United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS ELIZABETH SLADE (One of Her Majesty's Counsel) and MR CARLO BREEN (of Counsel) Instructed by: Messrs Hill Dickinson LLP Solicitors 34 Cuppin Street CHESTER CH1 2BN
For the Respondent	MR ANTONY WHITE (One of Her Majesty's Counsel) and MS BETSAN CRIDDLE (of Counsel) Instructed by: Messrs Thompsons Solicitors Acresfield 8 Exchange Street MANCHESTER M2 7HA

SUMMARY

EQUAL PAY ACT: Article 141/European law

Can a woman in an equal pay claim compare herself with a successor? The Employment Tribunal reluctantly held that she could, on the grounds that it was bound by the decision of the EAT in Diocese of Hallam Trustee v Connaughton [1996] ICR 860. The EAT held that the Hallam case was plainly per incuriam and should not be followed. The central issue was whether Article 141, as interpreted in the case law of the European Court of Justice, permits such a comparison. The EAT held that it did not and upheld the employer's appeal.


 


THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1. This raises a short but difficult point concerning who can be a comparator in an equal pay claim. The employment judge held that a claimant in an equal pay claim could compare herself with a successor. He felt obliged to reach that conclusion, which he did with some reluctance, in order to give effect to the principles enunciated by the Employment Appeal Tribunal (Holland J presiding) in Diocese of Hallam Trustee v Connaughton [1996] ICR 860. The short issue before me is whether the principle established in Hallam is correct and whether such a comparison can be made in an equal pay claim. (We will continue to refer to the claimant as the claimant although she was the respondent before us.)

The background.

2. The background can be very summarily set out. The claimant was employed by the Trust as a senior health care assistant/nursing assistant. Her job was evaluated under a new job evaluation scheme termed the Agenda for Change Job Evaluation Scheme at band 3 with effect from 1 October 2004.
3. On 23 June 2006 she presented a claim to the Employment Tribunal under both the Equal Pay Act 1970 and Article 141 of the EC Treaty. (This was formerly Article 119, and many of the cases referred to in this judgment refer to that Article.) Her claim falls into two categories. With relation to the period following 1 October 2004 she contends that her job and those of her male comparators have been rated as equivalent under the job evaluation scheme.
4. With respect to the period prior to 1 October 2004, however, she contends that her work was of equal value to that of her male comparators.
5. There were three male comparators identified. Mr Duffy was the Performance and Governance assistant, whose employment began on 1 April 2004; Mr Hubbard, an IT helpdesk officer, whose employment began on 28 February 2005; and Mr Thompson, also an IT helpdesk officer, whose employment began on 28 July 2005. Each of these comparators was employed on new posts brought into existence for the first time.
6. There is no dispute that a comparison can legitimately be made with respect to the period during which the comparators were in contemporaneous employment with the claimant. The issue before the Employment Tribunal was whether the claimant could make this comparison extending back for the full six years from the date of claim, or whether she was barred from claiming for the earlier period when she was employed but the comparator was not. Could she seek to recover the back pay for up to six years even although in the period prior to the employment of the relevant comparator, she would not have been able to establish any equality clause with respect to any of them?

The decision of the Employment Tribunal.

7. The employment judge (Mr Malone), in a conspicuously careful and detailed analysis, ruled that a claimant can rely on comparators who are employed contemporaneously, not only in respect of the period of contemporaneous employment but also in respect of an earlier period when the claimant was employed and the comparators were not. Accordingly, he held that the Tribunal has jurisdiction to consider the claimant's claims not only for the periods when she was employed contemporaneously with the three male comparators but also for earlier periods.
8. In reaching this conclusion, the employment judge felt constrained to follow the decision of the EAT in Diocese of Hallam Trustee v Connaughton [1996] ICR 860, although he made it plain that but for this authority, he would have reached the opposite result. His reluctance to permit the comparison was particularly influenced by the following submissions advanced on behalf of the unsuccessful employers in the Hallam case ([1996] ICR 864, paras 8-11):

"8. If the applicant's position is correct, then no breach of contract occurs until the contract has been concluded and the parties are discharged from their obligations. At the time the contract is being performed there is no breach. Thus an employer may not know until the employment is at an end whether or not there is any breach of contract, and any such breach is contingent on the pay and conditions offered to and the sex of the successor. That uncertainty would apply to the contract throughout the period of its performance.

