Equal pay has become a hot topic. The rise, particularly in group litigation against public sector employers such as local authorities, has been felt up and down the country, with voluminous, expensive and protracted litigation being brought. And following the recent decision of the Court of Appeal in Redcar and Cleveland Borough Council v Bainbridge and Others Surtees and Others v Middlesborough Council, it remains a contentious issue.
These two cases concerned equal pay litigation against councils in the North East. Redcar and Cleveland, and Middlesbrough, had conducted job evaluations schemes. They fell into difficulty when the evaluations led to the downgrading of predominantly male jobs and they introduced pay protection to such staff for a specified period.
The female claimants contended they had an entitlement to pay protection too, for, if they had been given their right to equal pay, they would have qualified for pay protection. The cases involved the consideration of two conflicting Employment Appeal Tribunal (EAT) judgments. In Bainbridge, the EAT upheld the employment tribunal’s finding that the pay protection arrangements effected by Redcar were discriminatory and could not be justified. But in Surtees, the EAT overturned the employment tribunal’s judgment that Middlesbrough pay arrangements could not be justified, holding that justification had been established on the part of the employer.
In addressing the conflicting views of the EAT, the Court of Appeal emphasised that it is essential to consider the legality of such arrangements in a two-stage approach. First, a tribunal must ask whether the arrangements are discriminatory – ie, do they directly or indirectly treat women less favourably than men? If so, then the tribunal should consider whether any indirect discrimination can nevertheless be objectively justified.
Contrary to the EAT’s approach in Surtees, it was not appropriate to consider an employer’s knowledge of any pay inequality when considering the first question. This is because a discriminatory effect must be measured objectively. Knowledge, intention and motive are bigger factors to be considered as part of justification.
The Court of Appeal accepted in principle that discriminatory pay protection arrangements could be justified, particularly so when the employer was unaware of past discrimination when it entered into the arrangements. However, it found that neither Redcar nor Middlesbrough council’s actions could be justified on the facts of these cases. At the time it entered into the arrangements, Redcar had already settled a number of equal pay claims by women in the affected roles, and must have known that the arrangements were continuing discrimination. While Middlesbrough council did not have knowledge of pay discrimination when the arrangements were put in place, it had to be aware of the potential for such claims, particularly as the claimants had already been successful in Bainbridge.
Based on the judgment in Bainbridge and Surtees, employers must be more cautious in agreeing pay protection arrangements with staff. It’s also likely that trade unions will be more cautious in agreeing settlements with employers. Employers and HR managers alike may have to seriously consider amending their policies on equal pay and pay reviews.
In my view, it is to be welcomed that the Court of Appeal’s judgment clarified that an employer’s motive, intention and knowledge are actually irrelevant to the question of whether arrangements are discriminatory, and should only be considered as part of the question of justification.