PREBON MARSHALL YAMANE (UK) LTD v MS L ROSE [2002] UKEAT 1000_02_0312

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 1000_02_0312Case No Appeal No. EAT/1000/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
PREBON MARSHALL YAMANE (UK) LTDAPPELLANTMS L ROSERESPONDENT
Before
His Honour Judge J McMullenDate 3 December 2002
[1]APPEARANCES For the Appellant MR DAVID READE (of Counsel) Instructed By: Messrs Herbert Smith Solicitors Exchange House Primrose Street London EC2A 2HS JUDGE J McMULLEN QC : This case is about sex discrimination, equal pay and Employment Tribunal and EAT procedure. It is an appeal by the Respondent in proceedings against the decision of an Employment Tribunal sitting at London Central, Chairman, Mr C.P.Baron, Miss O'Sullivan and Mr Warner-Howard, over six days in May 2002, promulgated as a reserved decision with extended reasons on 24 July 2002.[2]The Applicant and Respondent were represented by Counsel. We will continue to refer to the parties as below. Both Counsel made written submissions which were considered by the Employment Tribunal. The proceedings[3]The Applicant raised a number of claims which were dismissed, principally about wrongful dismissal and breach of contract, and a claim that she was discriminated against, contrary to the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 . There is no appeal against those decisions.[4]The Tribunal upheld the Applicant's claim under section 2(2) of the Equal Pay Act 1970 that the terms of her contract of employment relating to salary should be modified so as to be not less favourable than those of a male comparator employee, Ian Gable. It dismissed her claim for parity with another employee, Mr Warren. It further held that the Applicant was discriminated against contrary to the Sex Discrimination Act 1975 in respect of the arrangements for the payment of bonus to her in November 2001. We think that is an error in the decision and it should be 2000.[5]The Respondent appeals against those two latter findings. The Applicant did not appeal against the dismissal of her claim for parity with Mr Warren. Background facts[6]The Respondent is engaged in broking international currencies. The Applicant commenced work with the Respondent in July 1998. As is obvious she is female, the comparators male. The Applicant was initially employed on a full-time basis working from 7 am to 5 pm, but following a period of maternity leave, returned in March 2000 to work on a part-time basis from 7 am to 2 pm. The Respondent organised its operations around desks, that is, groups of people who were engaged in broking in particular currencies.[7]On 1 June 2000 the Applicant moved to the Non-deliverable Forwards and Emerging Markets Desk managed by Mr Bright. Mr Bright was a substantial contributor to the evidence before the Employment Tribunal by way of a written witness statement, further evidence-in-chief and, of course, cross-examination.[8]An incident arose on 19 January 2001 which led to the Respondent dismissing the Applicant on 7 March 2001 for gross misconduct. The Applicant's claims for unfair dismissal and breach of contract emanating from that were rejected by the Tribunal.[9]For her other claims, the Applicant relied on two comparators. The Respondent accepted that each was engaged on like work with the Applicant. The temporal extent of that concession sadly remains in dispute, since we have been told that following the decision on liability, which is the subject of this EAT hearing, a further hearing was conducted on remedy three months ago during the course of which an application was made for a review. We understand from oral reasons given on the day, but not yet reduced to writing, that the Tribunal decided that the equality clause operated in respect of the whole of the Applicant's time and not simply from her time on the relevant desk. The substantive appeal 1. Inconsistency in the defence to equal pay[10]The Respondent raises two issues in relation to the Equal Pay Act case. First, the Respondent contends that the Tribunal acted inconsistently, when it examined the genuine material factor defence under the Equal Pay Act section 1(3). It referred in respect of Mr Gable to length of service with the Respondent. The Respondent contends that this was not supported by the evidence, since the evidence of Mr Bright was that Mr Gable's experience as a broker was relevant, rather than his length of service with the Respondent . It was that which constituted the basis for the Respondent's case of genuine material difference.[11]The Tribunal rejected that defence. It did, however, accept such a defence in respect of Mr Warren. Mr Warren was more experienced than the Applicant, having some 11 years' experience of broking, and the Tribunal accepted, following Mr Bright's evidence, that that was a genuine material difference between the Applicant's case and Mr Warren. Thus, it is submitted by Mr Reade, there is an inconsistency in the Tribunal's approach. We agree that that is an argument which should be developed at a full hearing. 2. Multiple claims in equal pay[12]Secondly, it is contended that the Tribunal acted inconsistently in its approach to the two cases. As Mr Reade put it in his Skeleton Argument:
"The Applicant's case was therefore inherently inconsistent in that she sought modification to two different sets of contractual terms. Despite an invitation to do so, in the Respondent's closing submissions, the Applicant failed to clarify her position and continue to maintain these inconsistent cases."
