THE MINISTRY OF DEFENCE v (1) MRS C ARMSTRONG (2) MRS K GEORGE & OTHERS [2004] UKEAT 1239_02_0704

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 1239_02_0704Case No Appeal No. UKEAT/1239/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
THE MINISTRY OF DEFENCEAPPELLANT(1) MRS C ARMSTRONG (2) MRS K GEORGE & OTHERSRESPONDENTS
Before
Mrs Justice Cox Mr B Beynon Mr R N StrakerDate 7 April 2004
[1]APPEARANCES For the Appellant MS ELIZABETH SLADE QC and MR KEITH MORTON (of Counsel) Instructed by: The Treasury Solicitor Queen Anne's Chambers 28 Broadway London SW1H 9JS For the Respondents MR THOMAS LINDEN and MR DANIEL SQUIRES (of Counsel) Instructed by: Messrs Steel & Co Solicitors 2 The Norwich Business Park Norwich Norfolk NR4 6DJ THE HONOURABLE MRS JUSTICE COX Introduction In this appeal the MOD (the Appellants) contend that the Employment Tribunal erred in law in holding, in a Decision promulgated on 17 September 2002 after a preliminary hearing, that they had not established a "material factor" defence to the Respondents' claims for equal pay, pursuant to the provisions of the Equal Pay Act 1970 and Article 141 of the Treaty of Rome . The Respondents (hereafter referred to as the Applicants) contend that the Tribunal reached a permissible conclusion and that there is no error of law in their Decision. The Applicants further contend, effectively by way of cross-appeal that, on the facts and findings in this case, the Tribunal could legitimately have arrived at the same conclusion via an alternative route and that therefore, if necessary, the Tribunal's Decision should be upheld on that alternative basis.[2]In the early part of 2000 nine female Army Careers Officers ("ACOs") brought proceedings in the Tribunal under the Equal Pay Act 1970 against the Appellants, claiming equal pay with male Long Service List Senior Army Recruiters ("SARs") on the basis that they were engaged in like work, or alternatively work of equal value, with their named comparators. Two of them, the named Respondents to this appeal, were selected as test cases. There are three grades of ACO, namely ACO1, ACO2 and ACO3 in descending order of seniority. At the date of presentation of their Originating Applications Major Armstrong was an ACO3 and Colonel George was an ACO2. At the date of the hearing in November 2001 both of them were ACO2s.[3]Initially, at an interlocutory hearing held on 17 May 2001, the Tribunal directed that a preliminary hearing take place, to determine whether the Applicants were engaged on like work with their comparators. However, on the first day of that preliminary hearing, it was agreed between counsel for the parties that a new preliminary issue should be formulated and that the hearing should be postponed. The reformulated preliminary issue was as follows:
"Assuming that the Applicants were able to establish that the work of an ACO2 or ACO3 was like work or work of equal value to that of a Long Service List Senior Army Recruiter during the six years preceding the presentation of the originating applications, is the Respondent able to establish the defence provided by section 1(3) of the Equal Pay Act 1970?"
The parties then set out their contentions on that issue in written particulars. All the Applicants and the Appellants agreed to be bound by the outcome of the preliminary hearing.[4]The hearing to determine that preliminary issue was held on 19 to 21 of November 2001 and 21 January 2002. The Tribunal, in a Decision promulgated on 17 September 2002, held unanimously that the section 1(3) defence had not been established. The Relevant Facts[5]The facts found by the Tribunal are set out in detail at paragraphs 8 – 84 of their Reasons. There was very little factual dispute between the parties although there were, as the Tribunal noted, some "differences of perspective" (see paragraph 72 of their Reasons). The Appellants relied on the evidence of Colonel Harber OBE. The Applicants relied, in addition to their own evidence, on the evidence of Colonel Taylor and Mr. Hempshall MBE, a SAR. At the conclusion of the evidence both counsel provided detailed written submissions on the facts and the law for the assistance of the Tribunal. We shall summarise here the principal findings of fact, which are relevant to the issues to be determined in this appeal.[6]Each year the Army aims to recruit approximately 16,000 soldiers and 800 officers. The responsibility for recruitment lies with the Recruiting Group (RG), which is part of the Army Training and Recruiting Agency. The RG operates a number of Armed Forces Careers Offices and Army Careers Information Offices in 12 regions. Various categories of staff, both military and civilian, are employed within these offices. Two of these categories are the ACOs and the SARs. At the time when the Applicants presented their Tribunal applications the remuneration of SARs was greater than that of ACOs. The difference varied between different ACOs and SAR comparators, but was in the region of £10,000 gross per annum.[7]ACOs are retired army officers who have served not less than 16 years (in the case of a man) or three years (in the case of a woman) as an officer in the Regular Army and have then been re-employed in the post of ACO following a break in service. SARs, on the other hand, are serving soldiers who have extended their careers following completion of a 22-year engagement in the Regular Army, by entry to the Long Service List, without a break in service. There are a number of posts available to soldiers on the Long Service List, amongst which is the post of SAR.[8]According to a report prepared by Army Management Services in 1999:
"the ACO3 grade was created in the 1970s to aid recruiting to the women's service and which introduced female officers to the recruiting service for the first time. Because few female officers served sufficiently long to gain retired pay (military pension) they were not eligible to enter under the prevailing conditions and special ACO terms for females had to be introduced. These included service of not less than three years as a commissioned officer on the active list and a minimum rank of Lieutenant. This grade was later absorbed into the mainstream ACO structure and, under Equal Opportunity legislation, the ACO3 grade became available to all officers but the special conditions were retained for female officers."
