Audit Commission v Haq
One of the responsibilities of the Audit Commission is to inspect social housing. Until October 2007, there were two jobs in the Commission’s Housing Inspectorate: an inspection and information officer (IIO) and a senior inspection and information officer (SIIO). The roles were broadly similar and in the same pay grade but the SIIO had a higher level of responsibility.
In September 2007, there were 11 IIOs (all female) and five SIIOs (three full-time male SIIOs and two job-sharing female SIIOs). The decision was taken to create 11 posts in the new job of inspection support officer (ISO) to replace the IIOs and SIIOs. The ISO post was closer to the IIO role, but incorporated elements of the SIIO role.
The Audit Commission decided to pool the IIOs and SIIOs, resulting in nine of the old IIOs and two of the old SIIOs (both male) being appointed as ISOs. The ex-IIOs and SIIOs brought to the new job the level of earnings that they had received in their old jobs. In June 2008, all nine of the ex-IIOs brought equal pay claims claiming equal pay with the two ex-SIIOs (who were the comparators for the purpose of this case).
It was accepted that the claimants and comparators were doing like work following the restructure and the only issue was whether or not the Audit Commission had a genuine material factor defence.
The Audit Commission relied on the fact that, prior to October 2007, the comparators were employed in a more senior role, therefore attracting a higher pay point. The Audit Commission’s policy in the circumstances of the restructuring was that the employees would retain their pay points as long as the new role was in the same pay grade.
The employment tribunal held that this factor was genuine and material, but went on to consider whether or not it was tainted by sex discrimination. The tribunal found that it was tainted by sex discrimination and needed to be objectively justified. The tribunal found that it could not be objectively justified. The Audit Commission appealed to the Employment Appeals Tribunal (EAT).
The EAT held that the pay differential was the result of the application of a provision, criterion or practice, namely the policy of allowing restructured employees to maintain their previous pay points.
The EAT did not consider that this put women at a particular disadvantage when compared with men. The tribunal was not entitled to find a prima facie case of indirect discrimination and so the issue of objective justification did not arise.
The EAT said that, if it had considered objective justification, it would have found that the policy was objectively justified. There was nothing inherently discriminatory about the pay differential that the Commission sought to protect on the restructure and the pay protection was legitimate as a matter of fairness and to promote employee retention. The EAT allowed the appeal.
Employers should be wary before implementing pay protection arrangements and consideration should be given in all cases to whether or not the pay protection will perpetuate historical discrimination, in which case it will need to be justified.
However, this case demonstrates that pay protection may be legitimate, even where it results in large disparities in pay between men and women doing the same job, if the reason for the underlying disparity is not itself discriminatory.
The EAT emphasised that this case is different to local authority bonus cases such as Redcar & Cleveland Borough Council v Bainbridge and Equality and Human Rights Commission and other appeals  IRLR 776 CA, in which pay protection arrangements were clearly tainted by sex as there was historical discrimination which the pay protection allowed to continue indefinitely.
Here, the cause of the pay disparity had nothing to do with gender, but simply reflected the fact that all the employees affected by the restructuring came into the new role preserving their previous pay, which was not itself discriminatory as it was based on factors such as length of service, performance and responsibility.
Nick Jew, partner, DLA Piper
Practical guidance from XpertHR on equal pay