CARLISLE CITY COUNCIL v MRS AUDREY BULMAN & OTHERS [2002] UKEAT 1120_01_0212

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 1120_01_0212Case No Appeal No. EAT/1120/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
CARLISLE CITY COUNCILAPPELLANTMRS AUDREY BULMAN & OTHERSRESPONDENT
Before
His Honour Judge Peter Clark Mr P A L ParkerDate 2 December 2002
[1]APPEARANCES For the Appellant MR MURRAY SHANKS (of Counsel) Instructed by: Mr John Eggars Carlisle City Council The Civic Centre Rickersgate Carlisle Cumbria CA3 8QG For the Respondent MISS MELANIE TETHER (of Counsel) Instructed by: Ms Shantha David Unison Employment Rights Unit 1 Mabledon Place London WC1H 9AJ HIS HONOUR JUDGE PETER CLARK By their Originating Applications to the Carlisle Employment Tribunal the Applicants, Ms Robertson and Mrs Bulman, workers at a hostel for women in London Road, Carlisle, sought to compare themselves with male workers in a hostel in John Street Carlisle, for the purposes of the Equal Pay Act 1970 (EqPA). Those three comparators were Steve McRonald, Peter Leech and Andrew Steele. All were employed by the Respondent Council, who owned and operated the hostels. The Applicants contended that they were employed on like work and/or work of equal value to that performed by the men at John Street.[2]By their Notices of Appearance, the Respondents denied that they were engaged in like work or work of equal value to that of their chosen comparators. Alternatively it was contended that the variation in grade (and thus pay) between the Applicants and their comparators was genuinely due to a material factor which was not the difference in sex (the material factor defence EqPA section 1(3).[3]A direction was given, it was unclear to us whether as a result of an application by either or both of the parties or by the Tribunal of its own motion, that the material factor defence should be taken as a preliminary issue. A preliminary hearing took place before a Tribunal chaired by Mr J R Nichol. Following a two day hearing and a further day's deliberations in private, by a reserved decision promulgated with Extended Reasons on 13 July 2001, the Tribunal rejected the material factor defence. The case was to proceed to a full hearing; a direction was given for the appointment of an expert. Against that Decision the Respondent Council now appeals. EqPA[4]By section 1 there is deemed to be incorporated into a woman's contract of employment an equality clause having the effect that where the woman is employed on(a) like work or(b) work rated as equivalent or(c) work of equal value when compared with that of a man her terms of employment shall not be less favourable than those of the male comparator.[5]Section 1(3) provides a defence to the employer to a claim for equal pay if he proves that the variation between the terms of the woman's contract and that of the male comparator is genuinely due to a material factor which is not the difference of sex and that factor -(a) in the case of like work or work of equivalent value must be a material difference between the woman's case and the man's, and(b) in the case of an equal value claim may be such a material difference.[6]'Like work' is defined in section 1(4). A woman is employed on like work with men if, but only if, her work and theirs is of the same or a broadly similar nature. Work of equal value, not being like work or work rated as equivalent (not material in the present case) is, by section 1(2)(c), in terms of the demands made on her (for instance under such headings as effort, skill and decision) of equal value to that of a man in the same employment.[7]The material factor defence differs, on the face of section 1(3), depending on whether the claim for equal pay is based on like work or work of equal value. In the former case (section 1(3)(a) ) there must be a material difference between the woman's case and the man's. In the latter, there may be a material difference. Thus the defence is wider in an equal value case than in a like work case. In the former, the genuine material factor, other than sex, need not amount to a genuine material difference.[8]It follows, in our judgment, that a necessary pre-condition to determining whether the section 1(3) defence is made out is to decide whether, in the present case, the Applicant's case is properly based on like work or work of equal value. It is advanced in the alternative and both contentions are denied on the face of the forms IT1 and IT3. Preliminary issues[9]This Appeal Tribunal and the Court of Appeal has often pointed out the dangers of selecting points which are unsuitable for preliminary hearing; points which would be better considered in the overall factual matrix of the case as a whole.[10]We regard this case as an example of a point which ought not to have been taken as a preliminary issue. The assumed basis for the enquiry was never made clear; was this a like work or equal value case? There is a considerable overlap of evidence between the first issue, had the Applicants established a prima facie equal pay claim and this second issue, if so, has the Respondent established the material factor defence?[11]However, this is not the basis of this appeal and no objection was taken to the course followed below, although the Tribunal recognised the difficulty at paragraph 2 of their Reasons. In these circumstances we shall proceed to consider the appeal on the assumption, without in any way deciding the point, that this is a like work case. We do so because Mr Shanks, appearing for the Respondent below, apparently accepted that the relevant test for determining whether the section 1(3) defence is here made out is that adumbrated by the House of Lords in Glasgow City Council -v- Marshall [2000] IRLR 272 , itself applying the earlier House of Lords approach in Strathclyde Regional Council -v- Wallace [1998] IRLR 146 . Both were like work cases. It follows that we must approach the present case on the basis of the section 1(3)(a) defence. The facts[12]The London Road Hostel, at which the Applicant, together with two other women on the same grade, worked at the material time, provided a refuge for "battered wives". The John Street Hostel, at which the three male comparators and one woman on the same grade worked, provided accommodation for single, vulnerable men.