Lawrence and ors v Regent Office Care Limited and Ors [2000] IRLR 608
Allonby v Accrington and Rossendale College and ors [2000] IRLB 645

This month, we report on two decisions where unions are trying to push back the boundaries as to when an Applicant is able to compare her or his terms and conditions with comparators who are actually employed by a different employer under the Equal Pay Act.

The decision of the Court of Appeal in Lawrence is the latest chapter in the long running saga of the North Yorkshire school meal workers pursued by UNISON.

Ms Lawrence and her colleagues originally worked for North Yorkshire County Council as kitchen assistants in schools. In preparation for compulsory competitive tendering, their pay and terms of conditions of employment were cut so as to make the service more competitive. Eventually the majority of the contracts were won in-house.

In the earlier landmark case of Ratcliffe v North Yorkshire CC the House of Lords upheld the equal pay claim brought on behalf of the school meal workers when they remained in employment with the Council. The Council tried to argue that it could justify the difference in pay between the dinner ladies and the male comparators in the Highways Department on account of market forces. The House of Lords was quick to point out that such a defence could not succeed where the market itself discriminated - ie there was a widely held perception in North Yorkshire that the work of "dinner ladies" was "womens work" and that that view was the real, and discriminatory, reason for paying them less.

In Lawrence & ors v Regent Office Care Limited, the distinction is that some of the contracts were subsequently awarded to outside contractors. The contractors then also took on new workers. Could newly appointed staff, as well as their colleagues who transferred on contracting out also compare their pay with that of workers still employed by the Council?

It was conceded by the employers at the Employment Tribunal that workers originally employed by the Council are able to rely on TUPE to compare themselves with workers still employed by the Council.

But what about their colleagues who only became employed by the contractors after the transfer from the Council?

They rely on the European Court of Justice decision in Defrenne v Sabena [no. 2], arguing that men and women are entitled to receive equal pay for work of equal value "carried out in the same establishment or service [as their comparator], whether public or private", under Article 141 of the Amsterdam treaty.

There are a number of important points in favour of the Applicants: their work was evaluated under the same job evaluation scheme as the comparators whilst they were employed by the Council; most of them suffered a pay cut in precisely the same situation as was outlawed in the Ratcliffe case; the work was hardly changed and the whole tendering process involves a control and review process by the Council.

The contractors argued that, in order to have any opportunity to justify objectively the pay differentials, they must be able to provide explanations of both the Applicants' pay rates and the comparators' pay rates. That is impossible where they do not employ the comparators.

The Employment Tribunal and the Employment Appeal Tribunal found against the Applicants employed by the contractor after the transfer who had never been Council employees. But the Court of Appeal has referred the issue to the European Court of Justice, recognising the potential far reaching impact of the case on the contracting out of services by public authorities. The decision is eagerly awaited as possibly the next piece in the anti-privatisation jigsaw.

Whilst the Court of Appeal in the Lawrence case recognised the ambiguity of the limits of the scope for comparison under Article 141 and the Equal Pay Act, the same cannot be said for the Employment Appeal Tribunal in Allonby v Accrington and Rossendale College and ors, a test case brought by NATFHE.

Ms Allonby was originally employed by Accrington and Rossendale College as a part time lecturer. When her fixed term contract expired she was then recruited back to the college through ELS, a business supplying teachers and lecturers. But as an employee of ELS, she ceased to be entitled to sick pay and to other benefits. She therefore brought a complaint under the Equal Pay Act claiming parity in terms and conditions with a male teacher employed directly by the college.

Section 1 (6) of the Equal Pay Act provides that the Applicant and comparators will be taken to be "in the same employment", as required by the Act, if the comparator is employed by the Applicant's employer "or any associated employer at the same establishment..." Two employers are to be treated as associated if one is a company which the other, directly or indirectly, has control.

The Employment Tribunal were not convinced that the college had "control" of ELS. It found that ELS was not an "associated employer" of the College. The Employment Appeal Tribunal agreed. It also dismissed a similar claim relating to pension entitlement, for the same reason - the lack of a suitable comparator. The EAT decided that there will be exceptional cases where the comparator does not have to be employed by the same employer as the Applicant. But by and large Article 141 requires the employer of both the Applicant and the comparator to be the same.

The EAT suggested that a comparison between employees of different employers for the purposes of article 141 may be appropriate only if the employees' terms and conditions of employment are governed by the same statutory scheme or collective agreement.
This is disappointing and demonstrates a lack of willingness on the part of the EAT to examine the outer limits of the scope of article 141. Admittedly, following on from the decision of the House of Lords in Ratcliffe, Lawrence is the ideal test case, but that does not mean that the EAT is excused from a rigorous and purposive examination of the opportunities an applicant may have to make a comparison for the purposes of Article 141.

Whilst awaiting the outcome of the reference to the ECJ in Lawrence, unions may well find it useful to try and stay claims brought by Applicants citing comparators employed by different employers.