Yorkshire Blood Transfusion Service v Plaskitt [1993] UKEAT 108_93_3006

EAT
Yorkshire Blood Transfusion Service v Plaskitt
[1993] UKEAT 108_93_3006 · 1993-06-30
MR JUSTICE TUCKEY : This is an appeal by Yorkshire Blood Transfusion Services from a decision of an Industrial Tribunal sitting at Leeds who, after a three day hearing on a complaint by The Respondent, Mrs Plaskitt, unanimously decided that the Appellants had contravened the Equal Pay Act 1970 ("The Act"). They so declared and adjourned matters of arrears of remuneration and/or damages to a date to be fixed. It so happened that that date was 1st July 1993. We heard the appeal on 30th June 1993 and were invited to announce our decision at the conclusion of the hearing if we felt able to do so, so that the parties should know where they stood for the hearing the following day. We unanimously decided that the appeal ahould be allowed and that as this was a case in which no further findings of fact were required, it was appropriate to substitute our decision for that of the Tribunal. We so informed the parties and dismissed the Respondent's complaint. We said that we would give our reasons for these decisions in writing. Here they are.The Appellants' central complaint is that the Industrial Tribunal misdirected itself in law in rejecting a "material difference" defence under S.1(3) of the Act because it -(a) looked for objective justification of such alleged difference when such was not necessary and/or;(b) failed to apply the right test namely, (i) whether there was a material factor, other than sex which was a material difference between the Respondent's (her) and the comparator's (his) case; and(ii) whether such variation in pay was genuinely due to such material factor.The undisputed facts which we extract from the findings of the Industrial Tribunal and the documents which were put before them are as follows. The Respondent was employed by the Appellants, who operate within the National Health Service, as a Medical Laboratory Scientific Officer (MLSO) Grade 1. Under the Whitley Council Rules there is an incremental pay scale for MLSOs based on length of service and experience which put the Respondent at point 19 on the scale. For MLSO 1s the scale ranges from point 14 to point 21. There were three further discretionary points (22, 23 and 24) beyond this, but an MLSO 1 could only be paid at these rates if the job they were doing carried additional responsibilities or required additional skills. In the relevant department at the time of the hearing before the Industrial Tribunal there were 20 MLSO 1s: 12 females and 8 males (including the comparator). There was no suggestion of inequality in any case other than that of the comparator.The comparator was Mr Ennis. It is necessary to explain when and how he came to be recruited by the Appellants. In 1989 he was also working within the National Health Service, at Kingston Hospital in Surrey as an MLSO 2 which is a higher grade than Grade 1. He applied for a Grade 2 post with the Appellants but was unsuccessful. Nevertheless he impressed those interviewing him and in January 1990 he was offered a post by the Appellants as an MLSO 1. It appears from the evidence that it was his hospital experience which made him attractive to the Appellants. Mr Ennis accepted that offer subject to his current salary and annual leave being maintained. The Appellants agreed and Mr Ennis started work on 19th March 1990. In order to implement the assurance of a salary no less than he had been earning at Kingston (ignoring any relevant London Weighting) he was put at point 23 on the MLSO scale. It is accepted that the Appellants were not entitled to do this under the Whitley Rules to which we have referred. He could and should have been put at point 21.In the course of the hearing before the Industrial Tribunal the Appellants called evidence from five witnesses who spoke in different ways of the difficulty in recruiting experienced MLSO 1s. The Industrial Tribunal accepted that suitably experienced MLSO 1s were not easy to find but qualified this by saying:
"...the evidence indicates that the problem was not particularly acute and was being tackled by developing trainees ... ."