[13]Prior to 1994 the main group of workers at both hostels were on the same grade with similar job descriptions. Staff at each hostel were, the Tribunal found, interchangeable and London Road staff provided cover for the John Street (then Lowther House) hostel.[14]In 1991 some of the John Street staff applied for re-grading from grade 3 up to grade 5. That application was refused by the Respondent. The employees appealed, as they were contractually entitled to do, to an external body, the North Western Council for Local Authorities (the Council). Decisions of the Council were binding on employer and employee. The appeal was partially successful. They were upgraded to grade 4.[15]The Respondent implemented that decision in respect of all relevant workers at John Street including the female Applicant and one male, Steve McRonald, who had not been a party to the appeal. Staff at London Road remained on grade 3. Both John Street and London Road employees remained on similar job descriptions.[16]The contracts of employment of staff both at London Road and John Street provided that claims for regrading could only be made where the employees' duties changed.[17]The London Road employees, including these two Applicants, then applied for regrading citing changes in duties which differed from those relied on by the John Street staff in their earlier application. The Respondent rejected the London Road staff application. The Tribunal found that it was reasonable to assume that the Respondent's reason for that rejection was that the London Road staff had not made out a change in duties sufficient to justify regrading. It was the Respondent's position that these applications were more to do with seeking parity with the John Street staff than any change in duties.[18]The London Road staff appealed to the Council but, for reasons which remain obscure, that appeal was not pursued to a determination. The Tribunal thought that was attributable to the trade union's handling of their case, rather than any lack of will on the part of the Applicants. Had the appeal been pursued and succeeded the Respondent would have implemented any regrading of the London Road staff determined by the Council. The material factor defence[19]Applying the guidance in the Strathclyde and Glasgow cases we take the test for an employer seeking to establish the section 1(3)(a) defence to be as follows:(1) is the Respondent's explanation or reason for the difference in pay between the Applicants and their male comparators genuine and not a sham or pretence?(2) Is the less favourable treatment of the Applicants due to this reason? The factor must be a significant and relevant factor.(3) The reason must not be the difference of sex.(4) In a like work case the factor relied on must be a significant and relevant difference between the woman's case and the man's case. Glasgow paragraph 18 per Lord Nicholls The Tribunal Decision[20]The Tribunal directed themselves in accordance with the four-fold test in section 1(3), identifying, as the fourth question, whether the factor or reason advanced by the Respondent was or may amount to a material difference (cf section 1(3)(a) and (b) ). In the event they avoided that distinction by making no finding on the fourth question (Reasons paragraph 28).[21]In relation to the first three questions their conclusions are set out at paragraphs 25-27. We should record that reasoning in full:
"25 The Tribunal did not accept that the proffered reason was genuine. On the basis of the respondent's own documentation, the upgrading of the John Street Hostel employees was not justified but the Council overruled this. This should have meant that when the job description was rewritten the duties had changed but the main change was to expand an item that was, again according to the respondent's documents, already covered in the original job description. No other attempt was made to redefine the duties at the John Street Hostel, which would seem to show that there was not any change thought worthy of being recorded. Despite the two groups of employees having what was virtually a shared job description, the respondent did not honour the normal practice of applying the decision of the Council to all of those with the same job description. When the London Road Hostel employees sought regrading, this was recognised as a seeking of parity and opposed. 26 However, if the reason was genuine, the question would then arise as to whether the less favourable treatment was for the reason proffered by the respondent. The Tribunal accepted that it was normal practice for employees with a common job description to benefit from a successful appeal by a colleague on the same job description and this happened in relation to one employee at John Street Hostel. Given the similarity in the job descriptions, it would seem to be for the respondent to justify not applying the benefit uniformly to all of those with the same job description. Having failed to redefine the jobs, evaluate the jobs or to recognise any increase in duties/responsibilities at John Street Hostel, it would not appear that the respondent made any effort to examine and/or justify creating a differential. In normal circumstances, it appeared to the Tribunal that the employees at London Road Hostel would have been upgraded as a result of the Council decision but the respondent failed to do so. Instead, it left those employees to seek a regrading by any means that were open to them. Accordingly, this was not a situation where nothing was done because nothing was required but rather one where normal practice was abandoned without any apparent assessment being made of whether this was appropriate or not. The respondent chose not to follow normal procedure at the time and now seeks to justify this retrospectively without putting forward any evidence to show that this was the reasoning that was applied at the time. 27 Looking then to see whether the reason was not the difference in sex, the respondent failed to establish any reason other than sex to the satisfaction of the Tribunal."