[9]The Tribunal found at paragraph 17 that the basis for remuneration of ACOs and SARs during the material time was quite separate and distinct. SARs were paid according to their rank and service, on scales applicable to all soldiers in the Regular Army. In contrast ACOs were paid at a rate determined by their post, which equated to rates paid to retired officers, determined in accordance with Civil Service grades. Officers who had served more than 16 years became immediately entitled to a pension by reason of their previous service. This was called "retired pay". That retired pay was abated, in accordance with the Army Pension Warrant 1964, so that the total of their retired pay plus their ACO pay did not exceed the amount which they would have received had they still been serving in the Regular Army, in the rank held at the time they retired. This abatement provision ceased to apply when the recipient of retired pay attained the age of 55 and it applied not only to ACOs, but also to retired officers re-employed through the Ministry of Defence. It followed therefore that the remuneration varied between ACOs in accordance with the variations in retired pay. If the ACO was not entitled to retired pay then the remuneration would necessarily consist solely of the salary. Such a retired officer would receive a pension in due course, at the age of 60, and the extent of that pension would be referable to the period of service.[10]At paragraphs 21 onwards the Tribunal set out some of the history relating to the pay of ACOs and its linkage to that of retired officers, which had been a cause of concern generally for some years. In a letter dated 18 April 1990, Brigadier Lytle, Director of Army Services, referring to a complaint from an ACO about his pay and conditions, stated amongst other things that:
"…There are two anomalies which I believe should be resolved so I have directed the Inspector of Recruiting accordingly. These are the pay scales of ACO (women's services) since these individuals are generally not in receipt of pensions, and the denial of ACOs of RO appointments."
[11]Almost exactly seven years later, in April 1997, Brigadier Milne of the RG wrote to the ACOs stating that he had considered the pay/retired pay issue, but that he was left with no choice but "to accept the status quo". Colonel Holmes, Deputy Commander Recruiting and Liaison Staff (South East) replied, taking issue with many of the points he had made in his letter. Events moved on. By late 1997, the Retired Officers Association (ROA) had not accepted the Civil Service pay award and were continuing to negotiate on behalf of their members. In a memorandum from Major Bagley, dated 28 November 1997, it was said that COMD Recruiting had written to the Chairman of the ROA investigating the possibility of having some form of ACO representation on the ROA Committee to put forward ACOs' views on matters which affected ACOs. However, the Tribunal noted at paragraph 24 that the correspondence did not demonstrate any progress on that suggestion.[12]Subsequently Mrs. Jean North was given the task of conducting a study into terms and conditions of service of ACOs. Her report was presented in July 1998. In paragraph 3.5 of that report Mrs. North stated:
"like the rest of ROs their pension is abated so that they cannot receive more than an ACO (when added to their pension) than they would have if they were still serving in the Regular Army at the rank they were when they retired. This abatement stops once the officer reaches the age of 55. This is not the case of female ACOs who are not in receipt of a pension, it being non existent or preserved until they reached the 60 years of age."
[13]Army Management Services then carried out a review of Army Careers Officers. Their report was dated 1 March 1999. Concern was expressed in the introduction as to ACOs' discontent over remuneration and conditions of service, which had resulted in difficulties in filling vacant posts. At paragraph 28 of their Reasons the Tribunal set out the profile of the ACOs as at the date of that report. This was as follows:
"(a) 10 ACO1 grade posts, at Lt. Colonel rank. (b) 43 ACO2 grade posts, ranked Major to Lt. Colonel. 34 of them were designated ACO1C of AFCO. 9 were within recruit selection centres undertaking personnel selection officer duties alongside their regular army colleagues. (c) 22 ACO3 grade posts, ranked Captain to Major, within AFCOs, supporting and carrying out similar recruiting activities as the ACOs IC. (d) 8 of the current 56 ACO2/3 posts within AFCOs are held by female officers who were appointed some years ago to promote recruiting for the women's service."
Thus, as at March 1999, there were 75 ACOs, of which eight of the current 56 ACO2/3 posts were held by women. The report referred to the existing conditions of service for ACOs and stated, amongst other things, that:
"….Special conditions of employment apply to female ACOs principally that, unlike their male colleagues, they are not required to be in receipt of retired pay on appointment."
[14]At paragraphs 30 and 31 the Tribunal refer to the conclusions set out in the report. These included the conclusion that:
"…(d) There should be no rank, grade or gender anomalies or irregularities within the employment group"
. They referred also to one of the suggested options for reform which, it had been concluded, would satisfy the requirements by providing "equality for male and female ACOs." At paragraph 32 the Tribunal referred to paragraph 55 of the report, which specifically addressed the issue of retired pay abatement and commented as follows:
"male staff on retirement pay are subject to abatement as described below. The combined ACO salary and retired pay constitutes a total sum close to the basic pay of the equivalent serving rank. Retired pay abatement ceases at age 55 when ACOs gain the benefits of full retired pay and ACO pay. However, none of the present female ACOs are in receipt of retired pay and most may have only a small reserved army pension which is payable at age 60. For them, the ACO3 salary is not attractive. But, unlike their male counterparts, there is no condition of service that prohibits them from joining the TA and this outlet has been used [to] supplement pay and provide a continuing reserve commitment. It is possible that, in the future, a growing number of female applicants will have completed 16 years service and, therefore, would be in receipt of retired pay. In this situation, the current problems over low take home pay for their group will become less noticeable."
[15]Various figures indicated that the majority of female officers were appointed as ACOs within the 36-40 age bracket and could serve for up to 25 years. Most male officers were appointed in the 46-55 age bracket and would therefore serve as ACOs for up to 15 years. The report referred to the results of a questionnaire sent out to every ACO post holder, which had attracted a 90% response. The Tribunal noted that the report stated, at paragraph 91:
"…36.3% of ACO3s are female officers. Understandably, therefore, they place the higher level of importance on pay issues from whatever direction this may come. They do not relate pay issues directly with military alignment (possibly because of their lower military rank) and see the overtime issue as a way of supplementing their pay. It is surprising, however, that they do not rate promotion opportunities and other incentives very highly."
