The EAT’s shrewd ruling over a City bonus claim has wide implications for
all employers fighting sex discrimination cases and serves as a warning over
transparent pay scales
One of the most controversial provisions of the Employment Act 2002, which
came into force last week, concerns the new right to serve an equal pay
questionnaire on an organisation which has to be responded to within eight
weeks. An employer’s failure to provide a full answer or to respond within the
time limit – or at all – can lead a tribunal to infer sex discrimination.
This right, afforded to equal pay complainants, is novel but has existed in
other discrimination statutes for some time, where it proved ineffective in
achieving its aim of providing the complainant with full information about the
merits of a potential claim.
However, all that may change as a result of the Employment Appeal Tribunal’s
(EAT) decision reported last week in the case of Barton v Investec Henderson
Crosthwaite Securities Ltd (EAT/18/03).
Media analyst Louise Barton claimed her basic pay and bonus was lower than
male colleagues’, although she said she had brought in as much or more revenue.
The employers were able to persuade a tribunal that secrecy was essential in
the Square Mile because the alternative would lead to invidious comparisons
which would destroy the City’s bonus system. The EAT distanced itself from the
notion that tribunals could "condone a City bonus culture involving
secrecy and/or lack of transparency".
In so doing, it merely reflected the case law of the European Court of
Justice, which has made clear that where employers construct smokescreens
either inadvertently or deliberately around salary structures, it is the
employer which ultimately pays the price because of its then near-impossible
task of explaining the basis of the pay differential.
The requirement to prove discrimination has been too onerous on the employee
and a major obstacle in the cause of sex equality, according to the EU
Commission, so all member states have been forced to comply with a new
directive on the issue.
The UK vehicle was the Sex Discrimination (Burden of Proof) Regulations 2001
implemented on 12 October 2001, which until the Barton case had not been
considered in detail by the higher courts.
The EAT’s interpretation must be a nightmare for every empl-oyer reluctant
to deal with the issue of sex discrimination. In its view, all a complainant
has to do is establish there may have been discrimination from the basic facts.
It then falls upon the employer to show that any difference in treatment was in
no way due to sex discrimination.
The total exclusion of sex discrimination as a possible explanation is very
difficult in most cases. It becomes formidable when an employer fails to follow
best practice or prevaricates in disclosing relevant information until
compelled to do so bya tribunal.
The questionnaire process needs to be viewed against this background. The
greater the secrecy, the harder it will be for the employer to volunteer
information, and the more likely it is that a tribunal will view such
intransigence in a negative light.
The EAT did not go as far as to state that lack of compliance would trigger
a finding of discrimination, but rather shrewdly pointed out that it could be
the basis to justify the shift of the burden to the employer to establish
otherwise. This will put most employers in a difficult position since they will
need to establish that sex discrimination was not even a potential explanation
for any difference in treatment.
The Barton case has gone back for a hearing before another tribunal. For
employers the message is obvious – any lack of transparency in decision-making,
particularly over pay, will be punished and the reticence to disclose
information will be a potential weapon in the hands of the complainant.