Source of employment

North Cumbria Acute Hospitals NHS Trust v Potter

When bringing an equal pay claim under the 1970 Equal Pay Act (EqPA), women have to show that they are in the “same employment” as their comparators. In North Cumbria Acute Hospitals NHS Trust v Potter, the Employment Appeal Tribunal (EAT) said that, unlike article 141 of the EC Treaty, they did not also have to show that there was a “single source” responsible for setting their terms and conditions.

Basic facts

Hundreds of women employed by the Trust brought equal pay claims, relying on comparators who were also employed by the Trust. Its origins, however, were very complex as it had been the result of a merger in April 2001 of two other Trusts. These, in turn, had been the product of mergers between various health authorities.

Because of this complicated history, both the women and their comparators had worked under a number of different terms and conditions. Prior to the introduction of health trusts, they had worked under different Whitley councils which set their terms and conditions. After the trusts came into operation, some continued under Whitley terms while others worked under local terms and conditions.

The Trust and the relevant unions then negotiated a collective agreement in 2002 to harmonise everyone’s pay and conditions (apart from senior employees). With the introduction of Agenda for Change, one single scheme applied to everyone.

Arguments put forward by the Trust

The Trust argued that as the case law applying article 141 (including Robertson and ors v DEFRA) of the EC treaty required the women to show that their pay and conditions and those of their comparators were attributable to a “single source”, then section 1(6) of the EqPa required them to do the same.

Although the Trust accepted that the women now worked for the same employer as their comparators, it said that the mechanisms under which all their terms and conditions had come about were so complex that they could not show there was a “single source”, and their claim therefore had to fail.

Relevant law

Section 1(6) states that “men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes.”

Tribunal decision

The tribunal disagreed with the Trust’s arguments. It said that although case law had interpreted article 141 as requiring a “single source”, there was no such requirement under the EqPA. However, it said it was bound by case law to conclude that under article 141 a “single source” had to be shown even where the claimant and comparator were employed by the same employers. In this case, the employer was the single source.

EAT decision

And the EAT agreed with the tribunal. It said that the Trust was mistaken in the way it had interpreted cases such as Robertson because they just dealt with the way in which article 141 had to be applied, not the EqPA.

It said that member states were perfectly entitled to provide more favourable terms to employees than the directive, as the UK had done with the EqPA. It was not therefore necessary to incorporate the concept of a “single source” into section 1(6), as that would restrict the way in which it operated and “would be contrary to the intent and spirit of Article 141.

It went on to find that the Trust was the single source as it was the body that dealt with harmonisation and had also had responsibility for negotiating and agreeing changes in terms and conditions.

The EAT also agreed with the tribunal that the harmonisation of pay scales and contracts had not been a fundamental change to the claimants' contracts which brought their existing contracts to an end and triggered the start of the six-month time limit for bringing their equal pay claims. (This aspect of the case was heard in a separate appeal in December.)