Factor this in

Coventry City Council v Nicholls and ors

Under the 1970 Equal Pay Act, employers can justify a difference in pay on the ground of sex in certain circumstances. In Coventry City Council v Nicholls and ors, however, the Employment Appeal Tribunal (EAT) said that the employer could not rely on a defence of “union intransigence”.

The claimants’ union, Unison, instructed Thompsons to act on their behalf. Claimants in Unite the Union were also involved in the case.

Basic facts

As part of a scheme to implement a unified pay structure for local government employees (known as single status), the council carried out a job evaluation study of all affected jobs.

In 2001 the unions and the council negotiated a pay protection scheme for employees who were going to be adversely affected by it, under which their old pay would be protected for five years. The hope was that by that time their pay would have risen with inflation so that they did not suffer an actual drop in pay.

Following stalled negotiations, the council unilaterally imposed single status on the unions in June 2005 and the women lodged their equal pay claims in February 2006. They argued that their jobs were rated as equivalent or of equal value to those of their male comparators, including periods prior to the introduction of single status.

The council accepted that the jobs were of equal value, but argued there were three genuine material factors (GMF) other than sex that explained the difference in pay:

1. Productivity and bonus arrangements to reduce levels of absenteeism and improve efficiency to which the comparators were entitled - the bonus GMF
2. “Pay protection" under the single status agreement to which the comparators were entitled – the pay protection GMF
3. The intransigence of the unions to negotiate the single status agreement which resulted in delays in removing the different pay arrangements – the supervening GMF

Tribunal decision

The tribunal dismissed the third argument out of hand. As for the first, it said that the bonus GMF “was tainted by sex” and as the council could not justify it, there was no lawful basis for the variation in pay.

However, it agreed that the council was justified in restricting the protected pay provisions to those employees who would actually suffer a loss of income because of the job evaluation scheme. And it was also justified in not extending it to employees who should have received equal pay before the job evaluation scheme but did not do so.

The council appealed the tribunal’s findings on points one and two of its GMF arguments, and the women cross appealed the finding on the pay protection scheme.

EAT decision

The EAT dismissed the Council’s “supervening GMF” argument on the basis that the Council was still paying the women less than the men from 1999 onwards despite admitting that the jobs were of equal value. This was a clear breach of the 1970 Equal Pay Act.

As to the Council’s argument about union intransigence, the EAT said: “We are fully satisfied that union hostility to change is incapable of constituting a new explanation for the difference in pay such that it can be said that a pay differential whose roots lay firmly in sex discrimination, has at some indeterminate point ceased to have anything to do with sex”.

It also agreed with the tribunal that a bonus scheme paid to a largely male group of refuse workers was discriminatory as there was no reason, in principle, why the Council could not have paid a similar bonus to all relevant workers. The employer said that the reason the bonus was only paid to the predominantly male group was that their work could be measured. The EAT said that this meant the reason was sex tainted and had to be objectively justified.

The EAT remitted the question of the legality of the pay protection scheme to the tribunal for further consideration in the light of the Court of Appeal decision in Redcar and Cleveland Borough Council v Bainbridge (which had overturned the decision in Middlesbrough City Council v Surtees on which the tribunal had relied).