Colonel George's evidence was that the ACO salary remained as low as it did for many years because male ACOs had little interest in it rising. The Tribunal found at paragraph 35 that there was no evidence that ACOs had ever had any representation within the Retired Officers' group in pay negotiations.[16]Referring to the Applicants' contention that the low pay of ACOs had a disparate adverse impact on female ACOs, the Tribunal set out the relevant figures at paragraphs 37 and 38. "37 The position as set out in the Applicant's submissions (para 61) is: 'throughout the period in question 100% of the male ACOs were in receipt of retired pay, as indeed a minimum of 16 years service was a requirement for becoming an ACO for men. Female ACOs were only required to serve for three years in the Regular Army. In April 1993 one of the 13 female ACOs received retired pay; in April 1996, it was 2 out of 12; in April 1999, it was 0 out of 8; and in October 2000, it was 1 out of 8.' 38 As set out in paragraph 91 of the Applicant's submissions, the proportions of ACOs who were female at the same dates, taking a figure of 70 ACOs throughout: April 1993: 13 female ACOs: 18.6%. For ACOs 2 & 3: 21.7%. As at April 1996: 12 female ACOs: 17.1% of all ACOs; and 20% of ACOs 2 & 3. As at April 1999: 11.4% of all ACOs, and 13.3% of ACOs 2 & 3. As at October 2000, 8 female ACOs." At paragraphs 39 and 40 the Tribunal referred to the Appellants' submissions in relation to the statistics and how the Tribunal proposed to address the matter by reference to the terms of the preliminary issue, as follows: "39 The Respondent's submissions at paragraphs 31 and 32 make the following points. It is accepted that as a group, ACOs are predominantly male. Taking an average of all ACOs since 1990, the proportion of female ACOs is in the order of 12%. Taking ACO2s and ACO3s as a group, they are predominantly male, and have been at all material times. However, if ACO3s are isolated from other grades, they have been predominantly female. The statistics at bundle A, page 481 are said by the Respondents, taken with the evidence of the witnesses, to suggest a peak in 1993 of 60% falling in 1999 to about 30%. It is, however, stated that it is agreed that if ACO3s form the relevant class to be compared with SARs, then further and more detailed statistics will be required. 40. However, we note the terms of the preliminary issue: 'assuming that the Applicants were able to establish that the work of an ACO2 or ACO3 was like work of work of equal value' … We also note that in opening the case, Mr. Morton stated that the comparison now made was between a female ACO grade 2 or 3 and male Senior Army Recruiters. Both Applicants in this preliminary hearing are ACO2s, having been previously ACO3s." We shall return to the significance of these findings when we address the contentions of the parties and the Tribunal's conclusions below. (We note, by way of clarification, that it was the Applicants, not the Appellants, who were contending that if ACO3s were isolated from other grades, they had been predominantly female). The Tribunal's Conclusions[17]At paragraphs 4 and 5 of their Reasons the Tribunal set out verbatim the material factors, which had been pleaded by the Appellants and the Applicants' contentions in response that the section 1(3) defence was not made out. The Appellants' pleaded material factors were extensive and were expressed as follows:
"The variation in remuneration between ACOs and SARs is genuinely due to material factors which are not the difference in sex between female ACOs and male SARs which are, or may be, material differences between the female ACOs' case and the male SARs' case. In particular: "(a) Qualifications for the posts of ACOs and SARs are materially different, non-discriminatory and mutually exclusive: (i) ACOs are retired army officers who have (in the case of a woman) served not less than 3 years in the Regular Army as an officer and been re-employed in the post of ACO following a break in service. (ii) SARs are serving soldiers who have extended their careers following completion of a 22 year engagement in the Regular Army by entry to the Long Service List without a break in service. (b) Remuneration of ACOs and SARs is, and has historically been, determined by entirely separate and independent means each of which is subject to differing market forces. Each is paid according to different pay scales: (i) ACOs are paid at a rate determined by their post which equates to rates paid to retired officers. (ii) SARs are paid according to their rank which equates to rates paid to soldiers serving in the Regular Army. (c) The skills, knowledge and experience of ACOs and SARs are materially different: (i) ACOs possess organisational and managerial skills which enable them to exercise strategic control of and responsibility for army recruitment within their geographical area. (ii) SARs possess detailed knowledge of the day to day lives, obligations and pressures of soldiers in the Regular Army and the demands which will be placed upon them. This knowledge and experience enables them to fulfil their key duties as 'front-line' advisers to and assessors of potential soldiers. (d) ACOs and SARs receive materially different training which is tailored to their particular duties. (e) The liabilities of ACOs and SARs to the Regular Army are different:- (i) ACOs are not serving members of the Regular Army. They are not obliged to maintain and satisfy the fitness requirements of the Regular Army. They have no ability to be deployed on operations in the event of an emergency. (ii) SARs are serving soldiers in the Regular Army. They are required to maintain and satisfy the fitness and operational readiness requirements of the Regular Army. They are liable to be deployed on operations in the event of an emergency (as in fact occurs). (f) ACOs and SARs are subject to different schemes for promotion: (i) ACOs may be promoted in grade from ACO3 to ACO2 to ACO1 but may not be promoted in rank (by reason of their work as an ACO). (ii) SARs may (although will not normally) be promoted in rank. (g) The variation in arrangements under which ACOs and SARs were engaged were economically and administratively efficient."
