Calder v Rowntree Mackintosh Confectionery Ltd [1991] UKEAT 594_89_1912

EAT
Calder v Rowntree Mackintosh Confectionery Ltd
[1991] UKEAT 594_89_1912 · 1991-11-19
MR JUSTICE KNOX: Mrs Calder and Mrs Cizakowsky appeal from a decision sent to the parties on the 19th October 1989 of the Newcastle-upon-Tyne Industrial Tribunal sitting on 11th and 12th September which unanimously held on a preliminary issue under the Equal Pay Act 1970 that equality clauses should not operate in relation (inter alia) to a variation in pay between Mrs Calder's contract and that of the first comparator Mr Charlton or an identical variation in pay between Mrs Cizakowsky's contract and that of her first comparator Mr Sillett. No separate issue arises in relation to Mrs Cizakowsky as opposed to Mrs Calder and it will be convenient and make for brevity to deal with the latter only.It was conceded here and before the Industrial Tribunal that Mrs Calder's work was work of equal value with that of Mr Charlton and there was no doubt of there being a variation between Mrs Calder's and Mr Charlton's contract in that the latter did, but Mrs Calder's did not, include a provision for payment of a shift premium. The issue is limited to whether the defence in s.1(3) of the Equal Pay Act, 1970, that the difference was genuinely due to a material factor which was not the difference of sex was established.

Section 1(3), as amended, read as follows

"An equality clause shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor - (a)in the case of an equality clause falling within subsection (2)(a) or (b) above, must be a material difference between the woman's case and the man's; and (b)in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference."
Because of the concession that Mrs Calder's work was of equal value it is para. (b) of Section 1(3) that is the relevant one in the present case.The appeal before us was not pursued against a similar conclusion by the Industrial Tribunal on the preliminary issue that equality clauses should not operate in relation to a comparison between Mrs Calder's contract and Mrs Cizakowsky's contract on the one hand and those of their respective second comparators who were engaged on permanent night turns. Mrs Calder and Mrs Cizakowsky were employed on what is called colloquially a "twilight turn" which gives a fairly wide meaning to the expression "twilight" since their hours of work were 5.30 pm till 10.30 pm Monday to Friday and it was not in the end sought before us to disturb the Industrial Tribunal's decision that there was a material factor which was not the difference of sex to which the variation between Mrs Calder's and Mrs Cizakowsky's contracts on the one hand and that of the second comparators on the other was genuinely due. We therefore exclude from our consideration the second comparators and the permanent night turns.The appeals concern the conditions of employment at the Fawdon factory at Newcastle-upon-Tyne of Rowntree Mackintosh Confectionery ("the Company"). The facts were found in a clear and concise manner by the Industrial Tribunal and because the appeal before us was limited in its scope it will be possible to state the relevant facts even more shortly. The twilight turn worked by Mrs Calder is in practice staffed exclusively by women. It is one of three part time turns staffed by women, the other two being one from 7 am to 12.30 pm and another from 12.30 pm to 5 pm. Mr Charlton, her comparator, and she are both machine operators in packing departments although the particular item of confectionery is different. He is a full time worker who is required to work a week and week about rotating two shift cycle, one shift being 8 am to 4 pm and the other 4 pm to midnight. He receives a shift premium of 20% of his pay calculated on a special calculator rate, the weekly amount being £28.08 at the time of the hearing. Both she and he have the same basic pay.Other shifts are worked at Fawdon, the permanent night turn already mentioned, a permanent day shift and a 3 shift rotating cycle. There are women employed on the regular shifts and on the rotating shifts and they receive exactly the same pay as men similarly employed including the shift premiums when paid.Mrs Calder and Mrs Cizakowsky who are two out of 23 applicants are all members of the GMB Trade Union which is recognised by the Company along with other unions. The terms and conditions of employment are negotiated nationally between the Company and the unions through a Joint Negotiating Council.Although the Company before the Industrial Tribunal relied on three separate material factors to establish their defence under s.1(3) of the Equal Pay Act, 1970, only one remains in issue. Of the others, one that market pressures required the payment of the premium to recruit employees of a satisfactory standard was abandoned as a separate point before the Industrial Tribunal and the other, that collective bargaining pressures had been stronger in relation to the comparators, including Mr Charlton than in relation to the applicants including Mrs Calder, was rejected by the Industrial Tribunal and there is no cross appeal from that. That therefore leaves the claimed material factor which remains in issue. It was stated in the Company's notice of appearance as follows:-
"The fact that her comparator is required to work rotating shifts in alternate weeks, namely a day shift and an evening shift. The differential in pay reflects this inconvenience of being required to work rotating shifts."
