Keep v Lloyds Retail Chemists Ltd [1998] UKEAT 319_97_2001

EAT
Keep v Lloyds Retail Chemists Ltd
[1998] UKEAT 319_97_2001 · 1997-11-27
MR JUSTICE LINDSAY : On the 30th January 1997 the Industrial Tribunal at Reading under the Chairmanship of Mr J.R. Hardwicke sent to the parties its reserved unanimous Decision and Extended Reasons. The Tribunal ruled that Ms J. Keep failed in her complaint against her employer, Lloyd's Retail Chemists Limited, that she should be entitled to equal pay pursuant to the Equal Pay Act 1970 , Article 119 of the Treaty establishing the European Community and the Equal Pay Directive. The Tribunal accordingly dismissed her claims. By her Notice of Appeal of the 10th March 1997 Ms Keep appeals against that ruling and that is the appeal now before us.Before we come to the questions raised in the appeal we shall set out something of the background. Lloyd's Retail Chemists Limited ("the Employer") is a large retail chemist which operates a chain of some 900 shops, one of which is at Blackbird Leys, Oxford where Ms Keep has been and still is employed. She began work there in September 1993. The Employer's Staff Rules and Conditions of Employment applicable generally to the Employer's staff, including Ms Keep, divide staff into four categories. "Full-Time Staff" are those of the staff who usually work more than 39 hours a week, "Part-Time Staff" are those who normally work 16 hours or more a week but less than the standard full-time hours. "Casual Staff" are staff who normally work less than 16 hours a week. A further category comprises those who have worked a regular 8 hours or more a week for a continuous period of 5 years; such persons, who would otherwise be "Casual Staff", are treated as if Part-Time Staff. The Employer's Staff Rules and Conditions of Employment make provision for holidays and holiday pay for Full-Time Staff and Part-Time Staff but, as for Casual Staff, provide:-"Casual Staff ....... are not entitled to any paid holiday leave and therefore any holiday taken must still be taken with the approval of the Manager, but at the employee's own expense. Casual Staff are not paid for Bank Holidays unless they are worked".The Rules and Conditions also provide for sick pay for Full-Time and Part-Time Staff but none for Casual Staff. Ms Keep was and is a member of the Casual Staff and, as the Industrial Tribunal summarised it:-
"The substance of the Applicant's complaint was that, as against part-time and full-time staff, she suffers unequal treatment in relation to her remuneration in that she received no sick pay when absent sick and no holiday pay when on holiday. To achieve these benefits she would have had to have completed five years of service thus becoming a member of the part-time staff or alternatively to have taken on a full-time post with the Respondent."
She could also, of course, have achieved those benefits by working 16 hours or more but less than 39 hours a week as an ordinary member of the Part-Time Staff.It is Ms Keep's case before us that she had relied on four separate types of claim before the Industrial Tribunal, namely claims under Article 119, under the Equal Treatment Directive, the Equal Pay Act and the Sex Discrimination Act . As each of the four is linked with the symbol "and/or" the case was therefore available to be put in 24 different ways, an undesirable proliferation that serves only to confuse. However, by the time Mr Brown, on behalf of Ms Keep, replied, he had, in effect, narrowed Ms Keep's claims down to one only, a claim under the Equal Pay Act . After reference had been made to Section 6 (6) of the Sex Discrimination Act 1975 and to Barry -v- Midland Bank plc [1997] ICR p.192 at p. 206 E, Mr Brown, whilst making no formal concession, had, in practical terms, accepted that the 1975 Act was not concerned with discrimination on the grounds of sex in the matter of pay. He recognised too, as Barry shows at p. 206 E-F, firstly that the Directive cannot be invoked directly against the employer here and, secondly, that, to use the words of Barry at p. 206:-"Insofar as the Applicant is asserting a free-standing claim for breach of the directly effective provisions of Article 119 of the EEC Treaty, the Industrial Tribunal ..... has no statutory or inherent jurisdiction to determine it. The Tribunal's jurisdiction is confined to cases brought under specified legislation, such as the Equal Pay Act 1970. The specified legislation does not include the European Communities Act 1972 or European Community legislation".The original unwieldy 24 possible formulations were thus, for the purposes of the appeal, reduced to a more manageable one, a claim under the Equal Pay Act (albeit that the Act would need to be construed with the purposes and language of the Treaty and the Directives in mind).