9. Further uncertainty would arise if a successor is offered employment with more favourable terms but then does not accept the offer, or alternatively only fills the post for a short period before leaving. If a second successor is found at a salary scale in accordance with the original employee's salary, does the entitlement to make a claim then evaporate?

10. If comparison is allowed with a successor, as opposed to a predecessor, there is nothing the employer can do to remedy the breach of contract whilst the contract is in existence. In Macarthy's Ltd v Smith (Case 129/79) [1980] ICR 672 and in the Albion Shipping case [1982] ICR 22 the employers were in a position at all times during the contract of employment to remedy their breach of contract.

11. Where there is uncertainty as to the effect of an equality clause an employer may apply to an industrial tribunal pursuant to section 2(1A) of the Act of 1970. If comparison is allowed with a successor, the employer would be deprived of this remedy whilst the contract is in existence. Once the contract is at an end, it will be too late for the employer to remedy the situation if an industrial tribunal were to find that the employee's contract is less favourable to a contract for similar work offered to an employee of the opposite sex. This would be unfair."

9. Some of these objections relate to the application of the domestic legislation, and in particular the artificiality of identifying a breach of contract only in retrospect. However, the difficulties and uncertainties of only knowing that there is a breach with hindsight are very real and would be applicable whenever a claim is permitted with a successor, and whatever legal technique is employed to give effect to Article 141.
10. Hallam is the only appeal decision in which it has been expressly held that a claimant can rely for her male comparator on a successor as opposed to a predecessor in the same employment. It was a decision of the EAT (Holland J presiding) in which it was held that the applicant, who had resigned as the first holder of the post of director of music in the diocese, could compare herself with her male successor. The facts differ from this case in two respects; first, in Hallam the work being compared was like work, and not work of alleged equal value; second, the claimant here seeks to compare herself with a successor whilst remaining in employment whereas in Hallam she had resigned and the successor was occupying her post. However, it is accepted that nothing turns on these two distinctions.
11. It is common ground that the reasoning in Hallam is fundamentally defective. The reason is that in reaching its decision the EAT cited and relied upon the following passage which it took to be from the decision of the ECJ in Macarthys v Smith [1980] ICR 672:

" …neither article 119 of the Treaty nor article 1 of the Directive specify any requirement of an actual comparator of the opposite sex. Questions of proof which might arise would not appear to be insuperable. The fundamental aim of the abolition of sex discrimination would be damaged if a woman always had to find an actual male comparator."

12. It is hardly surprising that having understood that passage to reflect the view of the ECJ itself, the EAT held that the comparison was permitted by Article 119 (now 141) (p.866H):

"We are satisfied that this analysis of article 119 by the Court of Justice should be a guide to us and that it provides a sustainable justification for the ruling under appeal. In short we are satisfied that the scope of article 119 is such as to allow the applicant to advance a case to the effect that the male successor's contract was so proximate to her own as to render him an effective comparator, as effective as if 'actual'."

13. In fact the passage quoted was from the submission of the Commission which was to the effect that a hypothetical comparator should be allowed in what was then an Article 119 claim. That argument was in fact rejected by the ECJ. It follows that Hallam was decided per incuriam, and it is not an authority that can be relied upon in any way. In fairness, Mr White QC, counsel for the claimants, has not sought to rely upon it. He submits that the EAT did in fact reach the correct answer, but does not seek to sustain its reasoning.
14. Ms Elizabeth Slade QC, counsel for the appellant NHS Trust, suggested that the Employment Tribunal was wrong to treat itself as bound by this decision, given that they recognised its defects. I do not agree. I do not think that it would be right for an employment tribunal to refuse to follow a decision of the EAT on the grounds that the latter decision is per incuriam. It seems to me that it is for the EAT itself to determine whether that is so or not. In any event, nothing turns on this point in this case because both parties accept that the issue is a pure point of law which I now have to determine.

The law.

15. Article 141 ( formerly Article 119) of the EC Treaty requires Member States to ensure that the principle of equal pay for equal work or work of equal value is applied. Section 1(2) of the Equal Pay Act 1970 provides the route in domestic law by which a claim for equal pay for equal work or work of equal value can be enforced.
16. The right to equal pay is conferred by operation of a statutorily deemed equality clause in the woman's contract of employment so that:

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

(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"

where the woman is employed on like work, work rated as equivalent or work of equal value to that of a man in the same employment, subject to certain matters, the woman's contract is treated as modified or as including a more favourable term in the man's contract.