The Industrial Tribunal first addressed the question whether the factor which consisted of the requirement to work rotating shifts was genuine and held that it was, rejecting a submission that there was intentional discrimination, although not actuated by malice, and concluding that there was no intention of discriminating against Mrs Calder or any other woman in the Company's employ. That finding is not challenged. There is therefore no question of any sham reason being put forward by the Company.Next the Industrial Tribunal applied the principles set out in Lord Keith's speech in Rainey v. Greater Glasgow Health Board [1987] ICR 129 and considered whether it could be said that the difference between Mrs Calder's case and the case of Mr Charlton was material, that is to say as Lord Keith interpreted the word "material", relevant and significant.The Industrial Tribunal in identifying the differences between Mrs Calder's case and that of Mr Charlton stated the hours of work of Mrs Calder and Mr Charlton as already set out above and said that where they overlapped they could be described as unsocial. The overlap is between 5.30 pm and 10.30 pm. It is clear that there is both an area of difference and of overlap between the respective hours of work. The next difference identified was that Mr Charlton was classified as a shift worker in the relevant JNC Agreement whereas Mrs Calder had always been regarded as a day worker. The Industrial Tribunal concluded that these differences were relevant because they related to the respective terms and conditions of employment of Mrs Calder and Mr Charlton. No-one challenges that.It was against the Industrial Tribunal's reasoning in arriving at the conclusion that the differences were significant, as well as relevant, that the appellant's argument by Professor Hepple was principally directed, although the conclusion that the differences were genuine, relevant and significant was not challenged. The foundation of the argument was that it was accepted on behalf of the Company in evidence that although the shift premium was paid to shift workers because of the disruption to life that shift working brings there was an element in the shift premium paid to Mr Charlton for working unsocial hours. Until 1982 shift workers were paid a premium for all hours worked between 4.30 pm and the following 7.30 am, but in 1982 the premium was spread across all the shift worked hours so that shift workers such as Mr Charlton ceased to receive pay on alternate weeks with and without the shift premium and received equal pay packets in each of the two weeks in the rotating cycle. Notwithstanding the apportionment it remained the fact that the shift premium was paid for shift work in unsocial hours. Professor Hepple's submission was that the Industrial Tribunal asked itself the wrong question in deciding as it did that the material factor to which the variations between Mrs Calder's contract and Mr Charlton's contract was genuinely due was not a difference of sex but a difference related to an employee who works on a rotating shift and one who works on a part-time evening shift.The question which in Professor Hepple's submission should have been asked was whether, after allowing for the fact that the male comparators are compensated for inconvenience, they are still being paid at a rate exceeding that paid to the appellants. The argument is based on the premise that the shift premium was attributable to two factors, one inconvenience from shift working and the other working unsocial hours. Because the unsocial hours element was to a substantial extent a common factor of Mrs Calder's case and Mr Charlton's case it fell to be disregarded as a material difference so that if the element of the shift premium attributable to inconvenience of shift working, which was recognised in itself to be a material difference could be stripped out, what was left would be clear evidence of direct discrimination because there would be no relevant material difference left.The main support relied upon for this analytical approach to the identification of the material factor to which the variations is genuinely due is the decision in National Coal Board v. Sherwin [1978] ICR 700. The complainants in that case were women canteen workers employed on day shifts by the NCB. They claimed to be engaged on like work with their comparator Mr Tilstone a male canteen worker employed permanently on the night shift. There was a very slight overlap in the hours worked between 5.30 am and 6 am at one end of the day and from 10 to 11 pm at the other. The complainants' terms of remuneration were less favourable than Mr Tilstone's both as regards rates of pay and in that he received, but the complainants did not receive, concessionary coal. The first and principal issue was whether Mr Tilstone and the complainants were, as the Industrial Tribunal held, engaged on like work. That is not of any direct relevance here but in upholding the Industrial Tribunal on this aspect of the case the Employment Appeal Tribunal said at p.703
"if the man and the woman do the same work, the mere fact that they do it at different times is of no importance: the disadvantage of working at night, or at other inconvenient times, can be compensated by an additional night shift premium, or other appropriate arrangement; but this is no reason why the person, usually the man, should receive by way of remuneration a sum which is greater than necessary to recognise the fact that he works at night or other inconvenient times: and if he does there is no reason why the woman should not be remunerated to the extent of the excess."
