Equal pay sham
Labour & European Law Review Weekly Issue 270 24 May 2012
To defend an equal pay claim, employers have to show that any difference in pay between men and women is not tainted by sex discrimination and if it is, that they can objectively justify it. In Council of the City of Sunderland v Brennan, the Court of Appeal said that once the Council’s defence had failed, the Tribunal was bound to find it had indirectly discriminated against the women.
Women employed by the Council (mainly caterers, cleaners, carers, school support staff and leisure centre attendants) claimed that they were entitled to productivity bonuses that had historically been paid to their male comparators (gardeners, road sweepers, drivers and refuse collectors ) under the Equal Pay Act 1970.
The Council claimed that the difference in pay was genuinely due to a material factor (the GMF defence) that had nothing to do with sex. The bonuses were based on performance and had resulted in better productivity and savings. The women’s jobs, by contrast, had not been suitable for similar efficiency schemes.
Tribunal and EAT decisions
The Tribunal disagreed with the Council, saying that although the bonuses were not a sham when first introduced, they “became a sham and were not genuinely linked to productivity.” As there was “no satisfactory evidence of a link between the bonus schemes and productivity” the GMF defence failed.
In a joint appeal with Bury Metropolitan Borough Council v Hamilton and ors (see weekly LELR 210), the EAT said that the Tribunal was wrong to focus on whether the employer’s explanation was genuine or a sham.
Instead, it should have concentrated on whether the discrimination between the women and their comparators could be justified.
In this case, the Council did provide an explanation for the difference in treatment - that the jobs of the comparators were “bonusable” whereas those of the claimants were not. However, this constituted indirect sex discrimination and could not be justified because the Council could not show a link between the bonuses and productivity.
Basis of appeal
The Council appealed, arguing (among other things) that once the EAT had removed the issue of “sham” from the argument, it should have then gone on to consider whether the Council had established a non-sex discriminatory reason for the pay differentials.
Instead it proceeded directly to the question of objective justification, which would not arise if the Council had established a non-sex discriminatory reason. The EAT should not therefore have upheld the Tribunal’s finding as it hadn’t asked itself that question.
Court of Appeal decision
The Court of Appeal, however, disagreed. It said that, once the Tribunal had found that there was no longer a link between the men’s productivity and the bonuses, the Council’s case had become “unsustainable”. The fact that the EAT had removed the “sham” finding was irrelevant and did not impact on this stage of the analysis or the Tribunal’s finding that the link no longer existed.
As the productivity link was the reason given by the Council for the difference in pay, then there could only be one answer to the issue of the "missing" question on the facts of the case. That is, that there was “Enderby-type” (see below) indirect sex discrimination. In any event, the Court said that the EAT had considered whether the Council’s explanation was 'tainted by sex' before it went on to consider objective justification.
The Court therefore upheld the findings of the Tribunal that the difference in pay was discriminatory and could not be justified.
This case is part of the long running litigation about bonus payments in local government. It is yet further confirmation that an equal pay case is fundamentally about sex discrimination in pay. Enderby-type discrimination is where the evidence of sex discrimination (in this case against women) comes from evidence that the higher paid group is, and for a very long time has been, predominantly male and the lower paid group is, and for a very long time has been, predominantly female.