Further the Appellants contended that the difference in remuneration of ACOs and SARs did not have a disproportionately adverse effect on women. Alternatively, if any of the material factors were found to be "related to sex either directly or indirectly" the Appellants pleaded that the difference in remuneration was justified, on the basis that it was at all material times appropriate and necessary in order that they might "recruit suitable people to become soldiers in the Regular Army."[18]The Applicants denied that the difference in remuneration at the material times was genuinely due to these factors, or that they were the material cause of the disparity in pay. They contended that the qualifications, skills, knowledge, experience, training, fitness requirements, liability for deployment and promotion schemes for SARs and ACOs were all the same before and after October 2000, as were any economic and administrative constraints. The respective levels of responsibility of ACOs and SARs and the nature of the work undertaken also remained unchanged since that date. The significance of the October 2000 date was that, as was common ground, the ACOs had as from that date received what the Tribunal described as a "dramatic increase" in their pay. ACO salaries had almost doubled, whilst those of SARs remained the same. This had resulted in ACOs receiving higher salaries than SARs. The Applicants submitted that this provided very strong evidence that there was in fact no causal connection between the factors listed by the Appellants and the pay differential.[19]In addition to denying that the pay difference was genuinely due to any of the factors being advanced by the Appellants, the Applicants pleaded their own positive case as to the cause of the pay disparity about which they complained. They accepted that ACOs and SARs had always been paid according to different pay scales. However, they contended that historical factors, which caused the different pay scales to operate as they did, were tainted by sex discrimination. The fact that all the male ACOs were in receipt of retired pay was alleged to be a substantial cause of the historical attitude of the MOD to the appropriate salary for ACOs as a whole. It was also said to have a material impact upon the bargaining position taken, the pressure or lack of it by ACOs as a whole for a greater salary and the way in which market forces operated. In relation to the effect of retired pay the Applicants contended as follows:
" The effect of retired pay 12. Prior to 2000 male ACOs had no interest (or a very significantly lower interest than female ACOs) in having their salary raised and furthermore received a total remuneration commensurate with the Respondents' view of the value, experience, level of responsibility associated with their posts. Any increase in the ACOs' salary would have led to a decrease in their retired pay and no greater total annual remuneration. Any efforts made by the ACOs as a whole to alter their salary (e.g. in bargaining or consultation), the assessment of the appropriate level of salary for ACOs and market forces, if any operated, was materially shaped by the receipt by the male ACOs of retired pay. 13. While the Applicants are not required to prove the reason for the difference in pay, the burden of proof being wholly on the Respondents in this matter, it is submitted that the existence of factors tainted by sex, which explain part or all the difference, rebut the assertion that it was caused by genuine material factors unconnected to sex. It is submitted that it is unlikely that the male ACOs would have accepted, or indeed the Respondents allowed, individuals with the equivalent rank of officers, who were in command of those with the equivalent rank of sergeant, to receive only 60%-70% of the latters' salary in total remuneration. The reason that this was accepted for so many years, and so few complaints, if any, were made by male ACOs in relation to it, was that the men, once their salary was added to their retirement pay, received considerably more than the SARs and also would have gained little by any increase in salary. It was total remuneration which reflected the perceived value of the ACOs' worth. It was only female ACOs who, in reality, received considerably less than SARs, and whose complaints were, until recently, to no avail."
[20]This was the Applicants' primary case. However, a secondary case was being advanced by the Applicants in the alternative, as set out on page 6 of the Tribunal's Decision (our bundle, page 19). It is this secondary case which forms the basis of the cross-appeal before us. They pleaded that the pay differential had a disparate impact dependent on sex and was therefore discriminatory for the following reasons. The lower salary had a disproportionate adverse impact upon women because they formed a significantly higher proportion of the lower paid group (ACOs) by reason of past discrimination. Essentially, their argument was that it was significantly easier for a woman to become an ACO than an SAR, where 22 years continuous service was required, and there was a far smaller proportion of SARs than ACOs who were women. It was denied that any discrimination was justified in order that the Army might recruit suitable people, as the Appellants alleged.[21]These then were the pleaded cases in relation to the preliminary issue. The position changed however, at the hearing. Despite the extensive list of material factors pleaded, in the course of evidence and argument before the Tribunal the Appellants' case narrowed significantly. The Tribunal recorded at paragraphs 82-84 that Colonel Harber, the Appellants' only witness, put the case on a fairly narrow basis in his evidence. In his witness statement he attributed the difference in pay between ACOs and SARs to the fact that the SARs were "still on the active strength of the Army and … paid as such." In cross-examination he stated that the reason for the difference in pay was "…the different terms of engagement" and "…because of liability to active service" for SARs. He accepted that the difference between the schemes of promotion of ACOs and their comparators was not a contributory factor to the pay differential.[22]Thus, in his written closing submissions, counsel for the Appellants significantly reduced in number (to two) the material factors which were said to constitute the reasons for the disparity in pay and upon which the Appellants relied. They were expressed at paragraphs 45-48 as follows:
"45. The genuine material difference that accounts for the different pay scales of ACOs and SARs is that SARs are serving soldiers who retain a liability to be deployed on operations whereas ACOs are retired officers who have no such liability. … 47. Remuneration of ACOs and SARs is, and has historically been, determined by entirely separate means, each of which is subject to differing market forces. Each is paid according to different pay scales: (a) ACOs are paid at a rate determined by their post which equates to rates paid to retired officers determined in accordance with civil service grades. (b) SARS are paid according to their rank which equates to rates paid to soldiers serving in the Regular Army. The scale is determined by whether the person is a retired officer or a serving soldier and is unrelated to the sex of the individual. These genuine material factors are differences between the female ACOs case and male SARs neither of which is the difference in their sex and which are not discriminatory."
If, alternatively, it was found to be necessary for the Appellants objectively to justify the pay difference, it appears from paragraph 49 of their closing submissions (bundle page 309) that they relied in that context on the above factors, together with all the matters which they had originally pleaded as material factors, in support of their argument that the pay difference was necessary and justified in order to recruit suitable people to become soldiers in the Regular Army.[23]We need, finally, to refer to the issue which had emerged in the evidence relating to the Applicants' secondary case, because it is relevant to the Tribunal's conclusions. As set out above, at paragraph 19, the pleaded primary case was that the historical anomaly of ACO pay and its linkage to retired pay had a disparate impact on the ACOs who were not in receipt of retired pay, all or almost all of whom were women. This had the effect of "tainting" the Appellants' apparently sex-neutral explanation for the pay differential between the two posts and resulted in a sex-related pay arrangement. This was said to be unlawful. However, as is clear from paragraph 88 of the closing submissions (bundle, page 284), the Applicants' pleaded secondary argument, in relation to disparate impact, sought in the alternative to compare the proportion of women in the higher and lower paid groups. Counsel submitted that:
"…this raises the question of what constitutes a "group" for these purposes. It seems to be agreed between the parties that SARs should be treated as one group. It is the Applicants' case that ACO grades should be considered separately for these purposes. The grades were paid different amounts, had different job descriptions and levels of responsibilities. Furthermore the Applicants were all ACO3s for most of the material time, though three were appointed to ACO2 grade in the last 3 years of the material time. If the Tribunal finds that the ACO2 and 3 grades should be considered separately it was accepted by both parties that insufficient evidence was before the Tribunal to determine the proportion of women in the different grades at the material times. It was accepted that further evidence will be required if this question is determinative."
