Gibson and ors v Sheffield City Council
Under the 1970 Equal Pay Act, employers can defend an equal pay claim if they can show that the difference in pay was due to a genuine material factor and was not “tainted” by sex. In Gibson and ors v Sheffield City Council, the Court of Appeal said that just because an employer had an explanation for the difference in pay, did not necessarily mean that the pay practice was not tainted by sex discrimination.
The GMB union instructed Thompsons to act on behalf of its members.
Basic facts
Following the introduction of a productivity bonus scheme for a group of mainly male street cleaners and gardeners in the 1960s by the Council, their basic pay increased considerably. Depending on performance, they received a 33 or 38 per cent bonus.
The Council then accepted in the late 1980s, following a job evaluation, that the jobs of the (mainly female) carers and school supervisors were of equal value to the street cleaners and gardeners. As the women did not receive a similar productivity bonus, however, their basic pay was substantially less. The carers and school supervisors lodged equal pay claims.
The Council argued that the difference in pay was due to a genuine productivity bonus required to improve the productivity of the street cleaners and gardeners and had nothing to do with the sex of the different groups of workers.
Tribunal and EAT decisions
The tribunal agreed that the Council did not have to objectively justify the bonus because it had started off as a genuine productivity incentive which was not needed to improve the productivity of the carers.
The EAT agreed. It said that it had to abide by the principle in Armstrong v Newcastle Upon Tyne NHS Hospital Trust (LELR Issue 109) which held that employers do not have to provide justification for a pay disparity if the employer can show that the genuine material factor is not tainted by sex.
Court of Appeal decision
But the Court of Appeal disagreed, saying that, although Armstrong was correctly decided, it had been wrongly applied to this case.
The Court of Appeal said that because of the “clear and compelling statistics” involved in this case (that the Council only considered productivity bonuses for jobs that were almost exclusively done by men and were not applied to jobs mainly done by women), the tribunal had to examine whether the employer could objectively justify the pay practices. There was evidence from which the tribunal should have inferred that there was sex discrimination. And, indeed, the evidence showed that there was indirect discrimination.
It warned that tribunals must examine “with great care” the argument that employers did not have to justify a pay practice that had an adverse impact on women if they could show it was not “sex-tainted”. It made clear that when there was evidence of subconscious stereotypical assumptions on the part of an employer that women should be paid less than men, courts should “readily” draw the inference that the difference of treatment was sex tainted.
The claims have now been remitted to the tribunal to consider whether the employer can objectively justify the scheme.
Comment
The Council may appeal this decision to the Supreme Court. But this is the latest in a series of cases about local authority bonus schemes and equal pay that have consistently found that the system of bonus is indirectly discriminatory and has to be objectively justified. This case provides useful clarification of the very confusing Court of Appeal decision in Armstrong. It is now absolutely clear that where pay practices directly or indirectly discriminate against women, or are left overs of historic pay practices that have directly or indirectly discriminated (although the origins are lost in the mists of time), the employer has to objectively justify the pay practices in order to establish their genuine material factor defence to an equal pay claim.