Pay Factor

Hartlepool Borough Council v Dolphin

When defending equal pay claims, employers have to show that the difference in pay is due to a genuine material factor that has nothing to do with sex. In Hartlepool Borough Council v Dolphin (IDS 863) the Employment Appeal Tribunal (EAT) said that when justifying bonus schemes, employers have to be able to show that they are genuine and have monitoring mechanisms in place to prove they are doing what they are supposed to do.

Basic facts

Ms Dolphin and her colleagues worked for the Council in a range of jobs including care assistant, cleaner, swimming pool attendant and kitchen assistant. These jobs did not attract any sort of bonuses, apart from the kitchen assistant.

The women brought test claims against the Council arguing that they were doing work of equal value and/or work rated as equivalent to the jobs of a number of male council workers, all of whom received bonuses.

The Council argued that the bonuses (negotiated as incentives with the trade unions in the 1970s) were related to performance and productivity. The difference in treatment, it said, was therefore a genuine material factor (GMF) which had nothing to do with sex.

Tribunal decision

But the tribunal disagreed. It said that “The schemes were discriminatory when introduced, remain discriminatory and are still discriminatory on grounds of sex.”

It found that all the schemes had been introduced as a result of government pay freezes in the 1970s which had prevented the Council from “providing pay increases to strong union based employees except under the guise of incentive schemes. The schemes, however, in many respects obviously did nothing of the sort. The attendance allowances, spot bonuses, unmeasured payments all clearly come into this category”.

It pointed out that the Council did not even have tools for measuring performance (the alleged point of the bonuses). Reviews and reassessments only took place “on the introduction of new technology, or new systems of work and it is impossible to conclude from them that the schemes had provided incentive at all despite what was, in some cases, quite a complicated arrangement”. It concluded, therefore, that the bonus schemes were a sham.

It also said that they had had a disproportionate impact on women in all cases except the pool attendants “and their introduction was therefore tainted by sex”. It did not think this was “mere accident, but was related to bonuses being paid to the powerfully union supported male dominated groups”.

The Council appealed, arguing that the tribunal should have ignored the fact that it had no monitoring schemes in place to measure whether the bonuses were doing what they were supposed to do. It said that as long as the Council itself had “a perception that the schemes are in place to achieve a permissible objective”, then that should be enough to satisfy the GMF test.

EAT decision

But the EAT disagreed. It held that the tribunal had asked itself the correct question – “were the schemes intended to and do they in fact achieve productivity improvements?"

It had not passed judgment on whether the schemes introduced by the Council were good or bad. It had simply tried to find out whether they were genuine. To answer that question, it had to pay attention to the Council’s evidence as to the extent of monitoring and general assessment that it claimed was in place to ensure that the schemes were doing what they were supposed to do.

And, given the available evidence, it had been entitled to hold “that these measures were not enough to satisfy it that the schemes were and continue to be genuinely intended to achieve improvements in productivity.”

It concluded that an explanation based on the history of pay freezes in the 1970s was not a good enough reason for continuing to rely on them nearly 30 years later and could not constitute a GMF.