Indirect pay discrimination can arise in two circumstances. Firstly, when there is a practice that disproportionately affects the pay of women (or men). Or secondly, when there is a group of workers who are predominantly female (or male) but who have less favourable terms than another group of mainly male (or female) workers.
In Home Office v Bailey and ors (see LELR 96 for the EAT decision), the Court of Appeal has said that, even if the claimants are part of a group made up of almost equal numbers of men and women, that did not mean there could not be discrimination. In this case it was because the higher paid comparator group was male-dominated.
The claimants' union (PCS) instructed Thompsons, supported by the Equal Opportunities Commission.
What was the background?
In early 1999, a group of higher executive officers, relying on a 1996 job evaluation scheme, claimed equal pay with three higher grades, all dominated by men. In March 2000 about half the higher executive officers were women. About 2,000 other employees subsequently brought claims against the Home Office on a similar basis.
The employment tribunal decided that there was prima facie (at first sight) sex discrimination which required the Home Office to justify the difference in pay. The EAT, however, said the tribunal had relied on the wrong evidence.
It decided that if there was a practice that stopped women from becoming a member of a particular work group, then it made sense to compare different 'pools' of men and women who can satisfy that provision (as in the case of Seymour-Smith, which the tribunal had followed).
But if there was a situation in which the disparity in pay had arisen because of different arrangements for collective bargaining between the claimant and comparator groups, the claimant group had to be disproportionately female (as in the case of Enderby) to succeed. This was the approach that the tribunal should have taken in this case.
What did the parties argue?
The two women accepted that, to establish indirect discrimination, they had to show discrimination in the pay system.
But they argued there was no basis in law to draw a distinction between different types of cases, as the EAT had done.
They said that the tribunal was entitled to rely on statistical evidence when determining whether there is evidence of prima facie discrimination and was therefore entitled to adopt the approach set out in Seymour-Smith in this case.
The Home Office, on the other hand, said that if the disadvantaged group consists equally of men and women, there cannot be a prima facie case of discrimination which requires them to provide objective justification for the pay difference.
What did the Court of Appeal decide?
The question for the Court of Appeal was whether the pay practices of the prison service had had a disparately adverse impact on women.
According to the figures, there were six times as many disadvantaged women as men.
The court therefore agreed with the tribunal that the difference indicated by the six to one ratio was plainly significant, leading to a prima facie case of indirect discrimination (unless, of course, it could be objectively justified).
The tribunal was therefore entitled to find that these facts gave rise to discrimination and the employers had to objectively justify the pay gap. It concluded that, even if the "disadvantaged" group consists of both men and women, tribunals can still hold that the employer should be required to justify the difference in pay between the two groups when the discrimination arises from the gender disparity in the comparator group.
The Home Office is seeking leave to appeal to the House of Lords.