In 1991 Mr Ennis applied to be moved to point 24 on the pay scale. Backed by his Union he asserted that the Appellants had agreed to protect his salary scale on transfer. A panel chaired by Dr Robinson, who was his head of department, decided that as the position was not made clear when Mr Ennis was appointed he would be moved to point 24 but no further advancement beyond this point would be permitted. Under the Whitley Rules he could not have been put beyond point 21.Before coming to the Reasons given by the Industrial Tribunal for their decision it is necessary to refer shortly to what happened in the course of the hearings before them since they obviously attached considerable importance to this. They say:
"The respondent's defence in the notice of appearance seems to display little understanding of the issues and it was only at the first hearing on 16 May 1992 at which the respondent indicated through Mrs Wilson, solicitor, then representing the respondent that the employers were pleading the material factor defence under section 1(3) of the Act. Even then the defence was ill-defined. At that first hearing, when it emerged from the evidence that the respondent had not appreciated that they had been operating outwith the Whitley Council Rules the tribunal deemed it sensible to adjourn the proceedings for a few months in the hope that Mr Clark the union representative for Mrs Plaskitt and the respondent might well be able to resolve the issue if the management were prepared to acknowledge an error and find a satisfactory way of rectifying it."
By the time of the resumed hearing on 14th October 1992 no meeting had taken place and the Appellants invited the Tribunal to continue with the hearing. The Tribunal say:

"...That we think regrettable but of course it is entirely a matter for them."

When we resumed on 14th October 1992 it was to find that the respondent was now represented by Mr Dalziel of Counsel in place of Mr Wilson. Mr Dalziel's submission is that the material factor defence applies. ..."It was of course common ground that there was a variation between the Respondent's and Mr Ennis' contract of employment and that the onus was upon the Appellants to establish the "material difference" defence.In dealing with this the Industrial Tribunal said:
"17. The tribunal is simply not able to accept as a fact Mr Dalziel's submission that the higher payment to Mr Ennis was expressly designed to meet a recruitment problem in 1990. The fact was that in 1990 it was a personal payment designed to ensure that Mr Ennis's then current salary could be maintained. Now that, if it had been properly done, might well have formed a justification providing that it was a temporary arrangement as would be the case with the so called `red circling' principle of maintaining someone's wage or salary until others catch up - a system with which the tribunal is familiar. But the respondent in setting Mr Ennis's pay at a level outwith the Whitley Council Rules by incorrectly applying the discretionary points then proceeded to perpetuate it on a permanent basis and even to worsen the situation by advancing Mr Ennis to a further point on the scale.
18. It seems to the tribunal that in perpetuating the situation the respondent ought to have appreciated the consequences of the provisions of the Equal Pay Act of which they cannot as employers of some substance plead ignorance. There was plenty of opportunity of rectifying the situation in so far as it arose by error but instead of doing that they made it even worse by specifically advancing Mr Ennis through a further discretionary point to which he was not clearly entitled under the rules. Thus in the event the matter went well beyond a simple earlier error. We are quite unable to accept as a fact that that was justified in order to keep Mr Ennis employed by the respondent.19. Thus we regard Mrs Plaskitt as having a very strong case for saying in these circumstances and on the above facts, as indeed she does through Mr Clark's attractive written submission - that it cannot be a successful defence for the respondent now to say that these matters constitute a genuine objective justification for Mrs Plaskitt as a woman being paid in January 1992 less than Mr Ennis, allowing of course for their legitimate differences on their points on the incremental scale. It was never pleaded in the Notice of Appearance. It was ill defined at the first hearing, and it has come over to the tribunal at the second hearing as having been put together very much as an afterthought to present a lame excuse for having breached the equal pay provisions. We find unanimously as a fact that we are not satisfied that the material factor defence succeeds. Accordingly we conclude that there has been a contravention of the Equal Pay Act 1970 and we do declare."This was a "like work" case. There was a variation between the Respondent and Mr Ennis' contract as to pay. Accordingly the effect of S.1(1) and (2) of the Act was that the Respondent was to be treated equally subject to the S.1(3) defence. Section 1(3) provides that:
"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) ... must be a material difference between the woman's case and the man's;"
