Council of the City of Sunderland v Brennan and Others (No 1)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Maurice Kay,Lord Justice Rimer,Lord Justice Tomlinson |
| Judgment Date | 03 April 2012 |
| Neutral Citation | [2012] EWCA Civ 413 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2011/0552 |
| Date | 03 April 2012 |
[2012] EWCA Civ 413
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
(Mr Justice Underhill, Mr T Haywood and Mr B Gibbs)
Ref No: UKEAT/0241/09/CEA
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Maurice Kay, Vice President of the Court of Appeal, Civil Division
Lord Justice Rimer
and
Lord Justice Tomlinson
Case No: A2/2011/0552
Hearing date : 7, 8 March 2012
Approved Judgment
This case concerns equal pay claims brought by female employees of the Council of the City of Sunderland (the Council) whose case is that their jobs were either "rated as equivalent," or had been determined to be of equal value, to those of male comparators but they did not receive bonus payments which were paid to the men. There have been many such cases in recent years. The historical reasons are well-known. They were succinctly described by the Employment Appeal Tribunal (EAT) in the present case and I gratefully adopt and adapt that account.
Traditionally there were three principal categories of local authority employee and they had different arrangements for determining their terms and conditions. Manual workers were covered by the White Book; administrative, professional, technical and clerical workers by the Purple Book; and craftsmen by the Red Book. Different national negotiating structures governed each of the groups. Most jobs covered by the White Book were the subject of a job evaluation study and graded accordingly but there were no job evaluation studies in relation to Purple Book or Red Book employees. From the 1970s, it became common for employees in some White Book jobs to enjoy locally negotiated bonus arrangements which resulted in their receiving total earnings between 33% and 50% above the basic level of remuneration for their grade. Typically (although not invariably) the jobs attracting the bonus arrangements were predominantly done by men and jobs which were predominantly done by women tended not to benefit from bonus arrangements.
In the 1990s there was pressure for the negotiation of a single system of negotiation and grading covering employees in all three categories. This became known as "single status". In April 1997 agreement was reached at national level amalgamating the White Book and Purple Book pay scales into the Green Book. However, it was recognised that the allocation of particular jobs to particular points in the scale necessitated job evaluation studies and negotiation at local level with the result that there was no immediate effect on actual terms and conditions relating to pay and grading. Progress towards single status agreements was slow. Eventually, national agreement was reached for a deadline of 1 April 2007 but some local authorities failed to meet that deadline.
Once a local authority achieved the implementation of single status, the bonus schemes were formally withdrawn but it often happened that employees who had been beneficiaries of the schemes became covered by pay protection agreements enabling them to continue to receive bonuses at the same or a lower level for a period of time.
All this set the scene for the prolific equal pay litigation of recent years. Female employees on White Book jobs who did not receive bonuses were, in respect of the period prior to the implementation of the Green Book, prima facie entitled to bring claims for amounts equivalent to those paid by way of bonus to male employees on the same White Book grade because their jobs were "rated as equivalent" within the meaning of section 1(2)(b) of the Equal Pay Act 1970. Following the withdrawal of the bonus schemes on the implementation of single status, such claims would come to an end but the question then arose as to whether the women had claims in relation to the pay protection agreements under which predominantly male groups continued to enjoy bonus arrangements. In Sunderland, female claimants issued proceedings in the Employment Tribunal (ET) by reference to both periods. Thus far, however, only the claims in relation to the earlier period have been determined. Their pay protection claims remain part-heard in the ET.
The Sunderland claimants commenced their claims in 2004 with the consequence that any liability for arrears can go back six years to 1997. As often happens in such cases, the ET decided to deal first with the issue whether the non-payment of bonuses to the female workers during the relevant years was "genuinely due to a material factor other than the difference of sex" within the meaning of section 1(3) of the 1970 Act – the "GMF defence". The lead claimants fell into five groups: caterers, cleaners, carers, school support staff and leisure centre attendants. The male comparators were gardeners, road sweepers, drivers and refuse collectors. The hearing in the ET was protracted, occupying some 24 days spread over May, June, July and September 2008. In its careful and detailed judgment dated 31 March 2009 the ET rejected the GMF defence except in relation to the leisure centre attendants (about whom I need say no more).
The Council appealed to the EAT, where the case was heard with the appeal of Bury Metropolitan Borough Council in a similar case. The EAT (Mr Justice Underhill, Mr T Haywood and Mr B Gibbs) dismissed the appeals but granted the local authorities permission to appeal to this Court. We were to hear the appeals in both cases together but, shortly before the hearing, we were requested and agreed to adjourn the Bury case so as to facilitate the continuation of negotiations.
Grounds of appeal
The Council seeks to advance two grounds of appeal. The first is what Mr David Reade QC describes as "the Armstrong point", that being a reference to Armstrong v Newcastle upon Tyne NHS Hospital Trust [2006] 1 IRLR 124, [2005] EWCA Civ 1608, otherwise known as Armstrong No 1. Essentially, the complaint is that, when addressing the GMF defence, the EAT missed out a stage in the structured approach set out in the judgment of Arden LJ in Armstrong No 1. Having held that the Council's explanation for the pay differential occasioned by the bonus scheme was not a "sham" (as the ET had held it to be), the next question in the analysis, according to the pleaded grounds, —
"should have been whether the Council has established a non-sex discriminatory reason for the pay differential. However, in the EAT's analysis, the next step is to go straight to the question of objective justification. This is contrary to the approach taken by the Court of Appeal in Armstrong No 1."
In other words, it was legally erroneous to proceed to objective justification without having first concluded that there was a need for the Council to establish objective justification.
The second ground of appeal is in the form of a perversity challenge to central findings of the ET, in particular the finding that, by the material period of 1997–2003, the bonus schemes enjoyed by the predominantly male groups "had long ceased to have anything to do with productivity". This finding amounted to a rejection of the Council's case that right up until the abolition of the original bonus schemes in 2007, they were linked to productivity.
Although it is the first ground of appeal that is advanced on the basis that it is a pure point of law, it became apparent in the course of the hearing that it is closely bound up with the perversity challenge. If the Council were to succeed on that challenge, that success would enliven its case on the Armstrong point. Accordingly, I propose to deal with it first. Before I do so, it is appropriate to set out the legal landscape.
The law
At all material times, the predominantly male and the predominantly female groups were employed on "work rated as equivalent" pursuant to section 1(2)(b) of the Equal Pay Act 1970, as amended, which gave rise to equality clauses in the individual contracts of employment, subject to section 1(3) which stated:
"An equality clause falling within subsection (2) ..(b) ..above shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor –
(a) in the case of an equality clause falling within subsection (2) ..(b) above, must be a material difference between the woman's case and the man's case …"
This is the GMF defence.
The leading authority on section 1(3) remains Glasgow City Council v Marshall [2000] ICR 196 in which Lord Nicholls said (at pages 202F – 203B):
"The scheme of the Act is that a rebuttable presumption of sex discrimination arises once the gender-based comparison shows that a woman, doing like work or work rated as equivalent or work of equal value to that of a man, is being paid or treated less favourably than the man. The variation between her contract and the man's contract is presumed to be due to the difference of sex. The burden passes to the employer to show that the explanation for the variation is not tainted with sex. In order to discharge this burden the employer must satisfy the tribunal on several matters. First, that the proffered explanation, or reason, is genuine, and not a sham or pretence. Second, that the less favourable treatment is due to this reason. The factor relied upon must be the cause of the disparity. In this regard, and in this sense, the factor must be a 'material' factor, that is, a significant and relevant factor. Third, that the reason is not 'the difference of sex'. This phrase is apt...
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