This passage was directed at the question whether or not the two were engaged on like work as each other and not to the question whether there was a material difference, other than the difference of sex, between the two cases which was the genuine reason for the variation between their contracts. On the other hand there was an express contemplation as a permissible process of a discounting operation by an Industrial Tribunal from gross pay of the amount properly attributable to the fact that the worker in question works at inconvenient hours. At p.704 Phillips J said
"Thus the industrial tribunal - without falling into the error of setting itself up as a wage fixing body - may adjust the remuneration upon a claim by her so that it is at the same rate as the man's, discounting for the fact that he works at inconvenient hours, and she does not."
In dealing with the question which is the one with which we are concerned namely whether the employer has established the defence under s.1(3) of the Equal Pay Act, 1970, the Employment Appeal Tribunal in Sherwin's case concluded that the Industrial Tribunal was right in rejecting the NCB's answer under that sub-section. Two principal reasons were given in support of that. First, it was held that there was not a real case of protected employment explaining the retention of a rate of pay which was higher than that of other workers engaged in like work, "red circle cases" as they are often called. We are not concerned with that aspect. Secondly, and more significantly, for our purposes, the Employment Appeal Tribunal held that there was no reason why the employers, the NCB should not over the years since Mr Tilstone and his predecessor were first engaged have phased out what they regarded as discriminatory rates of pay and adopted a common scale for canteen workers irrespective of sex and with an appropriate but not exaggerated allowance for night work. In this there was found to be justification for the Industrial Tribunal's conclusion of fact that part of the difference between the complainant's basic rate and Mr Tilstone's basic rate (plus concessionary coal) was due to the fact that Mr Tilstone was a man. In our view NCB v. Sherwin , is authority for the proposition than an industrial tribunal can legitimately in an appropriate case analyse the constituent elements in a rate of pay and conclude, where appropriate, that on analysis a part of the variation between a complainant's and a comparator's rate of pay is due to the difference of sex between them. We do not consider that it is authority for the proposition that an Industrial Tribunal is bound as a matter of law to seek to apportion a rate of pay between the different factors that go to establish it either as as a matter of historical fact or as a matter of economic justification. What is always required for the Industrial Tribunal dealing with a defence under s.1(3) of the Equal Pay Act, 1970, is for it after identifying variations between two relevant rates of pay to identify whether there is a material difference (other than sex) between the two cases to which the variation is genuinely due. The identification of the material difference is essentially a question of fact. The Industrial Tribunal is not in any way bound by the manner in which the contractual relationship between the parties is defined, but is in our view entitled and bound to look at all the facts of the case in identifying the reason to which the variation is genuinely due. Nor is this limited to what is commonly called a sham where a transaction is dressed up to look like another different transaction.So far we have not mentioned either the possibility of indirect discrimination nor any question of objective justification of the variation between the complainant's and the comparator's contracts. Indirect discrimination is not relevant in this case because Professor Hepple stated in terms, no doubt for excellent reasons, that he was not founding his argument upon it. We need not therefore take time to examine that possibility. Professor Hepple did however submit that it was necessary, even in a case such as the present, where what is relied upon is direct discrimination, to show objective justification for a variation between the contracts of the complainant and the comparator. That submission was based partly on what Lord Keith said in Rainey v. Greater Glasgow Health Board, supra.

