Barry v Midland Bank [1999] IRLR 581

The House of Lords' decision in Barry v Midland Bank, regarding the calculation of a severance package for a part-time worker, raises fundamental questions about the relationship between part-timers and discrimination law. However, the unsatisfactory and contradictory reasoning in the Lords decision ends up confusing more than it explains.

Mrs Barry worked full time for eleven years, before taking maternity leave and then returning to work part-time. She continued working part-time until she took a voluntary severance package. The severance calculation was based on her length of service and her part-time salary as at the time of the termination of her employment. She argued that in basing the package on her part-time earnings and failing to take into account her previous full-time service, Midland Bank were indirectly discriminating against her, contrary to the Equal Pay Act 1970.

In endorsing the previous decisions of the Employment Tribunal, Appeal Tribunal and Court of Appeal, the House of Lords conclude that this method of calculating a severance package was not even potentially discriminatory so as to require objective justification on the part of the employers. They argue that the primary purpose of the scheme was to compensate for loss of a job, and given that the job that Mrs Barry was losing was part-time, it was appropriate in terms of the scheme to base the calculation on the part-time salary. To argue that her years of full-time service should be taken into account was to argue for a different scheme, and had nothing to do with indirect discrimination.

In reaching this decision, the Lords appear to place great emphasis on the fact that the intention of the severance scheme was to cushion the employee against the loss of a job.

This consideration of the intention of the alleged discriminator is an altogether unwelcome concept in the context of equal pay and indirect discrimination, and one that previously has been rejected by the Courts. By placing this emphasis on the intention of the scheme, the Lords avoid addressing the fundamental point that Mrs Barry was receiving less severance pay than her full-time comparators simply by reason of her part-time status. It may be that ultimately the employers could have ended up justifying the method of calculation, but in not allowing the case to get to the justification stage, the entire operation of the Equal Pay Act is side-stepped.

This approach contrasts markedly with the European Court case of Hill and Stapleton v Revenue Commissioners 1998 IRLR 466 (not referred to at all by the Lords), where it was held that an incremental point system that required part-timers to work for twice as long as full-timers in order to qualify for incremental points did indirectly discriminate against women. It is hard to reconcile Barry with Hill and Stapleton.

Mrs Barry's case was also rejected for the more coherent reason that there were no statistics adduced by her before the Tribunal to show that a greater proportion of women than men were disadvantaged by the system of calculating severance pay by reference to final salary as opposed to salary averaged out over the years.

This flags up the very demanding requirements that Applicants have to meet in producing evidence in pursuing indirect discrimination cases of this sort.
Mrs Barry's case was always going to be a difficult one to win, not least because the stakes were high. Had she been successful, then the system of calculating statutory, and most contractural, redundancy payments may have been vulnerable to challenge.

The spotlight will now be on the forthcoming Part Time Work regulations to see if the injustice experienced by people like Mrs Barry will be remedied.