The Court of Appeal has confirmed that discriminatory pay protection schemes are capable of justification under the Equal Pay Act as they (in principle) constitute a legitimate objective, but the means used to achieve that objective must be proportionate.
This case concerns female care and catering workers, who attempted to compare themselves with male workers, such as gardeners, street cleaners and refuse collectors. Although both types of workers received approximately the same basic salary, the male workers received productivity bonuses which, over time, had become automatic pay uplifts.
With this background, the councils carried out a job evaluation scheme that led to the downgrading of the predominantly male posts, and downgraded staff were given pay protection for a number of years. The female claimants alleged that but for the sex discrimination before the pay protection schemes (PPS) were put in place, they would have been on the same (higher) rate as the men and would have had their pay protected in the same way.
They succeeded and the court held that prior to putting the PPS in place the council had not given sufficient importance to the disparate impact on the claimants.
Although this case is a warning for employers to look at any PPS on a more holistic level, the fact is that the Court of Appeal was dealing with a strong finding of fact by the original tribunal that the pay practices of the local authorities were known to be discriminatory. In effect, the difference in pay was rooted in historic unlawful sex discrimination.
- The court set out a two-stage test for deciding whether a payment protection scheme (PPS) is unlawful: is it discriminatory and can the discrimination be justified?
- An employer’s motive, intention and knowledge are irrelevant to the question of whether arrangements are discriminatory and should be considered only as part of the justification.
What you should do
- A discriminatory PPS can, in principle, be justified. However, the justification test will be exacting. The employer must look at all options, calculate the cost of increasing female pay (rather than simply red-circling male pay), consider the reasons for the length of time the protection will last and form a business case for the PPS.