(b) of the Sex Discrimination Act, 1975, he said

"This provision has the effect of prohibiting indirect discrimination between women and men. In my opinion it does not, for present purposes, add anything to s.1(3) of the Act of 1970, since, upon the view which I have taken as to the proper construction of the latter, a difference which demonstrated unjustified indirect discrimination would not discharge the onus placed on the employer. Further, there would not appear to be any material distinction in principle between the need to demonstrate objectively justifiable grounds of difference for purposes of section 1(3) and the need to justify a requirement or condition under s.1(1)(b)(ii) of the Act of 1975."
The last quoted sentence, unlike the two preceding sentences, was not limited in terms to indirect discrimination. Nevertheless, in our view it was not intended to apply to all cases of discrimination, whether direct or indirect for the following reasons. First of all, single sentences in judgements, even in speeches in the House of Lords, must not be treated as though they were enactments, but must be read in the context in which they are placed and in particular in the context of the facts of the decision and the arguments addressed to the Court. Rainey's case was one of indirect discrimination. The rest of the paragraph quoted from Lord Keith's speech was in terms limited to indirect discrimination. There is no internal reason to suppose that he was intending any wider ambit for the last sentence of that paragraph than the earlier ones. Secondly, the introduction of a requirement for objective justification in cases of direct discrimination would run counter both to existing well established authority and to the basic scheme of the sex discrimination legislation. In National Vulcan Insurance v. Wade [1978] ICR 800 the Court of Appeal held that the defence under s.1(3) of the Equal Pay Act, 1970, was available to an employer which operated a grading system among employees engaged in like work. Geoffrey Lane, LJ at p.811 said
"It is not for the tribunal to examine the employers' system to see if it is operating efficiently or even fairly. The only enquiry is whether it is genuine - that is to say, designed to differentiate between employees on some basis other than sex."
The European Court of Justice authorities such as Bilka-Kaufhaus G.m.b.H v. Weber von Hartz [1987] ICR 110 that establish the requirements of objective justification are all concerned with indirect discrimination.The basic scheme of the Equal Pay Act, 1970, and the Sex Discrimination Act, 1975, with which it has to be read is not to secure equal pay for equal work across the board but to eliminate pay differential on grounds of sex. To introduce a requirement of objective justification outside the legitimate field of indirect discrimination, would radically alter the scope of the legislation and take it far beyond its legitimate aim of eliminating differences in pay on the grounds of sex.Professor Hepple also relied upon the Northern Ireland Court of Appeal decision Macpherson v. Rathgael Centre for Children and Young People, [1991] IRLR 206, a case of direct discrimination, where a woman was paid less than a male comparator who was paid too much because of a gross but understandable error in fixing his scale of pay. The Northern Ireland Court of Appeal applied a test whether or not the employer who relied upon s.1(3) of the Equal Pay Act, 1970, could prove objectively justifiable grounds for a variation between the woman's contract and the man's contract. We accept that this is an authority which supports Professor Hepple's argument on the need for objective justification not only where indirect discrimination but also where direct discrimination is relied upon in relation to a defence under s.1(3) of the Equal Pay Act, 1970. It also hardly needs stating that the views of the Northern Ireland Court of Appeal, consisting of Hutton, CJ and Kelly, LJ command great respect. However the respondent employer was unrepresented and National Vulcan Insurance v. Wade supra, was not cited to the court. The decision is not binding on this Tribunal, and, as will appear from what we have said earlier upon the subject of objective justification, it is in our view not in accordance with established authority and general principle. We therefore do not consider it appropriate to follow it. In doing so we emphasise that we do not question the correctness of the view there expressed that an absence of an intention to discriminate is insufficient to establish a defence under s.1(3) of the Equal Pay Act, 1970, whether the case is one of direct or indirect discrimination. It is only with regard to the additional requirement of objective justification in a case of claimed direct discrimination that we respectfully disagree.It was common ground between the parties before us that where there is a difference between the case of a complainant and the comparator the whole of the difference, and not just a part of it, must be genuinely due to the material factor relied upon where s.1(3) is raised as a defence. The difficulty in the present case in our view resides in the question whether the Industrial Tribunal was entitled to take a broad brush and categorise as the material factor the difference