Article 119 provides:-

"Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work. For the purpose of this Article, "pay" means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly in respect of his employment from his employer. Equal pay without discrimination based on sex means -(a) that pay for the same work at piece-rates shall be calculated on the basis of the same unit of measurement;(b) that pay for work at time-rates shall be the same for the same job".We shall have in mind, too, the Equal Pay Directive (75/117/EEC) without finding it necessary here to set it out.

The Equal Treatment Directive provides at Article 1 (1):-

"The purpose of this Directive is put into affect in the Member States the principle of equal treatment for men and women as regards access to employment, including promotion, and to vocational training and as regards working conditions and, on the conditions referred to in paragraph 2, social security. This principle is hereinafter referred to as "the principle of equal treatment"."

Article 2 continues:-

"1. For the purposes of the following provisions the principle of equal treatment shall mean that there shall be no discrimination whatsoever on grounds of sex either directly or indirectly by reference in particular to marital or family status."

Article 5 of the Equal Treatment Directive provides:-

"1. Application of the principle of equal treatment with regard to working conditions, including the conditions governing dismissal, means that men and women shall be guaranteed the same conditions without discrimination on grounds of sex."

Turning to the Equal Pay Act 1970, Section 1 (1) provides:-

"1. If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one".Ms Keep's contract does not include an equality clause and thus has to be deemed to include one. She was thus entitled to present a claim to the Industrial Tribunal in respect of any contravention of that deemed equality clause - Section 2(1) of the 1970 Act. The equality clause thus deemed to be amongst her terms of employment has the effects specified in Section 1(2) of the 1970 Act. Without his ever attempting to explain precisely which provision of the statutory equality clause was said to be contravened by the Employer, Mr Brown did argue that the terms of Ms Keep's employment were less favourable than the terms of a similar kind in the contract of a male comparator, arguing on the wider basis that a considerably smaller proportion of women than men can in practice comply with requirements either that more than 16 hours a week should normally be worked or that at least 8 hours a week should normally be worked for a continuous period of not less than 5 years. We shall assume in Ms Keep's favour (but without deciding) that under the combined effect of the 1970 Act, Article 119 and the Directives such a claim is arguable if there are facts to support it.Amongst the facts which Mr Brown urges do support it are facts in relation to a "pool", an argument of a kind perhaps more frequently encountered under the Sex Discrimination Act 1975 and Race Relation Act 1976 . Again we shall assume, without deciding, that comparisons of a "pool" kind are appropriate to this 1970 Act case. At this point there emerges in the argument the first of the two broad headings under which the appeal was argued.It may be called "the pool of comparison". It was, it seems, Ms Keep's case below that when the constituents of an appropriate pool of employees was examined it could be seen that 81% of the appropriate pool consisted of women but that a higher proportion than that, 94% of the pool, worked less than 16 hours a week, the difference between the two figures representing, it was said, a measure of the discriminatory effect on women of the requirement that the benefits at issue would not be available to those who worked less than 16 hours a week. The Employer's case, however, was that if one looked to all of its staff at all 900 shops, some 7,108 employees, then 5,175 of them were seen to be "casual staff" and that both the percentage of the total staff who were women and the percentage of the casual staff who were women were the same - 94%. This, said the Employer, indicated that there was no relevant discrimination on which Ms Keep could rely. The Industrial Tribunal therefore had to examine whether the pool for which Ms Keep argued was indeed appropriate for the purposes of the kind of comparison which the Tribunal was invited to undertake.The identification of the appropriate pool for comparison is essentially a matter of fact for the Industrial Tribunal. We gratefully adopt, from a slightly different context, the dicta of the Employment Appeal Tribunal under Waite J in Kidd -v- DRG (UK) Ltd [1985] IRLR p. 190 at paragraph 20 where the Appeal Tribunal held as follows:-
"The choice of an appropriate section of the population is in our judgment an issue of fact (or perhaps strictly a matter for discretion to be exercised in the course of discharging an exclusively fact-finding function) entrusted by Parliament to the good sense of the Tribunals, whose selection will be influenced by the need to fit as closely as possible to the varying circumstances of each case. Of course in those exceptional cases where it can be shown that good sense does not prevail, and the Tribunal has chosen to make the proportionate comparison with an area of society so irrationally inappropriate as to put it outside the range of selection of any reasonable Tribunal, then the Tribunal would have fallen into an error of law which could be corrected in the appellate jurisdiction."
