Case of the week: Unmonitored bonus incentive schemes a ‘sham’

Hartlepool Borough Council and others v Dolphin and others

FACTS The claimants were employed by Hartlepool Borough Council in a variety of roles, including minibus driver, school escort, kitchen staff, cleaners and leisure workers. The claimants’ roles did not attract any type of bonus, with the exception of the kitchen staff, who received a bonus as a result of previous litigation.

Between them, the claimants compared their roles with other roles at the council, namely trade supervisor, joiner, electrician, painter, driver, labourer, gardener, road sweeper and refuse driver.

As a result of negotiations with trade unions in the 1970s, these roles, which were primarily undertaken by men, attracted incentive bonuses. The claimants brought equal pay claims, arguing that they were performing work of equal value and/or work rated equivalent to their male comparators.

The council argued that the incentive bonus schemes were performance related and in place to improve productivity. It claimed the difference in treatment was due to a genuine material factor which was not the difference in sex.

DECISION The Employment Tribunal found that the council’s incentive bonus schemes were a sham. It held that the reason for the introduction of the schemes disappeared years ago, and they could no longer be held to constitute an incentive.

There was no proper monitoring of the schemes and any reviews of performance that did take place were only done in response to new systems or new technology. Performance was not measured on any basis that would improve the employees’ productivity, but instead was tailored to work already done. The reason for the schemes was “tainted by sex”, said the tribunal, and the claimants’ claims were upheld.

The council appealed, arguing that the tribunal should not have taken into account its absence of proper monitoring as to the continued effect of the schemes. The council claimed that if it thought the schemes were achieving their objectives, then that should be enough.

The Employment Appeal Tribunal (EAT) held that the tribunal had been entitled to consider the absence of proper monitoring. The correct question to ask was: “Were the schemes intended to and do they in fact achieve productivity improvements?”

The tribunal needed to establish whether the schemes were genuine and achieved their purpose.

The EAT held that the reason for the schemes’ introduction in the 1970s could not be relied upon to provide a genuine reason for the continuation of the schemes in 2004, which was when these claims were first brought, and dismissed the appeal.

IMPLICATIONS This case emphasises the importance of monitoring and properly regulating any type of pay scheme, including pay rises and overtime pay as well as bonus schemes.

It will not be enough to show that a scheme creating a difference in treatment was justified at the time of implementation – a scheme that does not start out as discriminatory could become so in the future.

Sandra Wallace, partner, DLA Piper

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