17. There is no doubt, as the EAT recognised in Hallam and as Mr White accepts, that it is not possible to give a natural meaning to section 1(2) so as to embrace comparisons with a successor. The Act itself plainly envisages comparison with someone employed at the same time as the claimant. If the comparison is to be permitted, it can only be because this is required by EU law. Since Article 141 is directly effective, a principle first established in the seminal case of Defrenne v Sabena [1976] ICR 547, courts are obliged to give effect to it even if this involves disapplying inconsistent domestic legislation. Accordingly the real issue in this case is whether EU law requires that, at least in principle, comparison with a successor is permitted. We turn to consider the relevant authorities.

The ECJ decisions.

18. The earliest case in which the issue was addressed was Defrenne v Sabena [1976] ICR 547. The Court had to consider when and whether the Article had direct effect. It held that Article 119 was of direct effect but only in relation to "direct and overt discrimination". The expression "direct" discrimination was not however, a reference to the concept of direct discrimination (as opposed to indirect discrimination) as it has since developed. Rather, it was a reference to the forms of discrimination which could be identified with the aid of criteria based on equal work and equal pay, including discrimination which had its origin in legislation or collective agreements, and in particular pay discrimination within one establishment or service, which could be detected through legal analysis. This was contrasted with other forms of discrimination which could only be identified and removed by measures at Community or national level.
19. The ECJ drew the distinction in the following way (paras 18-24):-

"18. For the purposes of the implementation of [Article 119] a distinction must be drawn within the whole area of application of Article 119 between, first, direct and overt discrimination which may be identified solely with the aid of the criteria based on equal work and equal pay referred to by the Article in question and, secondly, indirect and disguised discrimination which can only be identified by reference to more explicit implementing provisions of a Community or national character.

19. It is impossible not to recognise that the complete implementation of the aim pursued by Article 119, by means of elimination of all discrimination, direct or indirect, between men and women workers, not only as regards individual undertakings but also entire branches of industry and even of the economic system as a whole, may in certain cases involve the elaboration of criteria whose implementation necessitates the taking of appropriate measures at Community and national level.

…

21. Among the forms of direct discrimination which may be identified solely by reference to the criteria laid down by Article 119 must be included in particular those which have their origin in legislative provisions or in collective labour agreements and which may be detected on the basis of a purely legal analysis of the situation.

22. This applies even more in cases where men and women receive unequal pay for equal work carried out in the same establishment or service, whether public or private.

23. As is shown by the very findings of the Judge making the reference, in such a situation the court is in a position to establish all the facts which enable it to decide whether a woman worker is receiving lower pay than a male worker performing the same tasks.

24. In such a situation, at least, Article 119 is directly applicable and may thus give rise to individual rights which the courts must protect."

20. Subsequent decisions have clarified the extent to which, and the circumstances in which, Article 119 is directly applicable. In Macarthys Limited v Smith [1980] ICR 672, the Court considered the application of Article 119 to a claim for equal pay for equal work where the claimant and her comparator were not in contemporaneous employment. The claimant in that case was recruited to replace her comparator some 4 months after his employment had ended.
21. The Court of Appeal referred four questions to the ECJ for a preliminary ruling. The first two questions asked:-

"1. Is the principle of equal pay for equal work, contained in Article 119 of the EEC Treaty and Article 1 of the EEC Council Directive of February 10, 1975 (75/117/EEC), confined to situations in which men and women are contemporaneously doing equal work for their employer?

2. If the answer to Question (1) is in the negative, does the said principle apply where a worker can show that she receives less pay in respect of her employment from her employer:

(a) than she would have received if she were a man doing equal work for the employer; or

(b) than had been received by a male worker who had been employed prior to her period of employment and who had been doing equal work for the employer?"

22. The first question essentially raised the issue whether the Equal Pay Act was an adequate implementation of the principles in Article 141. Question 2(a) raised in terms the issue whether there can be a comparison with a hypothetical comparator under EU law, and 2(b) raised the much more limited issue of whether there can be a comparison with an actual predecessor.
23. The first question was answered in favour of the employee. The judgment the Court held:-

"10. As the Court indicated in Defrenne v. Sabena [1976] ICR 547, [Article 119] applies directly, and without the need for more detailed implementing measures on the part of the Community or the Member States, to all forms of direct and overt discrimination which may be identified solely with the aid of the criteria of equal work and equal pay referred to by the Article in question. Among the forms of discrimination which may be thus judicially identified, the court mentioned in particular cases where men and women receive unequal pay for equal work carried out in the same establishment or service.