The effect of these provisions therefore is to presume discrimination unless the contrary is shown.To establish the defence under S.1(3) the employer must prove on a balance of probabilities that:(a) there was a material factor, other than the difference of sex, which was a material difference between the two cases; and(b) the variation was genuinely due to that material factor.(See McGregor v. GMBATU [1987] ICR 505 at p.514 ).The Appellant's case was that the material factors which explained the difference were the need to secure and retain Mr Ennis' services by protecting his salary against the background of a recruitment problem and their own mistake in paying him more than they should have done. On analysis, however, the difference can only be explained by the mistake, since but for this, the Appellants would not (and could not because it would have been ultra vires) have placed him on the scale above point 21 however much they wanted or needed to employ him and no complaint of inequality could have been made had they done so. We do not therefore need to deal with the criticisms of the Industrial Tribunal's finding that the Appellants had failed to establish a material difference based on the need to secure and retain Mr Ennis' services, although we note that they found that this might have been justified "if it had been properly done" and was only temporary. If it had been properly done the Respondent would have had no cause for complaint.The real point was and is whether the Appellants could rely on their own mistake as a material factor since self-evidently it did explain the difference. It is clear from the Industrial Tribunal's findings that they thought that they could not. They looked for "an objective justification" of the difference and could not find one. If this was the right approach, then we accept that, as the mistake could not be objectively justified, the Tribunal's conclusions cannot be faulted.But was it the right approach? The Appellants submit that it was not. They rely on the decision of the EAT in Calder v. Rowntree Mackintosh [1992] IRLR 165. There the EAT concluded that in a case of direct discrimination it was not necessary for the employer to objectively justify the difference. (See paragraphs 15 - 18) We find the reasoning in that decision compelling. It went to the Court of Appeal [ 1993] IRLR 212 where the appeal was dismissed. However, the Court of Appeal do not deal in their judgments with the objective justification point.Ms Mountfield in her able submissions on behalf of the Respondent relied on arguments considered and rejected by this Tribunal in Calder . She also referred to the decision of the Court of Appeal in Enderby v. Frenchay Health Authority [1992] IRLR 15 at paragraphs 58 and 59, and submitted that Calder and the decision in National Vulcan v. Wade [1978] IRLR 255 , relied on in Calder could no longer be regarded as good law. However, Enderby was a case of indirect discrimination and could be distinguished on this basis, as the EAT did with other cases of indirect discrimination in Calder . Ms Mountfield further submitted that there was no basis for distinguishing between direct and indirect discrimination since these words do not even appear in the relevant part of the Act. Nor however, we observe, do the words "objective justification". As a matter purely of construction the word "genuinely", which appears before the words "material factor", suggests that the question is a subjective one. The concepts of direct and indirect discrimination are the mainstays of the Sex Discrimination Act 1975 and as Bridge LJ. (as he then was) said in E Coomes (Holdings) Ltd v. Shields [1978] IRLR 263 at P.269 .
"In the sphere of employment the provisions of the Sex Discrimination Act and the Equal Pay Act aimed at eliminating discrimination on grounds of sex are closely interlocking and provide in effect a single comprehensive code."
There is therefore nothing wrong in principle in our view in distinguishing between direct and indirect discrimination when considering a material difference defence under S.1(3) of the Equal Pay Act 1970.For these reasons we do not accept Ms Mountfield's submissions and gratefully follow the decision in Calder.It follows that we think that the Industrial Tribunal erred in law in the approach which they adopted in this case. They do not in their reasoning set out and answer the McGregor questions, but we are satisfied that if they had done so and had properly directed themselves in law they would have answered both questions in favour of the Appellant. There was no evidence of intention to discriminate or of actual discrimination; indeed all the evidence was to the contrary. Ms Mountfield sought to persuade us that nevertheless the case should be remitted to enable this or another Industrial Tribunal to consider whether it was only because he was a man that Mr Ennis was treated in the way he was. There was no evidence to support any such suggestion in our view. The plain fact is that the difference occurred because of a mistake and not because of anything which was "tainted with gender-based discrimination".For this reason we decided that this was an appropriate case to substitute our own conclusion based on a correct application of the law to the facts. That we have done.