[13]The inconsistency Mr Reade advances is this. The Applicant claims under the statute that her contract should include an equality clause with the terms upon which Mr Gable was engaged. He is higher paid than Mr Warren and the Applicant. The Applicant also contends that she should have parity with Mr Warren's terms, who of the three of them is the middle ranking in pay.[14]We see no inconsistency. Since the statute individualises the claim and requires a bilateral comparison there is nothing wrong in an Applicant claiming parity with more than one employee within the same employment. Indeed, the leading authorities in this field indicate multiple comparisons being made: see Leverton v Clwyd Council [1989] ICR 33 HL; British Coal Corporation v Smith [1996] ICR 515 HL. Indeed, it may well be prudent so to do, for the Applicant will never know precisely the availability and extent of any material factor defence. This case is a good example. She failed against Mr Warren because of the material difference accepted by the Tribunal, but succeeded against Mr Gable. We consider that the approach required by the Equal Pay Act does allow the Applicant to compare herself with more than one comparator and it is for her, and her alone, to decide with whom she should be compared: see Ainsworth v Glass Tubes & Components Ltd [1977] ICR 347 EAT Thus, we see no arguable basis for the submission which Mr Reade makes and we dismiss that ground of the appeal. 3. Sex discrimination and EAT procedure[15]Turning then to the claim of sex discrimination, the Applicant claimed that she had received less by way of bonus in November 2000 than her comparator. The issue was joined in two ways. The Respondent in its Notice of Appearance denied any discrimination but also challenged the jurisdiction of the Tribunal to hear this claim. The Originating Application was presented on 6 June 2001 and therefore was apt to encompass any claim made on, or after 7 March 2001: Sex Discrimination Act 1975 s 76(1). As the Tribunal found, the bonus issue was determined in November 2000.[16]We have been told by Mr Reade that the Applicant, in her argument presented by Counsel, contended that the Tribunal had jurisdiction, since there was a continuing act which included a number of features amongst them the administration of the bonus. Continuing acts are provided for by Sex Discrimination Act 1975 s 76(6). He also tells us that the written argument on behalf of the Applicant included a submission that if the Tribunal found that the claim was out of time, it should exercise its discretion to extend the jurisdiction on the basis of what was just and equitable: Sex Discrimination Act 1975 s 76(5).[17]We are satisfied, from Mr Reade's account, that the jurisdiction issue was still live at the hearing. However, the Tribunal has not indicated whether it accepted either of those and, if so, what reasons were behind it.[18]The approach that we would take is this. If we were the EAT at the full hearing, and we accepted having heard argument from the Applicant, Mr Reade's case that the Employment Tribunal did not make a decision and give reasons on his jurisdiction point, we would have to allow the appeal. It would be remitted to the same or a differently constituted Employment Tribunal. That would add further delay to this appeal.[19]However, another approach commends itself to us. In English v Emery Reinbold [2002] 1 WLR 2409, [2002] EWCA 605 at paragraph 25, the Ord Phillps MR, giving the judgment of the Court of Appeal, said this:
"If an application for permission to appeal on the ground of lack of reasons is made to the appellate court and it appears to the appellate court that the application is well founded, it should consider adjourning the application and remitting the case to the trial judge with an invitation to provide additional reasons for his decision or where appropriate his reasons for a specific finding or findings."