11. In such a situation the decisive test lies in establishing whether there is a difference in treatment between a man and a woman performing "equal work" within the meaning of Article 119. The scope of that concept, which is entirely qualitative in character in that it is exclusively concerned with the nature of the services in question, may not be restricted by the introduction of a requirement of contemporaneity.

…

13. Thus the answer to the first question should be that the principle that men and women should receive equal pay for equal work, enshrined in Article 119 of the EEC Treaty, is not confined to situations in which men and women are contemporaneously doing equal work for the same employer."

24. In relation to question 2(a), namely whether there could be a comparison with a hypothetical comparator, the Court set its face against such a comparison. However, in its response to question 2(b) the Court did consider that the comparison with a predecessor was within the principle of direct discrimination as enunciated in Defrenne:-

"14. The second question put by the Court of Appeal and expressed in terms of alternatives concerns the framework within which the existence of possible discrimination in pay may be established. This question is intended to enable the Court to rule upon a submission made by the employee and developed by her before the European Court of Justice to the effect that a woman may claim not only the salary received by a man who previously did the same work for her employer but also, more generally, the salary to which she would be entitled were she a man, even in the absence of any man who was concurrently performing, or had previously performed, similar work. The employee defined this term of comparison by reference to the concept of what she described as "a hypothetical male worker".

15. It is clear that the latter proposition, which is the subject of Question 2(a), is to be classed as indirect and disguised discrimination, the identification of which, as the Court explained in Defrenne v. Sabena [1976] ICR 547, implies comparative studies of entire branches of industry and therefore requires, as a prerequisite, the elaboration by the Community and national legislative bodies of criteria of assessment. From that it follows that, in cases of actual discrimination falling within the scope of the direct application of Article 119, comparisons are confined to parallels which may be drawn on the basis of concrete appraisals of the work actually performed by employees of different sex within the same establishment or service.

16. The answer to the second question should therefore be that the principle of equal pay enshrined in Article 119 applies to the case where it is established that, having regard to the nature of her services, a woman has received less pay than a man who was employed prior to the woman's period of employment and who did equal work for the employer."

25. It has to be said that it is not entirely clear why the court took the view that hypothetical comparisons would necessarily involve studies across branches of industry. A stronger justification for the decision is that the comparisons require concrete appraisals of actual work. However, whatever the merits of the reasoning, the rejection of a hypothetical comparison is clear and unambiguous.
26. Following Macarthys, a claimant has to compare herself to a male comparator who has actually worked within the same establishment or service, although it is not necessary for the claimant and her comparator to be, or have been, in contemporaneous employment. These are the situations where there may be a concrete appraisal of the work performed.
27. In Worringham v Lloyds Bank Limited [1981] ICR 558 the ECJ held that contributions to a contractual retirement benefit scheme paid by an employer in the name of employees, by means of an addition to the gross salary, constituted pay within the meaning of Article 119. Advocate General Warner observed that he found the distinction between "direct and overt" discrimination and "indirect and disguised" discrimination "puzzling" (p.566C). He suggested that the proper analysis is that:

"Article 119 has direct effect in those areas where the court can apply its provisions by reference to the simple criteria that those provisions themselves lay down; and that it can have no direct effect where implementing legislation is necessary to lay down the relevant criteria"

28. The ECJ explained the distinction drawn in Defrenne and Macarthys in terms which reflect that analysis (para 23):-

"As the Court has stated in previous decisions (judgment of April 8, 1976, in Defrenne v. Sabena (Case 43/75) [1976] ICR 547 and judgment of March 27, 1980, in Macarthys Limited v. Smith (Case 129/79) [1980] ICR 672), Article 119 of the Treaty applies directly to all forms of discrimination which may be identified solely with the aid of the criteria of equal work and equal pay referred to by the Article in question, without national or Community measures being required to define them with greater precision in order to permit of their application. Among the forms of discrimination which may be thus judicially identified, the court mentioned in particular cases where men and women receive unequal pay for equal work carried out in the same establishment or service, public or private. In such a situation the Court is in a position to establish all the facts enabling it to decide whether a woman receives less pay than a man engaged in the same work or work of equal value."

