Under section 1 of the Equal Pay Act 1970, a woman whose work is rated as equivalent to that of a man is entitled to be employed on terms no less favourable than his, unless the employer can justify the difference in pay.

In Degnan and ors v Redcar and Cleveland Borough Council (2005, IRLR 615), the Court of Appeal has said, however, that all similar elements of the contracts have to be lumped together and then divided by the hours in the working week, rather than be considered separately.

 

What were the basic facts?

Two women cleaners, a schools assistant and a home help brought equal pay claims against the council, comparing themselves with gardeners, refuse workers and drivers and road workers.

All the male comparators were employed on work rated as equivalent to the women, and for which they were paid the same hourly rate. However, the men also received a number of bonuses and/or attendance allowances.

For instance, the gardeners got a fixed bonus of 40 per cent; refuse workers and drivers 36 per cent; and road workers 33 per cent.

 

What did the tribunals decide?

Applying the "same subject matter test" from Hayward v Cammell Laird Shipbuilders (No.2) (1988, IRLR 257), the tribunal held that the terms in the men's contracts relating to basic pay and bonus pay had to be aggregated, but that the attendance allowance was to be treated separately.

This allowed the women to compare themselves with the relevant male comparator most advantageous to them for the bonus, as well as the most advantageous comparator for the attendance allowance. As a result, some of the women ended up with better pay than the men.

The employment appeal tribunal (EAT) said this was wrong. It said that all the payments received by the men should be aggregated and divided by the number of hours in the working week.

That hourly rate should then be compared with the woman's hourly rate. If it turned out to be more, the woman's hourly rate should be increased to make up the difference.

 

What did the Court of Appeal decide?

The Court of Appeal agreed with the EAT that the "employment tribunal had fallen into error when finding functional and conceptual differences between basic pay and the attendance allowance." Instead the attendance allowances related to the same "subject matter" as the hourly rate and bonuses and had to be treated as a single term.

The women were not, therefore, entitled to compare themselves with the relevant male worker most advantageous to them for the purpose of the bonus element of pay, and then (as a separate exercise) the most advantageous male comparator for the purpose of the attendance allowance element.

The court said that this also "had the desirable result that it will facilitate what was intended by the Equal Pay Act, namely equalisation, rather than the upward movement of the women's rate of monetary pay to a level higher than that of any single male comparator."

SECTION 1(2)(B), EQUAL PAY ACT 1970

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.