[20]Just four days earlier a majority division of the Court of Appeal (Brooke, Arden LJJ; Sedley LJ dissenting) had decided Tran v Greenwich Vietnam Community Project [2002] EWCA Civ 553 , [2002] ICR 1101 [2002] IRLR 735 . It indicated, construing section 35 of the Employment Tribunals Act 1996 , that it was not possible, at an EAT preliminary hearing, to remit a case to an Employment Tribunal since that was not " for the purpose of disposing of an appeal" : see Arden LJ paragraph 37, Brooke LJ paragraph 51. In Tran the Court was not referred to an earlier decision of the Employment Appeal Tribunal Yusuf v Aberface [1984] ICR 850 a judgment of the EAT. In that case Nolan J indicated that a Tribunal which had not made a decision or which had not given proper reasons for its decision had not discharged its statutory function and until it did. At a full hearing it could be asked to continue to deliberate and that is what occurred. He said "… the procedure of calling upon an Industrial Tribunal to amplify findings and reasons which were incomplete or obscure is not often used because it is not often required but there is ample precedence for its use in decisions both of the Appeal Tribunal and of the National Industrial Relations Court [cites authorities]. Secondly, by virtue of the then procedure regulations the Industrial Tribunal must give the reasons for their decision. As has been made clear by the Court of Appeal in Union of Construction, Allied Trades and Technicians v Brain [1981] ICR 542, the purpose of giving reasons is "to tell the parties in broad terms why they lose, or as the case may be, win". Unless and until reasons are given with sufficient clarity to fulfil that purpose there can be no question of the Industrial Tribunal being functus officio…." The EAT went on to apply a judgment of Eveleigh LJ in Varndell v Kearney & Trecker Marwin [1983] ICR 683, 685, with whom Griffiths and Dillon LJJ agreed, that remission to an Employment Tribunal in such a case is the "obvious course" to take. In both those cases there was a full hearing, but it seems to us the principle of remission was applied in a general way.[21]The Court in Tran was referred to a subsequent decision of the EAT Reuben v Brent London Borough Council [2000] ICR 102 , 107 where Morison P held that Yusuf was wrongly decided. The EAT did so (see paragraph 15) on the ground that Nolan J in Yusuf referred to only one Court of Appeal authority which assisted his conclusion. Morison P did not say why that one precedent which was binding on Nolan J's EAT was not binding on his own EAT. What he did rely on was a conclusion of May LJ in Leverton (above) [1989] ICR 33 46 "… in my respectful opinion an appeal to the appeal tribunal should be decided upon the industrial tribunal's reasons as originally drafted, and I deprecate any procedure whereby these may be supported or enlarged by and direct communication between the industrial tribunal on the one hand and the appeal tribunal on the other." That conclusion started with a contention of the Applicant Ms Leverton that there was no evidence to justify a finding by the Employment Tribunal that there was a genuine material difference between her case and her comparator's. The EAT entered into correspondence with the Employment Tribunal Chairman who also produced a selected extract from his notes of evidence. Having looked at this material, the EAT upheld the Applicant's contention: see [1987] ICR 158, judgment of French J, Mr GH Wright and Mr JA Powell given by the latter. That finding was overturned by the Court of Appeal with whom the House of Lords agreed. So the finding by the Employment Tribunal was restored. The "remission" point was referred to only by May LJ.[22]Morison P's reasoning in Reuben was cited by only Sedley LJ in Tran : see paragraphs 19-21. He declined to follow Morison P's "powerful caveat", based as he put it, not on section 35 but on legal principles of finality of litigation.[23]The position on the authorities seems to us to be as follows. A unanimous Court of Appeal judgment ( Varndell ) was correctly followed by the EAT in Yusuf . It was held to be wrong by the EAT in Reuben on the basis of a holding by May LJ in Leverton , on the different point that correspondence between the Employment Tribunal and the Employment Tribunal should be eschewed. The majority in Tran did not apply Reuben and were not referred to Varndell . A unanimous Court of Appeal in Emery , albeit not specifically dealing with Employment Tribunal appeals, decided that an appeal could be remitted to the first instance tribunal for additional reasons or for specific reasons on a point, where none had been given. It is our duty to try to apply the law in these precedents. We consider the way forward coincides with the interests of justice and points to our taking the latter approach. We would follow Nolan J in Yusuf since we hold it was based on binding Court of Appeal authority, and is anyway a sensible and practical way of doing justice.[24]We would also come to the same result by a more direct route. Emery seems to us to be of general application. The preliminary hearing procedure in the EAT is analogous to the application for permission to appeal to the Court of Appeal. At both hearings, the question is whether the appeal stands a reasonable prospect of success. If it does, the EAT at a preliminary hearing with the Appellant in attendance, and since our new Practice Direction 9 December 2002, with the opportunity being given to the Respondent to make written submissions or in certain cases to attend, gives permission for it to proceed to a full hearing, and directions. The modern approach to litigating appeals consistently with the overriding objective allows for remission to the first instance tribunal for it to give reasons where they seem wanting. Thus it is often possible to achieve at an early stage the result which would be achieved at a much later stage. The appellate court is then able at the permission to appeal hearing, or on the papers, to see the whole picture and to decide the application with the benefit of seeing written reasons for each relevant decision. If permission is granted, the full hearing will have the same advantage.