29. In this formulation, the focus is on whether discrimination can be identified solely with the aid of the criteria of equal work and equal pay. Are the criteria available to enable the court to establish discrimination by a concrete appraisal of all the relevant facts? If so, Article 141 applies.
30. The next material decision is Jenkins v Kingsgate (Clothing Productions) Limited [1981] ICR 592. The ECJ considered whether a claim for equal pay could be maintained in reliance on Article 141 when the reason given for the difference in pay was the fact that the claimant worked part-time and her comparator worked full-time. In this seminal indirect discrimination case, the Court held that such a claim fell within the ambit of Article 141. Although the reason given by the employer for the difference in pay did not, on its face, differentiate on the basis of sex, it was necessary to examine the pay policy to determine whether it was in reality an indirect way of reducing the level of pay of part-time workers on the ground that that group of workers was composed exclusively or predominantly of women.
31. Two passages in Jenkins assist with the understanding of Defrenne and Macarthys.

First, Advocate-General Warner reiterated his analysis in Worringham and referred to the extract from the decision of the ECJ (para 23) which is reproduced above.

32. Second,the judgment the ECJ reiterated the by now well established principles:-

"17. As the court has stated in previous decisions (judgment of April 8, 1976, in Defrenne v. Sabena [1976] ICR 547; judgment of March 27, 1980, in Macarthys Limited v. Smith [1980] ICR 672 and judgment of March 11, 1981, in Worringham v. Lloyds Bank Limited [1981] ICR 558), Article 119 of the Treaty applies directly to all forms of discrimination which may be identified solely with the aid of criteria of equal work and equal pay referred to by the Article in question, without national or Community measures being required to define them with greater precision in order to permit of their application. Among the forms of discrimination which may thus be judicially identified, the Court mentioned in particular cases where men and women receive unequal pay for equal work carried out in the same establishment or service, public or private.

18. Where the national court is able, using the criteria of equal work and equal pay, without the operation of Community or national measures, to establish that the payment of lower hourly rates of remuneration for part-time work and for full-time work represents discrimination based on difference of sex the provisions of Article 119 of the Treaty apply directly to such a situation."

33. Once again, the focus of this formulation is on the question whether discrimination can be identified solely with the aid of criteria of equal work and equal pay.
34. In Coloroll Pension Trustees Limited v Russell [1995] ICR 179 the Court was again faced with the issue whether a hypothetical comparison could be made. The relevant question referred to the ECJ for a preliminary ruling was as follows:-

"6. Does Article 119 apply to [occupational pension] schemes which have at all times had members of only one sex so as to entitle a member to additional benefits to which that member would have been entitled as a result of Article 119, had the scheme had a member or members of the other sex?"

35. The court had the opportunity to distinguish or depart from the decision in Macarthys. It did not take that opportunity. On the contrary, the ECJ, referring to and adopting the approach in Macarthys held that Article 119 did not apply to schemes which have at all times had members of only one sex. The Court stated:-

"101. In Macarthys Limited v. Smith (Case 129/79) [1980] ICR 672, 691, para. 15, the Court held that comparisons in cases of actual discrimination falling within the scope of the direct application of Article 119 were confined to parallels which could be drawn on the basis of concrete appraisals of the work actually performed by employees of different sex within the same establishment or service.

102. The court accepted that such comparisons were also possible between workers of different sex performing the same work but at different periods. In such a case, however, it would be for the national court to decide whether any difference of treatment could be explained by factors which were unconnected to any discrimination on grounds of sex: see p. 690, paras. 11 and 12.

103. It follows that a worker cannot rely on Article 119 in order to claim pay to which he could be entitled if he belonged to the other sex in the absence, now or in the past, in the undertaking concerned of workers of the other sex who perform or performed comparable work. In such a case, the essential criterion for ascertaining that equal treatment exists in the matter of pay, namely, the performance of the same work and receipt of the same pay, cannot be applied."

36. It is to be noted that the formulation in paragraph 102 taken on its own is not inconsistent with the comparison with a successor. However, in the explanation of that principle in paragraph 103, the court explains the scope of that principle in terms which require comparison with someone who was a comparator "either now or in the past." This is also consistent with the principle that the analysis must be made on the basis of concrete appraisals of work actually performed (my emphasis). The inference is that without such comparison, the essential criterion for determining whether there is equal pay for equal work cannot be invoked.
37. In Allonby v Accrington and Rossendale College [2004] IRLR 224 the ECJ summarised the effect of the relevant passage in Coloroll as follows:-

"Thus in the case of company pension schemes which are limited to the undertaking in question, the Court has held that a worker cannot rely on Article 119 of the EC Treaty…in order to claim pay to which he could be entitled if he belonged to the other sex in the absence, now or in the past, in the undertaking concerned of workers of the other sex who perform or performed comparable work."

