Labour & European Law Review Weekly Issue 227 21 July 2011
Under domestic legislation, anyone bringing an equal pay claim has to show they are in the “same employment” as their comparator; EU law says they have to show a “single source” for their pay. In Beddoes v Birmingham City Council, the Employment Appeal Tribunal (EAT) said there was no need to comply with the “single source” test as well as the “same employment test” when making a claim under the Equal Pay Act (EqPA).
Large numbers of women employees who worked in a range of non-teaching roles in different state schools brought equal pay claims with male comparators employed by the Council, arguing that they were entitled to the same bonuses.
Among other things, they argued that they were 'in the same employment' as their comparators for the purposes of section 1(2) of the EqPA. In other words, that they were either employed at the same “establishment” or at different ones which shared common terms and conditions.
The Tribunal said that they were.
The Council appealed, arguing that to prove they were in the “same employment”, EU law said the women had to show that the pay of each group derived from a “single source”.
It said that, although the women were local authority employees, the power to set their pay (and other terms and conditions) rested with the governing bodies of the school where they worked. That meant they did not share a “single source” with their comparators.
However, the EAT disagreed. Relying on the EAT decision in North Cumbria Acute Hospitals NHS Trust v Potter, it said that there was no need to comply with the “single source” test as well as the “same employment test” when making a claim under the EqPA.
Anyway, it added that, although the board of governors could, in theory, impose their own terms and conditions, the reality was that they rarely did so. The women’s pay was set by the local authority in accordance with their pay scales.
If the idea of the governors binding the local authority to an inappropriate grade is “legally and factually fanciful”, said the EAT, then the Council could not rely on it to support an argument that the governors and not the Council were the true “source” of their terms and conditions.
In any event, the EAT said that the definition of “same employment” should be construed naturally, so that all employees of the same employer are available as comparators for equal pay purposes - provided they satisfy the establishment criterion. The EAT could not see how that departed from the requirements of EU law.
It concluded that “The most that can be said is that, in certain highly unusual cases (for it will on any view be very unusual for an employer not to have the legal power to determine the terms and conditions of employment of his own employees), the 1970 Act may be more generous in the comparisons that it permits than EU law; but that is not objectionable in principle”.
In those circumstances, the employer would “very probably” have a defence under section 1(3) of the Act.
There will be further cases about whether it is possible to claim equality of terms where two people are employed by the same employer, but the employer is made up of sections with delegated budgets and decision making about pay.
This case applies once again the decision in Potter that there is no need to establish a single source where employees are employed by the same employer or the employer is the single source. The sting is in the tail; delegated pay decision making may be a non discriminatory pay practice or one that objectively justifies an indirectly discriminatory practice. In the context of the history of local government pay that, at present, appears unlikely.