between the employer working a rotating shift and an employee working a part time evening shift notwithstanding the fact that the two categories of worker both worked some, albeit not identical, unsocial hours and that an element in the premium payment received by the rotating shift workers was for working unsocial hours.In favour of the broad brush approach we were referred to MacGregor v. GMBATU [1987] ICR 505 and NAAFI v. Varley [1977] ICR 11. The latter was a very plain case where the material difference relied upon was that the complainant worked in Nottingham and the comparator in London and that was obviously not a difference of sex. We do not derive much help from that case. MacGregor's case, supra, is more helpful in that the proper approach to a defence under s.1(3) of the Equal Pay Act, 1970, was examined. Wood J. at p.514 said"It seems to us that in approaching a defence to an equal value claim under section 1(3)(b) the tribunal will have to ask itself the following questions. 1. Was there a variation between the woman's contract and the man's contract? In this case the answer must be `Yes, pay." 2. Was there a material factor, other than the difference of sex, which was a material difference between the woman's case and the man's case or other material difference. 3. Has the employer proved that it was more probable than not that the variation was due to that material factor? We should add that there may of course be more than one material factor to be considered.The words `due to' are words of causation, which is a question of fact and degree - a matter for the tribunal if there is evidence to support its findings."He went on to quote the passage cited above from Geoffrey Lane LJ's judgement in National Vulcan Insurance v. Wade, supra.In our view this appeal turns on the question whether there is a logical impossibility in concluding as the Industrial Tribunal dida)that the material factor to which the whole of the variation between Mrs Calder's and Mr Charlton's contracts was genuinely due was the difference between rotating shift working and working the twilight turn and at the same time findingb)that an element in the premium paid to Mr Charlton was that he worked unsocial hours.Since the question is one of fact and degree nothing short of logical impossibility seems to us enough for us to say that there is an error of law involved in the Industrial Tribunal's decision. We are not persuaded that the decision of the Industrial Tribunal is a logically untenable one. There can in our view be a valid analysis which ascribes the whole difference between the contracts to working rotating shifts in one case and the twilight turn in the other notwithstanding that the two share an element in common viz unsocial hours, for which the complainants receive no compensation. It is a matter for judgement, by the Industrial Tribunal whether there is one material factor or more than one. We do not consider that it would be right for us to interfere with their decision upon this.There was also a submission made to us that what is called the principle of transparency applied here to establish that the Company had failed to enable its workers to identify how much of the shift premium was paid in respect of inconvenience and how much in respect of working unsocial hours. The Danfoss case [1991] ICR 74 was relied upon. In that case employers paid supplements over basic pay by reference to certain criteria which were not revealed to the employees, and the European Court of Justice held that in such circumstances where it was shown in relation to a relatively large number of employees that females were paid less on average than males, ie there was prima facie indirect discrimination, the employers had not discharged the onus of showing objective justification. That seems to us to be concerned with a separate issue unrelated to the problem before us and concerned with the question what an employer has to establish to refute a prima facie case of indirect discrimination. Moreover there is nothing in the least opaque, if that is the right word for the opposite of transparent, in the Company's method of calculating rates of pay. Everyone knew that if you were on rotating shift work a shift premium was payable whereas it was not payable on the twilight turn. There were no mysteries about how employee's rates of pay were calculated. We do not consider that the principle of transparency is of any help in the case before us.Both sides referred to Enderby v. Frenchay Health Authority [1991] ICR 382 (EAT) and so far unreported in the Court of Appeal of which we were supplied with a transcript. The Court of Appeal there referred to the European Court of Justice certain questions on the footing that in a case of indirect discrimination the employer had established that part (which was more than de minimis but not the whole) of the difference in pay between the two jobs in question assumed to be of equal value was objectively justified. Neither party before us asked for a reference to the European Court of Justice and upon the view which we have taken of the matter which is essentially that the Industrial Tribunal was not disentitled from giving effect to the view which it took of the facts we see no need for such a reference.The appeal will be dismissed.