This formulation does not embrace comparison with a successor.

The arguments on appeal.

38. Ms Slade submits that there is no authority at all from the ECJ which supports the argument now being advanced. Indeed, the ECJ in Macarthys and again in Coloroll specifically rejected the idea that there can be a hypothetical comparator and this is essentially what the claimants are arguing for. The employment judge referred to these comparators as "notional" comparators but that in truth is no different from a hypothetical comparator. She points to the various references in the judgments of the ECJ to comparisons with persons who "are or have been employed" in the same employment.
39. She also observes that it would be impossible to construe section 1 of the Equal Pay Act so as to allow a comparison of this kind: the equality clause requires comparison with a specific person of the opposite sex. As initially drafted, the English law on equal pay did not allow equal value claims to be advanced. That, however, was held to be in breach of EU law and domestic law was amended accordingly. It was never suggested, however, that domestic law was incompatible with EU law because it did not provide for comparison with a successor.
40. Furthermore, she submits that it would be wholly incompatible with the analysis in the case of Preston v Wolverhampton NHS Trust [2000] ICR 961 to accede to the claimants' submission. The ECJ held in that case that in principle there is no reason why the domestic law should not impose a requirement that claims for equal pay should be lodged within six months of the employment ceasing. That is contingent upon that time limit being no less favourable than time limits with respect to similar domestic claims. The House of Lords has subsequently held that it is no less favourable than those claims.
41. Ms Slade submits that if comparison can be made with a successor (and apparently that can at least in principle be a successor at any time in the future) then a provision which bars claims being made six months after employment had terminated would deny a potential claimant the right to pursue a claim conferred by EU law. If her successor were appointed more than six months after the termination of her employment, she would be denied the chance to make good her claim. It could not in principle be legitimate to bar a claim by the imposition of such a time limit in circumstances where the claimant would not have had that claim at the point when the time limit is exhausted. Accordingly, Ms Slade submits that it is implicit in Preston that no such comparison with a successor could be made.
42. She also relies upon the decision of the Court of Appeal in Alabaster v Barclays Bank plc [2005] ICR 1246 which considered a claim to maternity pay based on increased pay. The Court of Appeal observed that the Sex Discrimination Act 1975 ('SDA') permits reliance on a hypothetical comparator because Section 1(1)(a) defines sex discrimination by reference to a difference in the way a person 'treats or would treat a man' (p1255 para 24). By contrast, the court held that Section 1(1) of the Equal Pay Act, which reflects 'the philosophy of what is now Article 141 EC and the European Community Directives on equal pay and equal treatment', requires a male comparator with whom the woman's pay can be compared (para 26).
43. The claimant submits that there is no reason in principle why the comparison cannot be made. The essential issue underlying the principles of EU law is whether the court has enough evidence to be able fairly and effectively to identify and remedy any discrimination. Can the court remedy any discrimination by a purely legal analysis using the concepts of equal work and equal pay? If so, Article 141 applies. The ECJ in Defrenne was concerned to draw a distinction between cases where any discrimination might be deep seated and only identifiable by having regard to sectors of the economy or the economy at large, and cases which were in principle capable of being identified by the application of normal judicial techniques. The comparison with a successor falls into the latter category.
44. Mr White recognises that the evidential difficulties will become more pronounced the longer the time period during which there is no contemporaneous employment, but that is equally so where a predecessor is relied upon. Whilst evidential problems may in some cases be very real, nonetheless that should not defeat an entitlement in principle to make the claim.
45. He gave an example of an employer who expressly stated that the successor was being paid more because he was male. It would, he submits, fail to remedy an obvious and gross injustice if the law were powerless to remedy such blatant discrimination.
46. It is possible when comparing with a successor for a sufficiently precise and specific comparison to be made on the basis of factual information about the nature of the jobs. This satisfies the need to make an appraisal based on concrete material. Mr White accepts that there will thereafter be the need to infer what the pay would have been in the period during which the claimant was employed and the comparator was not, but that is not beyond the wit of a court which can be provided with evidence about the way in which pay structures have changed in the establishment over the years. Inevitably the assessment of loss will to some extent be rough and ready, but the process is not unlike other cases where there has to be an assessment of damages involving an element of speculation.

Conclusion.

