Key points
This is a significant ruling on the time limits for the commencement of equal pay proceedings under the EPA.
Employees who have worked under a succession of contracts with the same employer without a break can now bring equal pay claims under the EPA for their whole period of employment, where the variations between those successive contracts are minor, and the job carried out remains substantially the same.
What you should do
Given the increasing availability of minor contractual variations (such as reduced hours) as part of flexible working arrangements, it is important that employers are aware that when agreeing to minor contractual changes, where the employee’s job remains substantially the same, any equal pay claim brought could relate to the employee’s entire period of employment.
The case
In this appeal, the Court of Appeal considered three similar equal pay claims brought in 2003 under the Equal Pay Act 1970 (EPA), all being sample cases for a large number of equal pay claims brought against Cumbria County Council. The EPA sets out different methods for working out whether an equal pay claim has been brought in time, depending on whether the case is a “standard employment” case, a “stable employment” case or certain other types of case.
For a standard case, the claim must be brought within six months after the last date on which the employee was employed. However, for a stable employment case, a claim must be brought within six months of the date on which the stable employment relationship ended.
New contracts
In 2000, the first and second claimants had requested a reduction in their hours of work.These requests were granted and, in 2001, the council issued the claimants with new employment contracts, which expressly stated that they superseded any previous employment contract.
The third claimant was initially a relief home carer butin 2001she accepted a job with the council as a permanent home carer and signed a new employment contract.When the changes occurred in each case, there was no break in the continuity of the claimants’ employment.
The claimants’ equal pay claims sought to recover arrears of pay going back several years, before and after the changes to their working arrangements.The key question was whether the changes in the claimants’ working arrangements amounted to mere contractual variations, as opposed to actual terminations of their original employment contracts.
The council contended that the changes constituted a termination of the old employment contracts. Therefore, it argued that the claimants could only bring an equal pay claim in relation to employment under their new contracts, as any claim in relation to their old contracts was out of time as they had failed to lodge their claims within six months of the last date of their employment under the old contracts.
The claimants argued that the changes to their working arrangements amounted to mere variations of their original contracts. The Court of Appeal disagreed, holding that all three claimants had received new, rather than varied, contracts. Therefore, on the “new contract point”, the time limit for the claimants to bring an equal pay claim under their original employment contracts had expired.
However, the claimants also argued that a stable employment relationship exists where one employment contract terminates but the employment continues under another contract requiring substantially the same work.
Stable employment case
It was contended that where an employee brings an equal pay claim arising from this kind of relationship, it should be regarded as a “stable employment” case for the purposes of the time limit rules set out in the EPA and, therefore, that time started to run once the stable employment relationship had come to an end, rather than when one employment contract is superseded by another.
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The Court of Appeal held that the relationships between the council and the first and second claimants were stable employment relationships, as the claimants did the same work for years without a break. Time for their equal pay claims had not started to run when their original contracts were terminated and, therefore, their claims had been submitted in time.
However, the facts were not clear enough for the court to determine whether the third claimant was in a stable relationship, and so this issue was remitted to the tribunal for it to make further factual findings and to decide whether the stable employment time limit rules should also be applied.