This seems to be common ground between the parties and it is what the Tribunal were referring to at the end of paragraph 39 of their Reasons (see paragraph 16 above).[24]At paragraphs 41-49 of their Decision the Tribunal set out the facts relating to the first material factor relied upon by the Appellants, namely the liability of SARs to be deployed on active service. The essential findings on the evidence were that no SAR had been deployed on operations since 1993; that there was a tendency for fitness tests on SARs not to be arranged, which linked to it being unlikely that they would in fact be deployed; that the SAR comparators in the case had all served for long periods of time at one office; and that Mr. Hempshall, an SAR from 1990 to 2000, had said that he had never heard of an SAR being posted or warned for operational duties. Throughout his service as an SAR he never considered that this was a possibility. At paragraph 49 the Tribunal found, having regard to the evidence, that "… the actual risk of deployment of an SAR is so remote as to be non-existent." This led the Tribunal ultimately, after directing themselves on the law, to reject the Appellants' case on this factor, on the basis that they did not accept: "… that the liabilities of ACOs and SARs are different. Officers can be recalled. Conversely, SARs are not in fact ready for operational duties and are not in fact deployed. The risk of deployment is so remote as to be fanciful and is not a 'material' factor." (paragraph 100)[25]At paragraphs 50-77 the Tribunal set out the facts relating to differences between ACOs and SARs in respect of training, roles, tasks, responsibilities within offices and promotion prospects. They accepted the evidence of Colonel George in respect of promotion prospects (she was not aware of any SAR who had ever been promoted in rank); and, as we have already seen, Colonel Harber did not advance the different promotion schemes as in any way causative of the difference in pay. At paragraph 98 the Tribunal concluded on all the evidence they had heard that the skills, knowledge and experience of ACOs and SARs were indeed materially different. However, for the purposes of the preliminary issue, they recognised that they were required to assume that the work of an ACO2 or ACO3 was like work or work of equal value to that of an SAR. This effectively prevented any consideration of differences in knowledge, skills and experience etc. in order to determine the preliminary issue, those differences going to the substantive question of equal value which, for the purposes of the preliminary issue, had been assumed in the Applicants' favour. (We note that they concluded their Decision by expressing some concern about this at paragraph 105).[26]At paragraphs 96 and 99 the Tribunal recognised that the qualifications for the posts of ACOs and SARs were materially different and mutually exclusive; and that they received different training tailored to their particular duties, although there was a small degree of overlap. They also found, at paragraph 102, that the description of the arrangements under which ACOs and SARs were engaged as "economically and administratively efficient" amounted to no more than a contention that ACOs are subject to a remuneration system which is a cheap alternative for the Government; and that it was not legally permissible for the MOD to rely on the implicit contention that women are willing to work for less. It is of course to be recalled that the Appellants were no longer relying on any of these factors as genuine material factors within section 1(3).[27]In relation to the other material difference which the Appellants did rely on, namely determination of remuneration by separate and independent means, each of which is subject to differing market forces, and payment according to different pay scales, the Tribunal found as a fact (paragraph 97) that this was the case. However, they rejected the Appellants' contention that there were differing market forces for ACOs and SARs on the grounds that there was no evidence before them to support this proposition. At paragraph 97 the Tribunal concluded that:
"we do not accept that they are subject to differing market forces since the question of market forces is nowhere apparent as a significant factor to explain the basis of remuneration."
[28]The Tribunal then went on to accept the primary case advanced by the Applicants as to the cause of the pay difference; namely(a) that their salary did not reflect the true value of their work because it was calculated on the assumption that they were in receipt of retired pay, which was not the case for the substantial majority of female ACOs; and(b) the receipt of retired pay and the abatement provisions which attached to it also depressed the ACO pay rate by affecting the incentive of male ACOs to lobby for higher rates. At paragraph 103 the Tribunal concluded as follows:
"103 We find that the dependence of pay on pension had a disparate impact on women, because it was linked to service. There was a responsibility upon the Respondent to adjust and eliminate that discrimination: see Council Directive 75-117-EEC, the implementation of which was constituted by the Equal Pay Act 1970. There was no change because it was economically beneficial to the Government to continue the system. It was in turn part of the system of remuneration of retired officers, a system which contained no effective provision for the women officers to make a case for the disparate impact upon them. Men had no reason to argue for more pay because it had no effect upon their remuneration. A far higher proportion of men than women had retired pay, so that the abatement provisions removed the incentive for them to lobby for a change in terms. This state of affairs was an obvious and recognisable form of discrimination against women in a pay structure."