47. Like the employment judge, I consider that the submissions advanced by the employers in the Hallam case, reproduced at paragraph 8 above, are indeed powerful reasons for not extending the current principles to embrace successor employees. However, the policy arguments are certainly not all one way, and in my judgment the answer to this issue lies in determining the boundaries of what constitutes "direct" discrimination as that term was defined in Defrenne v Sabena and in the subsequent case law. More specifically, the question is whether comparison with a successor provides sufficient basis from which a concrete appraisal can be made of the kind envisaged by the ECJ in the case law.
48. As I have said, I agree with Ms Slade that the Equal Pay Act could not as a matter of domestic construction, and absent any distortion resulting from the application of EU law, be applied to comparisons with a successor. The statute envisages that there is someone specific contemporaneously employed with whom the comparison is made, and the result of a successful claim is to modify the contract accordingly.
49. However, that is not an answer to the claimants' submission, since read independently of EU law, domestic law would not allow a comparison with predecessors either, and yet Macarthys requires such comparisons to be allowed. The Equal Pay Act must be modified in a way which gives effect to any rights conferred by Article 141. Hence it is the reach of that Article which is in issue; if it allows comparison with successors then the Equal Pay Act must be amended accordingly.
50. The logic of the claimants' argument, in my judgment, is that the law should allow comparison with a hypothetical comparator. It should be open to a woman to complain that she is not being paid what a male would be paid. Indeed, Mr White effectively conceded that this was the rationale of his case but submitted that even if that were thought to be a step too far - as he accepted that it was as the law stands in the light of the decisions in Macarthys and Coloroll - there was in any event no reason why there should not be a claim where there is an available comparator, namely a successor.
51. Mr White's example of an employer who states that he is paying a woman less than he would pay a man because of her sex is a powerful one, but on analysis I think it proves too much. That plainly simply requires a comparison with a hypothetical comparator which is currently a step too far. No actual comparator is required to eliminate that discrimination. The fact that the employer subsequently employs a man on higher pay does not properly remedy the injustice highlighted by the particular example. It leaves the injustice in place if no such successor is appointed. Indeed, the existence of the successor is really no more than a fortuitous event which provides a peg on which to justify the legal comparison.
52. In my judgment the exercise of comparing with a successor is too hypothetical. The comparison requires asking what would have happened in the past, as opposed to the question in Macarthys, which is what did happen in the past. The exercise reconstructs virtual rather than actual history; it asks how events would have progressed had things been otherwise. I accept, as Mr White submits, that there is an element of hypothesis in Macarthys itself. The assumption is made, at least absent some explanation that had the predecessor man continued in employment, he would have received at least the same pay subsequently when the claimant was employed as he had done before she was employed. This does, however, seem to be at least in most cases a legitimate inference, if only because it would generally be a breach of contract to reduce the wage. It is a case where a concrete appraisal can be made using the concepts of equal work and equal pay.
53. It is to be noted, however, that the case law has not so far approved a comparison which involves assessing what the predecessor comparator would have received had he still been employed. The comparison is limited to what he was in fact paid at the time of the termination of his contract. In other words, no authority has suggested that the comparison with the predecessor could legitimately take account of likely pay increases which the predecessor would have secured had he remained employed. Yet, in substance, that is simply the reverse of the exercise which is being suggested here.
54. In my judgment it is useful to consider what is involved when making the comparison with a successor comparator. It helps identify the degree of speculation which the exercise involves. I agree with the employment judge that the essence of the analysis (taking the facts from Hallam) is as follows:

"… the appropriate starting point would not be to ask what the male successor would have been paid if he had held the post of director of music during the period when the claimant held that post, but rather to consider the reason why he was subsequently paid more. If he was paid more because he was a man, then it could be open to the Tribunal to draw the inference that he would also have been paid more during the earlier period, so that the claimant was paid less than she would have been paid if she had been a man."

