Mr A Lawrence and Others v Regent Office Care Ltd and Others

This is the judgment of the court.

Introduction

This appeal from the decision of the Employment Appeal Tribunal on 5 November 1998 raises a significant question on the interpretation of the directly effective provisions in Article 141 (formerly Article 119) of the EC Treaty under which each Member State shall ensure that, without discrimination based on sex,

" the principle of equal pay for male and female workers for equal work or work of equal value is applied."

The point arises in the context of claims under the Equal Pay Act 1970 (the 1970 Act) and Article 141 by 447 applicants for whom Mr Brian Langstaff QC and Ms Dinah Rose appear.

The applicants are female workers currently employed or formerly employed in the provision of cleaning and catering services in school premises in North Yorkshire by the three respondent companies. Mr Brian Napier appears for two of those companies, Commercial Catering Group Limited, against whom 85 claims are made, and Mitie Secure Services Limited (formerly Securicor Cleaning), against whom 300 claims are made. The third company, Regent Office Care Limited, against whom 62 claims are made, does not appear and is not represented.

Background

The issue is whether the applicants are entitled, for the purposes of establishing their equal pay claims against the respondent companies, to use as comparators the terms and conditions of employment of male workers employed by the North Yorkshire County Council (the Council). The proposed male comparators are not employed by any of the respondent companies. This issue goes to the right of the applicants to bring their claims and to the jurisdiction of the Employment Tribunal to hear and determine the claims. At this preliminary stage the court is not directly concerned with the issue of justification for the difference in pay.

Most of the applicants were originally employed by the Council in the provision of the same cleaning and catering services in the same schools. As a result of the process of compulsory competitive tendering pursuant to the Local Government Act 1988 there have been transferred to the respondent companies the undertakings of providing those services in the Council's schools.

During the period of compulsory competitive tendering an equal pay claim under the 1970 Act by female employees against the employer Council was proceeding in the Employment Tribunal, in the Employment Appeal Tribunal and finally in the House of Lords. The claim was ultimately successful for the reasons given in the speech of Lord Slynn on 6 July 1995 in North Yorkshire Council -v—Ratcliffe [1995] ICR 833.

The comparators used in that case were men in the employment of the Council. The Council had accepted the results of a job evaluation study which rated the work of the applicant women as being of equal value with various jobs performed by the men. The women's wages were lower than those of the men with whom the comparisons were made. The Council attempted to argue that the reason for paying the women less was to enable it to compete with a commercial company in the competitive tendering process in the open market. This argument was rejected by the House of Lords who held that it was impossible to say that the difference in pay was genuinely due to a material factor other than the difference in sex.

When the Council contracted out catering and cleaning services in certain geographical areas to the respondent companies those companies re-employed some former female staff on fresh terms and paid them at lower rates than those paid by the Council prior to the transfer. They also paid new female employees, who had not been employed by the Council, lower rates than those paid by the Council to its female employees prior to the transfer.

On the contracting out some of the Council's female employees were transferred to the respondent companies; some of them left employment on the transfer or more than 6 months before submitting a tribunal claim; and some female staff were employed for the first time by the respondent companies.

In December 1995 the applicants started proceedings in the Industrial Tribunal, as it was then called, under the 1970 Act. The nature of the complaint made by Mrs Marion Askew against Securicor Cleaning (now Mitie Secure Services) is typical of the claims

"I worked for North Yorkshire County Council who cut my pay and conditions in 1991. This was challenged on the basis of Equal Pay legislation and went through various stages of appeal in the UK courts where a final decision was given in the House of Lords in Ratcliffe and Others -v—North Yorkshire County Council on 6th July 1995.

In the interim my employer transferred the undertakings, or part of it I work in, to Securicor Cleaning Ltd.

I consider that I should have Equal Pay in line with the decision in Ratcliffe and Others -v—North Yorkshire County Council, and that my present employer is liable for any back pay and other monies which may be due to me."

The Agreed Facts

The case before the Employment Tribunal was argued on the basis of the following agreed Statement of Facts.

" (1) North Yorkshire County Council provide a service to the Council Tax Payers in North Yorkshire. Part of that service has traditionally involved the provision of education, catering for schools and educational institutions, and cleaning them.

(2) The cleaning of buildings, catering for the purposes of schools and welfare, and ground maintenance are all "defined activities" within the meaning of the Local Government Act 1988, Section 2. That Act provides for the compulsory competitive tendering of such defined activities if they are to be provided by the Local Authority concerned.

(3) Accordingly, in North Yorkshire a catering Direct Service Organisation ("DSO") was set up in 1990 with a view to bidding internally for the work.

(4) For the purposes of compulsory competitive tendering, catering in North Yorkshire was let in six separate contract areas. In July 1990, contract area 1 (Craven and Harrowgate) was won by the DSO. Contract area 2 was lost to Commercial Catering Group (now Castleview) ("CCG"). Contract areas 3,4,5 and 6 were retained by the DSO, on the basis of a bid which was designed to be competitive financially against those anticipated from CCG and other competitors. Accordingly, the employees in the School Meal Service (who, with the exception of two men, were entirely female) suffered pay cuts, which formed the basis for their application to the Leeds Industrial Tribunal in the case which ultimately reached the House of Lords as North Yorkshire County aCouncil -v—Ratcliffe [1995] ICR 833.

(5) In short, the effect of the ruling in the House of Lords was that the women were entitled to compare themselves for equal pay purposes with men in the employment of North Yorkshire County Council, in other parts of the Local Government service, whose work was rated as equivalent upon a national job evaluation study of August 1987, and who continued to be paid on the NJC scales for local authority service.

(6) The claim of Ratcliffe and Others had been upheld by the Leeds Industrial Tribunal on the 15th June 1992. The Council's appeal against that decision was allowed by the Employment Appeal Tribunal on 17th March 1993, and the appeal of the employees against that decision of the EAT was dismissed by the Court of Appeal on 28th April 1994. On July 6th 1995 the House of Lords unanimously allowed the employees' appeal from the decision of the Court of Appeal, and restored the decision of the Industrial Tribunal.

(7) The cases of Ratcliffe, Crosby and Collinson were test cases for several applicants who had claimed equal pay on the same basis.

(8) Before the hearing before the House of Lords, the catering contracts in each area had to be re-tendered under the provisions of the 1988 Act. Contract area 1 was lost to CCG, contract area 2, won back by the DSO, and of the remaining four areas two were retained by the DSO and two awarded to CCG. CCG secured an indemnity from North Yorkshire County Council in respect of any liabilities which might arise out of the Ratcliffe case.

CLEANING

(9) For the purposes of compulsory competitive tendering, North Yorkshire was divided into thirteen contract areas. North Yorkshire Contract Services (Cleaning and Caretaking Division), the DSO, tendered successfully in 1990 when the first contracts were put out for tender.

(10) During 1993/94, the cleaning contracts were re-tendered. The DSO tendered upon the basis that they would reduce terms and conditions of employment, in the same way as had been done in the case of catering.

(11) The DSO retained three contract areas (1,2 and 10). Mitie won contract areas 3,4,5,6,7,12 and 13. Regent Office Care Limited won contract areas 8,9 and 11. Subsequently, in 1994, Commercial succeeded in obtaining area 1.

(12) The exact date of the commencement of each cleaning contract is shown on Appendix 1.

(13) John Cafferty, Senior Regional Officer in the Yorkshire and Humberside office of UNISON, wrote...