[25]Applying this pragmatic approach, we hold that where an Employment Tribunal has not made a decision on a live issue in the case, or has not given reasons for a decision, or has not given reasons which tell the parties why they have won and lost, the EAT on a preliminary hearing may adjourn and seek the same from the Employment Tribunal. Usually this can be done by a request to the Chairman which he or she can quickly answer by reference to notes. Otherwise the Chairman might find it necessary to reconstitute the Tribunal. It should not be necessary to recall the parties.[26]As a practical way forward in this case, we will invite the Employment Tribunal to give reasons for its decision that the Applicant was discriminated against on the issue of bonus. It need hear no argument, nor any evidence, but simply give reasons for its finding in paragraph 47 of its reasons. 4. The sex discrimination appeal[27]Proceeding then on the basis that there was jurisdiction for the Tribunal to hear this claim, Mr Reade advances an argument based on the substance of its decision. He accepts that the Tribunal correctly directed itself on an approach which we know to derive from King v The Great Britain-China Centre [1992] ICR 516 CA and Glasgow City Council v Zafar [1998] ICR 120 HL in paragraph 47 of its reasons. The Tribunal found a difference of gender and a difference of treatment and therefore called upon the employer to explain what the difference was. This case was heard under the amendment to the burden of proof by Art 10 of the Equal Treatment Framework Directive 2000/78/EC, inserted by Sex Discrimination Act 1975 section 63A. What the Employment Tribunal said was this: see paragraph 48:
"The distribution of the bonus pool is clouded in uncertainty. There appears to have been no method whatsoever about it. The distribution was at the total discretion of the manager of the Desk, and that discretion appears to have been exercised arbitrarily. The evidence given by Mr Bright as to the difference in the levels of bonus was largely subjective, and unsupported by hard evidence. We therefore consider ourselves entitled to draw the inference that the difference in the bonus payments was caused by the sex of the Applicant, and so do. We therefore find that the Applicant succeeds in respect of this part of her claim."
[28]Mr Reade submits that the Tribunal has failed to make a finding that it rejected the explanation given by Mr Bright. We are in no doubt that it did so. The words we have cited indicate condign criticism of the subjective way in which the bonus was arbitrarily dealt with in the absence of any objective criteria, which we take to be the hard evidence cited by the Tribunal. The Tribunal did not commit the error noted in Glasgow City Council v Zafar (above) of being bound to draw an inference, but simply that it was entitled in those circumstances to do so if it felt fit. It did so. We see no error of law in that essentially factual decision, it being accepted that the direction in law was correct and therefore we dismiss that aspect of the appeal. Directions[29]Because the parties still await written reasons for the decision given in September on remedies, we have considered what would be the most effective directions in this case and we propose, subject to hearing Mr Reade again, the following. The Tribunal should provide the reasons we have sought. Mr Reade has leave to amend his Notice of Appeal, if so advised, to deal with the reasons which may be forthcoming, within 14 days of receipt of them, and the Applicant will have 14 days to amend any Respondent's Answer. The hearing of this case will go forward on the remaining basis that we have indicated to a full hearing. If the written reasons and any amendment to the Notice of Appeal are available in time they can be put in front of the full hearing. We understand there may be further objections on appeal to the reasons of the Tribunal on the remedies hearing. That, of course, since it relates to further decisions by the Tribunal will be the subject of a new Notice of Appeal but we would not wish to put the parties to the trouble of another preliminary hearing. So this case will be listed for a full hearing for one day, Category C, at a time when the further reasons of the Tribunal in the instant appeal, and any amendment to the Notice of Appeal, and the written reasons in relation to the remedies hearing, and any Notice of Appeal and Respondent's Answer based on that have been lodged. They will be served on the Applicant in the usual way. Skeleton arguments will be exchanged to cover all issues 14 days before the hearing. If any further directions are sought, as a result of our judgment, this can be reserved to me and I will give directions.[30]An application has been made by Mr Reade for the Chairman's notes but, on further discussion, we have put forward a pragmatic approach which may well avoid a lengthy transcription of the Chairman's notes. This relates to the evidence that Mr Bright gave or did not give about length of service and length of experience in broking. Mr Reade, on behalf of his client who was attended by solicitors at the hearing, will draft a passage which will be submitted to the Applicant's team with an invitation that they agree or object to the formulation. We encourage the parties, if they can, to reach an agreement on this aspect of the evidence bearing in mind that Mr Bright gave an extensive witness statement which was exchanged in advance and a supplementary witness statement. If the parties cannot agree, then the matter can be put back in front of me and I will give a further direction which may include asking the Chairman to produce a note.