The Equality Act states that men and women should receive equal pay for equal work, unless the employer can show that the difference was because of a material factor. In Walker v Co-operative Group Ltd and anor, the Court of Appeal held that tribunals must focus on evidence for the material factor causing, at any time, the pay difference between men and women doing equal work.
In February 2014, Ms Walker was promoted to the role of group chief HR officer on a basic salary of £215,000. However, as a result of changes to the executive team at a critical time for the business, her job was re-banded within the Tier four pay band of £350-550,000 in March 2014.
Although Ms Walker’s salary was increased to £425,000, this was less than the two men - Mr Folland and Mr Asher - who were also placed in the Tier four pay band. The Co-op justified the difference on the basis that Ms Walker had only just been promoted to an executive level post, whereas the two men had extensive experience at that level. In February 2015, however, a job evaluation scheme (JES) scored Ms Walker's role higher than either of those of the two men.
After her dismissal in April 2017, she brought a number of claims including one for equal pay, relying on Mr Folland and Mr Asher as her comparators. For its part, the Co-op relied on four material factors to defend the claim – the vital roles of the two men to the survival of the Co-op; their extensive executive experience; the impact on the Co-op if they were to leave; and market forces.
Tribunal and EAT decisions
The tribunal accepted that, when the remuneration committee set the salaries for the Tier four band posts in March 2014, the four material factors applied both to Ms Walker and her comparators and were unrelated to sex.
However, it also noted that by February 2015 her role had been rated as equivalent to those of her two comparators. In the view of the tribunal this was because the importance of their jobs had declined during that period relative to the work being done by Ms Walker. As such, the historical explanations provided by the Co-op for the pay differential were no longer material by the time of the JES and she was entitled to equal pay from a date to be determined at the remedy hearing.
The EAT, however, allowed the Co-op’s appeal on the basis that, as the company had not taken any new decisions about pay since March 2014, there was no basis for the tribunal’s finding that the material factors had ceased to be operative at that time.
Decision by Court of Appeal
Although the tribunal was entitled to find that Ms Walker's job had been rated as equivalent to those of Mr Folland and Mr Asher as of February 2015, the Court of Appeal made clear that this did not mean that her claim would automatically succeed. Instead the issue for the tribunal to focus on was whether the material factors which accounted for the pay differential in March 2014 still caused the difference in February 2015.
The Court of Appeal concluded that it was possible on the evidence that they could. In the case of Mr Asher, the tribunal had not found that the market forces driving his salary as a commercial lawyer of many years’ experience had ceased or diminished a year later. Likewise, Mr Folland’s executive experience had not ceased a year later.
The Court therefore concluded that by dismissing the explanation as "historical", the tribunal had missed the point. What mattered was the finding by the tribunal that in March 2014 when the executive salaries were set, the four material factors applied both to Ms Walker and her comparators which were unrelated to sex and that there was evidence that these factors still applied in 2015.
It therefore dismissed the appeal.
The facts matter. Facts are what is proved by evidence. It is unfair that women who are paid less than men often are not able to discover what the facts are that the employer says cause the pay difference until after they have started a claim. This case is yet another illustration of how important it is that there is complete transparency in matters relating to the setting of pay. It is also a useful reminder that the criteria for grading a job is not necessarily the same as the factors that explain why a person is paid a particular rate of pay unless there is a clear and transparent collective agreement setting out the relationship between pay and grading.