There are two main stages to an equal pay claim. The first is to establish whether the woman is doing like work, work rated as equivalent or work of equal value to a man; and secondly whether the employer can show that there is a material explanation or factor for the difference in pay that has nothing to do with sex.
In Sharp v Caledonia Group Services Ltd, the employment appeal tribunal (EAT) has said that it is not only in cases where there is sex discrimination that the employer has to show objective justification of the pay difference.
What were the facts in this case?
Ms Sharp started working for Caledonia in March 1996 and submitted an equal pay claim in August 2002. The tribunal's independent expert concluded that, as at 1 March 2002, her work was of equal value to one of her comparators, Mr Barnes.
However, the tribunal accepted the employer's defence that, although Mr Barnes now worked as an office manager, his salary reflected his long service and his previous duties as private secretary and confidante to the chairman, who had died in 1999. As a result, the difference in pay between Ms Sharpe and Mr Barnes was an historical matter that had nothing to do with her sex.
What did they argue at appeal?
Ms Sharp argued, on appeal, that an historical inequality in pay cannot be used as a material factor defence; and that the reasons put forward for the inequality have to be objectively justified by the employer without any proof of direct or indirect discrimination claims by the employee.
Caledonia, on the other hand, said that Ms Sharp had to show indirect discrimination before they were under a duty to show that it was objectively justified.
What did the EAT decide?
The EAT decided that the tribunal was right to consider the historical difference in duties between the two and the employer's reasons for not equalizing pay after the chairman's death.
But the real question, it said, was whether the employer could rely on a material factor defence that did not objectively justify the difference in pay between the employee and her comparator.
It turned out that this was not an easy question to answer because of a difference in approach between courts in this country and the European Court of Justice (ECJ).
For her part, Ms Sharp argued that the EAT was bound by the ECJ decision in Brunnhofer v Bank Der Osterrichischen Postparkasse AG (2001, 1RLR 271) which held that objective justification was required for all material factor defences.
The employer said the court should follow the line taken by the courts here. That is, that employers just have to identify a material factor which accounts for the difference in pay. They do not have to objectively justify this difference unless the factor is indirectly discriminatory against women.
The EAT, however, decided to follow the European approach, going against the decision of another EAT in Parliamentary Commissioner for Administration v Fernandez (2004, IRLR 22).
It said that the tribunal had "approached the genuine material factor defence on a subjective rather than objective view". As a result the EAT said the case would have to be reheard by a different tribunal to allow for a different approach to be taken.
Because of the importance of the decision, it gave both sides leave to appeal.
The basic question in this case is whether the law requires an employer to justify every difference in pay, when a man and woman are doing work of equal value but one is paid more than the other.
Traditionally, the courts in this country have assumed that the pay system was not to blame, and required evidence of sex discrimination. But given the shameful persistence of the pay gap (see news), it seems that the EAT is now acknowledging that any pay difference between men and women has to be viewed with suspicion.