[22]Thus they answered all three questions adverse to the Respondent. It is those findings which Mr Shanks challenges in this appeal. The Appeal[23]It is convenient to consider each of the Tribunal's three findings under section 1(3) in turn.(1) Was the reason for the difference in grading and thus pay between the Applicants and their male comparators a genuine reason? In both the Glasgow and Strathclyde cases there was no dispute before the House of Lords that the reasons advanced by the employer were genuine. In the present case issue was taken by the Applicants' representative, Miss Brown, below. The reason advanced by the Respondent and recorded at paragraph 6 of the Tribunal's Reasons consisted of an account of the factual history. The Tribunal interpreted that reason as being the fact that the John Street staff had been regraded following the Council decision whereas the London Road staff had not secured a regrading decision from the Council, their appeals not having been pursued. We have carefully considered what is said at paragraph 25 of the Tribunal's Reasons but we are quite unable to discern what it was about the Respondent's reasons, good bad or indifferent, that is said to be other than genuine. The critical finding by the Tribunal was that normally employees sharing the same job description would all receive the benefit of the Council's decision; that included London Road as well as John Street employees. However, the Respondent did not accept that the jobs at London Road and John Street were the same. That was the evidence of Mr Cyril Wright called on their behalf. For the Tribunal to find that the reason advanced was not a genuine reason it was necessary for them to find expressly that the Respondent did not in truth believe that any real distinction existed between the jobs at London Road and John Street. They made no such finding.(2) Was the less favourable treatment due to this reason? In paragraph 26 of their Reasons the Tribunal embark on an enquiry into whether the Respondent has justified not applying the regrading secured by the John Street workers on appeal to the Council to the London Road workers. We accept Mr Shanks' submission that the second question raises an issue of causation. Justification is irrelevant at this stage. The position was made clear by Lord Nicholls in the Glasgow case (paragraph 19). Justification may arise where it is for the Respondent to negative the suggestion that the disparity in pay is tainted by indirect sex discrimination. In the absence of sex discrimination he is not obliged to justify the pay disparity. In considering the question of justification at this causation stage the Tribunal fell into error.(3) Not the difference in sex. Ms Tether has sought to persuade us that the Tribunal's enquiry into the justification question at paragraph 26 of their Reasons fed into their short conclusion expressed at paragraph 27. We cannot accept that submission. It seems to us that on this issue it was for the Tribunal to determine whether in fact a disproportionate impact on women amounting to prima facie indirect sex discrimination was present in the difference in treatment here and if so, to determine whether the Respondent had justified the less favourable treatment. Alternatively, whether the less favourable treatment was directly discriminatory, in which case the question of justification also arises in the context of Equal Pay according to the European Court of Justice in Enderby -v- Frenchay Health Authority [1994] ICR 112 and Brunnhofer [2001] IRLR 572 . Neither question, in our judgment, has been addressed by the Tribunal. In short, we are persuaded that the Tribunal's reasoning in concluding that the material factor defence is not made out cannot stand and must be set aside. Conclusion[24]The appeal is allowed to the extent only that the Tribunal's finding that the Respondent cannot rely on the section 1(3) defence is set aside. However the remaining directions made by the Tribunal will stand. The matter will proceed to a full hearing at which a fresh Tribunal will consider the full case, determining first whether the Applicants were employed on(a) like work or(b) work of equal value to that of their male comparators and if so, whether the material factor defence is made out under either section 1(3)(a) or (b) as appropriate. For that purpose an expert shall be appointed to prepare a report as directed by the original Tribunal.[25]Before parting with this case we return to our earlier observations about the hearing of preliminary issues.[26]It is common ground between Counsel now appearing before us that in the event of this appeal succeeding the case should be remitted for a full hearing, to include the material factor defence should it arise. We agree. This preliminary issue was heard on 9-10 April 2001. Some two years will have been lost before this case is heard in full by a Tribunal. That is an unhappy state of affairs.