55. It seems to me that there are two problems in particular with the comparison which demonstrate its speculative nature. The first is the assumption that if the male successor is now receiving higher pay then he would have done so in the past. That is not, it seems to me, necessarily a safe prediction at all. It may well depend upon who is fixing the values of the job at any particular time. It may be an easy inference to draw where the successor is employed on like work with the claimant, but it seems to me that it is far more difficult where it is work of equal value or work rated as equivalent which is being compared. The valuation of jobs is not a science and the assumption that values attached to a post now would necessarily have been conferred in an identical way in the past is by no means a safe one.
56. The second premise is that the current differential would have been maintained in the past. That, or some such similar assumption, must be made in order to make any realistic assessment of the hypothetical historical effect of present discrimination. This is not to say that some rough and ready calculation could not be made, and some inferences may be more defensible than others.
57. I do not dispute that there are cogent arguments which can be advanced in favour of permitting hypothetical comparisons in equal pay cases. The justification for refusing hypothetical comparisons with respect to pay but permitting it for other forms of discriminatory conduct is not self evident. Moreover, it may be said that even if no precise assessments can be made, if there is evidence pointing to discrimination, a rough and ready remedy is better than none at all.
58. However, the issue for me is not whether it is sound or unsound policy. There is plainly a rationale for the position adopted by the ECJ which has denied hypothetical comparators, and the question is whether, properly analysed, the jurisprudence puts the comparison with a successor outside the scope of the rights which Article 141 affords. For the reasons I have given I think that the current jurisprudence does bar this comparison. It does not enable the concrete appraisal which the ECJ has emphasised is the bedrock of the application of Article 141, and it does not provide the secure factual premise which enables the proper and precise extent of the past and necessarily hypothetical discrimination to be determined.

Supplementary points:

59. I briefly deal with certain supplementary arguments which have been raised before me. I accept that the analysis in Preston lends some support to the argument advanced by Ms Slade. It is certainly difficult to see how Preston could have concluded that the domestic time limits are in principle compatible with EU law, had they recognised that the comparison of a successor is legitimate. However, I would not put much weight on this argument since the issue was not before the Tribunal. It is conceivable that had the possibility been adumbrated, the ECJ may have thought it necessary to qualify their decision. It is certainly not, in my view, a decision of any great moment in the context of this case.
60. Similarly I gain no assistance from the Alabaster case which was simply recounting the orthodox analysis of the scope of Article 141 and was not in my judgment seeking to foreclose any argument of the kind now being addressed.
61. Mr White for his part relied upon the decision of the ECJ in Brunnhofer v. Bank der Osterreichischen Postsparkasse AG [2001] IRLR 571. In that case the claimant was employed by the bank from July 1993 to July 1997. Her comparator, with whom she claimed equal pay, was a male colleague whose employment commenced in August 1994. From the time of his recruitment the male colleague received an individual supplement higher than the supplement received by Ms Brunnhofer. Ms Brunnhofer was able to compare her pay to that of her male colleague from the start of her employment. Mr White contends that this case is indistinguishable on the facts from the present case.
62. I wholly reject this submission. The questions before the ECJ did not raise the issue of a successor employer at all, and nor does any of the courts' reasoning have any bearing on this issue. An important issue of the kind raised in this case is not to be taken as having been determined by default.
63. Finally, Mr White referred to the fact that the amendment to the Sex Discrimination Directive 76/207/EEC by the European Parliament and Council Directive of 23 September 2002, 2002/73/EC has arguably widened the potential scope of the equal pay comparison. (This has been in turn superseded by the "recast" Directive 2006/54/EC with effect from 15 August 2009).
64. Article 3(1)(c) of the Equal Treatment Directive (76/207/EEC) as amended by Directive 2002/73/EC, provides as follows:-

"Application of the principle of equal treatment means that there shall be no direct or indirect discrimination on the grounds of sex in the public or private sectors, including public bodies, in relation to –

…

(c) employment and working conditions, including dismissals, as well as pay as provided for in Directive 75/117/EEC."

Article 2(2), as amended, provides:-

"For the purposes of this Directive, the following definitions shall apply –

direct discrimination: where one person is treated less favourably on grounds of sex than another is, has been or would be treated in a comparable situation,"

65. Mr White places emphasis on the phrase "or would be treated" which would cover hypothetical comparisons. Mr White did not suggest that this Directive had fundamentally transformed the scope of legitimate equal pay comparisons by allowing this concept of direct discrimination to apply to matters of pay, thereby permitting even hypothetical comparisons in equal pay cases. I think that the argument would have been difficult to sustain not only because the Directive cannot expand the scope or effect of an article of the Treaty, but also because the reference to pay in Article 3(1)(c) is as provided for in the Equal Pay Directive.
66. It is well established that the Directive and Article 141 are to be read together and that the former does not alter the scope or content of the principle of equal pay; but merely assists in its application: see e.g Brunnhofer paragraph 29. However, Mr White did suggest that these changes supported a more flexible approach to the comparator question. It may be that it will in due course herald a somewhat broader comparison, but if that is so, it is a matter for the ECJ rather than a national court.

Disposal.

67. In my judgment, the appeal succeeds. The comparison with a successor cannot be pursued and insofar as the claimant is seeking a remedy with respect to periods when her chosen comparators were not employed, her case fails.