At the Employer's retail shops not only sales assistants (be they full or part-time or casual) were employed but also, as one might expect, other staff including pharmacists. At Blackbird Leys, for example, all the staff were casual and included a pharmacist who, unlike the retail staff (who were paid fortnightly), was paid monthly. More generally, in the Employer's shops pharmacists were in almost all cases full-time; only 18 out of 1,015 were not. To include pharmacists in any relevant pool was thus likely to conduce to increasing the proportion of the pool which worked full-time. The Industrial Tribunal held the pharmacists to be employees of a different category to the retail assistants; they held:-
"Pharmacists are a wholly different category from sales assistants such as the Applicant. We heard they are paid approximately six times more in remuneration after undergoing four years' training and the category of work is completely different from the Applicant's. Whilst on occasion it may be true that the pharmacists carry out sales duties, their role is more wide ranging, the pharmacist dispenses drugs and gives out advice on appropriate medication which is an arena in which sales assistants, such as the Applicant, are not involved. The pharmacists have their own negotiating body for remuneration and we heard in evidence that because there is somewhat of a shortage their bargaining position is currently high."
On that account the Industrial Tribunal left pharmacists out of the pool which Ms Keep had suggested. Once the pharmacists were so left out the position, as the Industrial Tribunal held it to be, was that:-
"Looking at the statistics relative to [the Employer] there is no doubt that when considering the total of its retail staff, the proportion of women working less than 16 hours per week (they being the disadvantaged group) is the same as those working 16 hours or more, namely 94% of the work-force. As [Counsel for the Employer] said, on the face of it there is no discriminatory effect."
It is Ms Keep's argument on this appeal that to leave out pharmacists in that way was wrong; the correct pool, it was argued, was either what Mr Brown called "the internal pool" - such retail assistants and pharmacists as were within the Employer's employ - or what he called "the external labour market" a pool of retail assistants and pharmacists to whom the Employer's Staff Rules and Conditions of Employment would have applied if members of that market had entered the Employer's employ.Looking first to that suggested internal pool, it can immediately be seen that it is not of retail sales assistants in the Employer's employ and no others (as pharmacists were included) and it is not of all staff working at the Employer's premises upon the Employer's Staff Rules and Conditions of Employment (as, for example, cleaners and secretarial staff would not be within it). Mr Brown argues that there is no requirement in law that the pool has to consist only of those doing like work. However, even if that is correct (as to which we need say nothing) it does not follow from that that when considering a discrimination alleged in relation to terms and conditions of employment an Industrial Tribunal is unable, within the guidance of Kidd -v- DRG supra , to reject as valueless, for the purposes of assessing a statistical argument as to discrimination against a sales assistant, a pool which adds to sales assistants (and adds only) persons as different in their qualifications, pay, negotiating methods and in relation to the demand for their services as pharmacists. The Industrial Tribunal gave, as it seems to us, sound reasons for regarding pharmacists as in a different category to retail sales assistants and we are quite unpersuaded that the Tribunal was wrong in law in rejecting a pool comprising only sales assistants and pharmacists. If pharmacists were to be added, why should not others upon the same terms and conditions also be added? Indeed it is difficult to see any reason why that particular pool had been created other than as an artificial construct that would yield figures in Ms Keep's favour. As to that, the Industrial Tribunal, in relation to going beyond a pool consisting only of the Employer's sales assistants, held:-
"We consider that the Applicant has endeavoured to incorporate further sub-groups to find numerical differences which happen to suit her."