Accordingly the Tribunal concluded that the Appellants had not made out their case that there was a genuine, material and non-discriminatory reason for the difference in pay between the Applicants and their comparators. Rather there was unjustifiable discrimination in the pay arrangements due to historic factors, which the Appellants had a duty to eliminate. At paragraph 104 the Tribunal refers once again to it being "common ground that evidence related to ACO3s would be needed in order to arrive at an informed decision". It seems clear that this is a reference to the Applicants' secondary case and the statistical gaps referred to at paragraph 39 of the Decision. For the purposes of the primary case however no separate statistical information as to the proportions of women in the different "groups" was required; and in any event, as the Tribunal state in paragraph 104, they regarded the matter as determined by the framing of the preliminary issue. The Legal Framework[29]We point out that we are concerned in this case with the legislation as it was before 12 October 2001, when amendments to the Sex Discrimination Act 1975 were made as a result of the Sex Discrimination (Indirect Discrimination and Burden of Proof) Regulations 2001 , implementing the European Burden of Proof Directive 97/80/EC. These amendments included a new definition of indirect discrimination in relation to sex discrimination in the employment field.[30]In arriving at their conclusions the Tribunal directed themselves as to the relevant law at paragraphs 85-94 of their Reasons, setting out the provisions of section 1(3) of the Equal Pay Act 1970 and a summary of the principles established in a number of relevant domestic and European authorities. They observed that neither party had been able to cite any "directly applicable" case law. Save in regard to that observation, the Appellants do not contend that any of the directions in these paragraphs involved an error of law by the Tribunal. The Applicants relied on both European and domestic equal pay law and the starting point is therefore Article 141 (formerly Article 119) of the Treaty of Rome , which provides, so far as is relevant:
"1. Each member state shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied."
Council Directive 75/117/EEC (the Equal Pay Directive) provides:
"Article 1 The principle of equal pay for men and women outlined in Article 119 of the Treaty, hereinafter called 'principle of equal pay', means, for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration. In particular, where a job classification system is used for determining pay, it must be based on the same criteria for both men and women and so drawn up as to exclude any discrimination on grounds of sex. … Article 3 Member States shall abolish all discrimination between men and women arising from laws, regulations or administrative provisions, which is contrary to the principle of equal pay. Article 4 Member States shall take the necessary measures to ensure that provisions appearing in collective agreements, wage scales, wage agreements or individual contracts of employment which are contrary to the principle of equal pay shall be, or may be declared, null and void or may be amended. … Article 6 Member States shall, in accordance with their national circumstances and legal systems, take the measures necessary to ensure that the principle of equal pay is applied. They shall see that effective means are available to take care that this principle is observed."
[31]By section 1 of the 1970 Act an equality clause is deemed to be included in a woman's contract of employment at an establishment in Great Britain. The Act applies to members of the armed forces, by virtue of the provisions of section 7A. The equality clause has the effect that, by section 1(2)(a), where the woman is employed on like work with that of a man in the same employment, and by section 1(2)(c), where the work is of equal value to that of a man in the same employment then, if a term of the woman's contract is or becomes less favourable than a term of a similar kind in the man's contract, then the term in the woman's contract is to be treated as modified to be no less favourable. Section 1(3) of the Act however provides that:
"1 (3) 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."
[32]The provisions of section 1(3) have been considered by the Appellate Courts on many occasions over the years and Employment Tribunals are frequently faced with the difficult task of applying authorities which, in interpreting those provisions, appear to say slightly different things or, at any rate, to use slightly different terminology. The complex and labyrinthine nature of equal pay law is well known. The existence of authorities, which cannot always be easily reconciled, is, regrettably, confusing and unhelpful. In equal pay cases there is a need not to lose sight of the essential purpose of the legislation. In considering section 1(3) the fundamental question is whether the material cause of the pay difference between the applicant and her comparator is tainted by sex-related factors. If it is, then the defence fails.[33]Assistance in resolving this fundamental question in the present appeal is to be obtained from two recent decisions of the House of Lords and one decision of the European Court of Justice, where the material factor defence was considered. Firstly, in Strathclyde Regional Council and Others v Wallace and Others [1998] ICR 205 , it was held that the object of section 1 of the 1970 Act was to eliminate sex discrimination in pay, not to achieve fair wages. Accordingly, if a difference in pay between a female worker and her male comparator was explained by genuine factors which were not tainted by any sex discrimination that was sufficient to raise a valid defence under section 1(3). There was, in those circumstances, no further burden on the employer to justify anything. The House of Lords confirmed that the function of the genuine material factor defence is to prevent an equal pay claim succeeding where the difference in pay between an Applicant and her comparator is nothing to do with the fact that the Applicant is a woman and the comparator is a man. The Equal Pay Act is thus not concerned with fair wages, but only with sex-related pay discrimination. An important feature of the Strathclyde case however, absent in the present appeal, was that the parties had all agreed that the disparity in pay between the Applicant teachers and their male, principal teacher comparator had nothing to do with gender. The objective sought by the Applicants was to achieve equal pay for like work, regardless of sex, and not to eliminate any inequalities due to sex discrimination. There was no such discrimination in that case. At page 210 Lord Browne-Wilkinson observed that:
"To my mind it would be very surprising if a differential pay structure which had no disparate effect or impact as between the sexes should prove to be unlawful under the Equal Pay Act 1970. The long title to that Act describes its purpose as being 'An Act to prevent discrimination, as regards terms and conditions of employment, between men and women.'"
