants obtaining the same pay as the roadwork comparators in circumstances where the latter have through their own efforts made at least some productivity gains. The problem is that the employer was attempting to justify the whole of the differential on productivity grounds. It may very well be that it would in principle be open to an employer to show that even if the full differential could not be justified on a productivity basis, a certain proportion of it could be, just as with market forces. That might have justified differentiating between the road workers and the other comparators. However, that possible partial justification was not argued in this case, and the question will have to await another day.7.2 and 10. Could the claimant groups in principle have been subject to similar productivity arrangements?
8. Was the Tribunal entitled to reject the GMF defence for the enhancements for a category of carers?
"First, as we have indicated in the previous paragraph, there is a marked similarity between the facts in this case and in Ratcliffe. Terms entitling the claimant groups to an enhanced or higher rate of pay were removed, ostensibly in order to enable the groups to compete under CCT, or, as Mr Siegal described it, the mixed economy of care. In reality, it cloaked discrimination. There is no evidence that in respect of this work group the trade unions connived at this pay reduction. The contemporaneous documents indicate that they accepted it under considerable protest. The respondent cannot rely upon the Royal Copenhagen principle. Nor, in our view, can such a disproportionate result be justified by cost considerations. The reality of the situation is that there was enforced upon those work groups lower pay in circumstances which clearly demonstrated sex discrimination. Even if the only alternative was that the respondent would have had to close care homes and cease care provision in favour of the private sector, about which factual proposition we have some doubts, that would not have justified the total abolition of enhanced pay terms for these work groups, and reduced pay rates for new starters."
"We found that there was evidence of less favourable treatment of the female dominated care group compared to the male dominated groups when the respondent was faced with budgetary constraints. In the former case, pressure was put on the work force to agree to an overall reduction in pay, with which the trade union agreed, but with considerable reluctance. In the latter case, the pay levels of the male group were maintained but at the expense of some job losses. We conclude that a significant factor in this difference in treatment was a perception that female part-time workers would be prepared to agree to a pay reduction to retain a job which was particularly suited or more likely to be suited to their personal circumstances than to a man's, namely working around the requirements of child care. Those considerations did not apply to the male dominated full time jobs because they did not have child care responsibilities and were able to be more flexible in the labour market. There were in this respect close parallels with the facts and conclusions in Ratcliffe v North Yorkshire County Council".
9. The corresponding term argument.
[…(2) An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed (the "woman's contract"), and has the effect that –… (b) where the woman is employed on work rated as equivalent with that of a man in the same employment –(i) if (apart from the equality clause) any term of the woman's contract determined by the rating of the work is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and(ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed and determined by the rating of the work, the woman's contract shall be treated as including such a term;(c) where a woman is employed on work which, not being work in relation to which paragraph (a) or (b) above applies, is, in terms of the demands made on her (for instance under such headings as effort, skill and decision), of equal value to that of a man in the same employment –(i) if (apart from the equality clause) any term of the woman's contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and(ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed, the woman's contract shall be treated as including such a term];"
"You look at the two contracts; you ask yourself the common sense question- is there in each contract a term of a similar kind i.e. a term making a comparable provision for the same subject matter."
"If the respondent's submission on this point is correct, the respondent would not have to establish a GMF defence, nor to justify a prima facie discriminatory pay scheme which benefited workers of a particular sex. It would be open to an employer to construct a scheme in such a way or of such a kind that it was beyond challenge by a claimant of the opposite sex doing work rated as equivalent or of equal value by introducing elements into the scheme which could only practicably be applied to the benefiting group. This would be a surprising result. The Tribunal accepts that the terms to be applied to the woman's contract must be of a similar kind of that in the man's contract and accepts that the words "similar to" and "corresponding" should be given an equivalent meaning, but there is no necessity to interpret the words "similar" as meaning "identical". The Tribunal did not find the examples given by the respondent, for example that of a provision for protective clothing in a contract for a man who habitually worked outside to be inserted in the contract of a woman who habitually worked inside, to be particular apposite. Clearly in those circumstances a GMF defence would apply if the term in the man's contract was genuine and not a sham…."
11. The amendment issue.
"Civil trials are conducted on the basis that the Court decides the factual and legal issues which the parties bring before the Court. Normally each party should bring before the Court the whole relevant case that he wishes to advance. He may choose to confine his claim or defence to some only of the theoretical ways in which the case might be put. If he does so, the Court will decide the issues which are raised and normally will not decide issues which are not raised. Normally a party cannot raise in subsequent proceedings claims or issues which could and should have been raised in the first proceedings. … The justice of this as a general principle is, in my view, obvious. It is not merely a matter of efficiency, expediency and cost, but of substantial justice. Parties to litigation are entitled to know where they stand. The parties are entitled and the Court requires to know what the issues are. Upon this depends a variety of decisions, including, by the parties, what evidence to call, how much effort and money it is appropriate to invest in the case, and generally how to conduct the case; and, by the Court, what case management and administrative decisions and directions to make and give, and the substantive decisions in the case itself. Litigation should be resolved once and for all, and it is not, generally speaking, just if a party who successfully contested a case advanced on one basis should be expected to face on appeal, not a challenge to the original decision but a new case advanced on a different basis. …"
"There must be a limit to the number of times the claimant may change comparator, or to put it another way, a time by which the claimant must make an election as to which comparator or comparators finally to rely upon. The latest, in the Tribunal's view, is before the end of the hearing which determines the issue and certainly before a judgment has been given. We do not think that there are any exceptional circumstances which apply here to allow such an amendment."
Disposal.