The figures given to the Industrial Tribunal did not even reflect that there was a class of employee that was treated as if working for more than 16 hours a week by reason of having worked 8 or more hours a week for 5 years or more continuously.As for an "external" pool, the Equal Opportunities Commission had provided, somewhat hastily it seems, some statistics to Ms Keep's advisers which were intended to be industry-wide but which, upon analysis, seemed to indicate that on average each retail chemist shop employed 100 employees. The Industrial Tribunal rejected that evidence and gave reasons for doing so. They found it literally incredible. Moreover, insofar as the external pool which Mr Brown suggested was to be comprised of only sales assistants and pharmacists, it gave rise to the same doubts as had his internal pool; why, if pharmacists were to be added, should not others working in the very same retail premises and business and on the very same terms and conditions? Moving beyond the particular industry with which the case was concerned, the Industrial Tribunal was also told that women made up some 76% of the retail work-force but it seems that no evidence was laid before them to show that that proportion was observable in the retail chemist business.None of the pools put to the Industrial Tribunal was without some arguable flaw but here the Industrial Tribunal gave reasons for its rejection of those proposed by Ms Keep, reasons which have not been shown to us to be unfounded, let alone to suggest that any comparison made by the Tribunal was "irrationally inappropriate". The Tribunal chose to prefer the less or least flawed of the pools put before it. In particular, so far from being critical of, we would commend its common-sense inquiry into the credibility of the statistical evidence that it received. Many possible pools could have been considered. It is for the Applicant to prove his or her case and an applicant's case can fail for want of adequate evidence of any acceptable pool being laid before the Tribunal. Here, of the pools examinable and examined in any detail, only one (which included pharmacists) supported Ms Keep's argument and that pool was rejected for reasons which in our judgment disclosed no error of law. But, even had the Employer's suggested pool (one excluding pharmacists) been also rejected it would not have availed Ms Keep as, even so, Ms Keep's case on this point would still have failed for want of her having proved her case.We mentioned that there were two broad headings for the Appellant's argument. The second was "objective justification". Discrimination in terms of what would otherwise be a breach of the deemed equality clause can, so to speak, be sanitised if it is "genuinely due to a material factor which is not the difference of sex" - Section 1 (3) of the 1970 Act. Rainey -v- Greater Glasgow Health Board [1987] ICR p. 129 HL at p. 140 shows that at any rate where the discrimination is indirect (as is alleged here) an economic factor affecting the efficient carrying on of the employer's business can be a "material" factor within Section 1 (3). Rainey spoke of that being so where the discrimination had not been intentional although in later cases there has been a move towards intent being irrelevant and towards the proper distinction rather being between direct and indirect discrimination. It may be that it was that reference to intent in Rainey which led the Industrial Tribunal here to speak of intention where they held:-
"On the evidence before us, we find that there was no intention to single out casual or part-time workers or indeed any class of employee being male or female. The reason for the respondent's imposition of this requirement we do find was objectively justified for commercial reasons ........ Nevertheless we do find, if we had been against the respondent on the applicant's claim under the Equal Pay Act and of indirect discrimination, that the defence available under those Acts has been made out by the respondent and that the respondent's system has been shown to be objectively justified."
The evidence before the Industrial Tribunal had been that the Employer's retail chemists were the most profitable part of its group and that conferring on casual staff those particular benefits the deprivation of which Ms Keep claimed to be discriminatory would cost some £1m per annum and would have reduced profits in the year examined by some 2.6%. There was also some evidence, which failed to impress the Industrial Tribunal, that to confer such benefits on casual staff would have led to substantial additional administrative expenses. We have real doubts as to whether the Industrial Tribunal was correct in their conclusion on this point. The conferring of benefits will almost invariably cost something to fund and something to administer. However, this point, of course, would have arisen for decision by us only if the Employer had failed in its argument on the first point, the pool point, on which, as we have indicated, the Employer has succeeded. In the circumstances we think it best to do no more than tentatively to doubt whether the discrimination, had it existed, could have been regarded as objectively justified simply by reason of its costing something not regarded by the Tribunal as at all substantial to administer and its amounting to some 2.6% of profits to eradicate. A question of that kind is best left to a case in which it truly arises for decision.In conclusion, we have detected no error in law in the Industrial Tribunal's determination on the principal point falling for decision, the pool point, and accordingly we dismiss the appeal.