[34]In determining whether sex-related pay discrimination exists in any particular case it is important to bear in mind that, whilst the Equal Pay Act 1970 focuses on the contracts of each individual Applicant and her named comparator, pay discrimination is frequently systemic in character, arising as a result of gender job segregation or from discrimination in pay structures and grading systems, rather than from the terms of individuals' contracts of employment. It is important therefore to understand how domestic and European equal pay law knits together so as to prohibit pay discrimination of this kind. At page 212D to 213C Lord Browne-Wilkinson said as follows:
"The cases establish that the Equal Pay Act 1970 has to be construed so far as possible to work harmoniously both with the Sex Discrimination Act 1975 and article 119. All three sources of law are part of a code dealing with unlawful sex discrimination: see Shields v. E. Coomes (Holdings) Ltd. [1978] I.C.R. 1159 and Garland v. British Rail Engineering Ltd. [1982] ICR 420 . It follows that the words 'not the difference of sex' where they appear in section 1(3) of the Equal Pay Act 1970 must be construed so as to accord with the Sex Discrimination Act 1975 and article 119 of the E.C. Treaty, i.e. an employer will not be able to demonstrate that a factor is 'not the difference of sex' if the factor relied upon is sexually discriminatory whether directly or indirectly. Further a sexually discriminatory practice will not be fatal to a subsection (3) defence if the employer can 'justify' it applying the test in the Bilka-Kaufhaus case [1987] ICR 110 . In North Yorkshire County Council v. Ratcliffe [1995] I.C.R. 833, 839, this House expressed the view, obiter, that the Equal Pay Act 1970 has to be interpreted without introducing the distinction between direct and indirect discrimination drawn by section 1 of the Sex Discrimination Act 1975. That dictum must not be carried too far. Whilst there is no need to apply to the Equal Pay Act 1970 the hard and fast statutory distinction between the two types of discrimination drawn in the Sex Discrimination Act 1975, this House did not intend, and had no power, to sweep away all the law on equal pay under article 119 laid down by the European Court of Justice, including the concept of justifying, on Bilka grounds, practices which have a discriminatory effect on pay and conditions of service. The law on article 119, whilst recognising that in many cases there is a de facto distinction between direct and indirect discrimination, does not draw the same firm legal demarcation between the two as does the Sex Discrimination Act 1975, which permits justification of indirect discrimination but not of direct discrimination. The correct position under section 1(3) of the Equal Pay Act 1970 is that, even where the variation is genuinely due to a factor which involves the difference of sex, the employer can still establish a valid defence under subsection (3) if he can justify such differentiation on the grounds of sex, whether the differentiation is direct or indirect. I am not aware as yet of any case in which the European Court of Justice has held that a directly discriminatory practice can be justified in the Bilka sense. However, such a position cannot be ruled out since, in the United States, experience has shown that the hard and fast demarcation between direct and indirect discrimination is difficult to maintain. From what I have said, it is apparent that, in considering section 1(3) of the Equal Pay Act 1970, the only circumstances in which questions of 'justification' can arise are those in which the employer is relying on a factor which is sexually discriminatory. There is no question of the employer having to 'justify' (in the Bilka sense) all disparities of pay. Provided that there is no element of sexual discrimination, the employer establishes a subsection (3) defence by identifying the factors which he alleges have caused the disparity, proving that those factors are genuine and proving further that they were causally relevant to the disparity in pay complained of."
[35]An example of a situation where the distinction between direct and indirect discrimination may not always be clear arises in cases where there is job segregation. Men and women may tend to be segregated into different jobs (for example school cleaners and school caretakers) because of direct discrimination arising from stereotypical and traditional attitudes to men's and women's work; yet a pay practice may have a disparate impact on the predominantly female group and therefore be indirectly discriminatory.[36]A further, important point arises from these dicta. Harmony between domestic and European anti-discrimination laws is obviously desirable and necessary, so far as possible. However, although the Equal Pay Act 1970 was brought into force as a schedule to the 1975 Sex Discrimination Act, the concepts underpinning discrimination in pay and in other forms of treatment are not exactly the same. In the Equal Pay Act 1970 there is no equivalent of section 1(1)(b), or the new section 1(2) (indirect discrimination), or section 5(3) (like circumstances) in the 1975 Act. As we explain below this indicates that the concept of indirect discrimination under the Equal Pay Act, when read together with European equal pay legislation and case law, is broader than that which applies under the Sex Discrimination Act 1975 .[37]Two years later, in the case of Glasgow City Council and Others v Marshall and Others [2000] ICR 196 , the House of Lords were again faced with the issue of genuine material factors in equal pay claims brought, on this occasion, by instructors in special schools comparing themselves with teachers engaged on like work alongside them. Once again the Applicants did not challenge the Council's assertion that there was a complete absence of any sex discrimination in the pay arrangements. The claims failed in the House of Lords, where it was held that the equality clause in section 1 was not intended to operate where no sex discrimination was involved; and that where the employer established that a disparity in pay was due not to the difference in sex but to some other factor material in the causative sense, s/he was not obliged to establish that there was a good reason for the disparity. Since it was not contended that the disparity in pay between teachers and instructors was tainted by sex discrimination, the employers were held to have established the defence under section 1(3). At pages 202F-203B Lord Nicholls, with whom the other members of the appellate committee agreed, said as follows:
"I do not believe the Act of 1970 was intended to have this effect. Nor does the statutory language compel this result. The scheme of the Act is that a rebuttable presumption of sex discrimination arises once the gender-based comparison shows that a woman, doing like work or work rated as equivalent or work of equal value to that of a man, is being paid or treated less favourably than the man. The variation between her contract and the man's contract is presumed to be due to the difference of sex. The burden then passes to the employer to show that the explanation for the variation is not tainted with sex. In order to discharge this burden the employer must satisfy the tribunal on several matters. First, that the proffered explanation, or reason, is genuine, and not a sham or pretence. Second, that the less favourable treatment is due to this reason. The factor relied upon must be the cause of the disparity. In this regard, and in this sense, the factor must be a 'material' factor, that is, a significant and relevant factor. Third, that the reason is not 'the difference of sex.' This phrase is apt to embrace any form of sex discrimination, whether direct or indirect. Fourth, that the factor relied upon is or, in a case within section 1(2)( c ), may be a 'material' difference, that is, a significant and relevant difference, between the woman's case and the man's case. When section 1 is thus analysed, it is apparent that an employer who satisfies the third of these requirements is under no obligation to prove a 'good' reason for the pay disparity. In order to fulfil the third requirement he must prove the absence of sex discrimination, direct or indirect. If there is any evidence of sex discrimination, such as evidence that the difference in pay has a disparately adverse impact on women, the employer will be called upon to satisfy the tribunal that the difference in pay is objectively justifiable. But if the employer proves the absence of sex discrimination he is not obliged to justify the pay disparity."
He referred to his analysis as not lacking supportive authority and to the fact that Lord Browne-Wilkinson's conclusions on section 1(3) in Strathclyde were "to the same effect" (at 203G). The principal decision in the ECJ in recent years on the material factor defence and indirect discrimination in different pay systems is Enderby v Frenchay Health Authority and Another [1994] ICR 112 . A preliminary hearing was held by the employment tribunal to determine whether the Health Authority and the Secretary of State had established the section 1(3) defence, where different pay structures existed for speech therapists (predominantly female) and pharmacists and clinical psychologists (predominantly male) in claims for equal pay for work of equal value brought by a number of speech therapists. The Court of Appeal referred the matter to the European Court, who held, so far as is relevant, that: (1) Where there was an appreciable difference in pay between two jobs of equal value, one of which was carried out almost exclusively by women and the other predominantly by men, a prima facie case of sex discrimination under Article 141 was made out which required the employer to show that that difference was based on objectively justifiable factors unrelated to any discrimination on grounds of sex; and (2) The fact that the respective rates of pay were arrived at by collective bargaining processes which were distinct and which, taken separately, had in themselves no discriminatory effect, did not preclude a finding of prima facie discrimination and was not sufficient objective justification for the difference in pay between those two jobs."[38]This case indicated clearly that the concept of indirect discrimination is not the same in relation to inequality of pay as to inequality of treatment. At page 161A-162B the Court said:
" The question referred 13. It is normally for the person alleging facts in support of a claim to adduce proof of such facts. Thus, in principle, the burden of proving the existence of sex discrimination as to pay lies with the worker who, believing himself to be the victim of such discrimination, brings legal proceedings against his employer with a view to removing the discrimination. 14. However, it is clear from the case law of the court that the onus may shift when that is necessary to avoid depriving workers who appear to be the victims of discrimination of any effective means of enforcing the principle of equal pay. Accordingly, when a measure distinguishing between employees on the basis of their hours of work has in practice an adverse impact on substantially more members of one or other sex, that measure must be regarded as contrary to the objective pursued by article 119 of the Treaty, unless the employer shows that it is based on objectively justified factors unrelated to any discrimination on grounds of sex: see Bilka-Kaufhaus G.m.b.H v. Weber von Hartz (Case 170/84) [1987] ICR 110 ,125, para. 31; Kowalska v. Freie und Hansestadt Hamburg (Case C-33/89) [1992] I.C.R. 29, 35, para. 16 and Nimz v. Freie und Hansestadt Hamburg (Case C-184/89) [1991] E.C.R. 1-297, 320, para. 15. Similarly, where an undertaking applies a system of pay which is wholly lacking in transparency, it is for the employer to prove that his practice in the matter of wages is not discriminatory, if a female worker establishes, in relation to a relatively large number of employees, that the average pay for women is less than that for men: see Handels-og Kontorfunktionoerernes Forbund i Danmark v. Dansk Arbejdsgiverforening (Case 109/88) [1991] I.C.R. 74, 80, para. 16. 15. In this case, as both the health authority and the United Kingdom observe, the circumstances are not exactly the same as in the cases just mentioned. First, it is not a question of de facto discrimination arising from a particular sort of arrangement such as may apply, for example, in the case of part-time workers. Secondly, there can be no complaint that the employer has applied a system of pay wholly lacking in transparency since the rates of pay of National Health Service speech therapists and pharmacists are decided by regular collective bargaining processes in which there is no evidence of discrimination as regards either of those two professions. 16. However, if the pay of speech therapists is significantly lower than that of pharmacists and if the former are almost exclusively women while the latter are predominantly men, there is a prima facie case of sex discrimination, at least where the two jobs in question are of equal value and the statistics describing that situation are valid. 17. It is for the national court to assess whether it may take into account those statistics, that is to say, whether they cover enough individuals, whether they illustrate purely fortuitous or short term phenomena, and whether, in general, they appear to be significant. 18. Where there is a prima facie case of discrimination, it is for the employer to show that there are objective reasons for the difference in pay. Workers would be unable to enforce the principle of equal pay before national courts if evidence of prima facie case of discrimination did not shift to the employer the onus of showing that pay differential is not in fact discriminatory: see, by analogy, Handels-og Kontorfunktionoerernes Forbund i Danmark v. Dansk Arbejdsgiverforening (Case 109/88) [1991] I.C.R. 74, 79, para. 13. 19. In these circumstances, the answer to the first question is that, where significant statistics disclose an appreciable difference in pay between two jobs of equal value, one of which is carried out almost exclusively by women and the other predominantly by men, article 119 of the Treaty requires the employer to show that the difference is based on objectively justified factors unrelated to any discrimination on grounds of sex."
[39]The factual context for the decision in Enderby was the existence of an exclusively or almost exclusively female profession, namely speech therapists. However, that it is not necessary for there to be such a context in order for female Applicants to succeed in an equal pay claim is clear from a subsequent decision of the Northern Ireland Court of Appeal in British Road Services Limited v Loughran [1997] IRLR 92. The NICA there held that separate pay structures based on different collective agreements did not enable an employer to establish a genuine material factor defence if the Applicants are a member of a class of which a "significant" number are female. The Court rejected the employer's argument that the limitation on the employer's defence in Enderby applies only if the group including the Applicant is exclusively or almost exclusively composed of women. At paragraph 102 Kerr LJ explained why the argument should be rejected:
"Firstly, as I have pointed out, it was the Applicant in Enderby who first used the expression 'almost exclusively' to refer to the female group. I consider that the Court of Justice was merely reflecting the factual situation which obtained in that case in so stating its conclusion. Secondly, and more importantly, the relevance of the number of females in the group is as an indicator of its being traditionally a less well paid group on account of its being composed mainly of women. Logically, a group comprising 75% females and 25% males has the capacity to provide such an indication. Whether it does in fact is a matter for the tribunal to decide."
[40]In considering Enderby Kerr LJ referred extensively to the Opinion of Advocate-General Lenz, who warned of the dangers of categorising various forms of discrimination since this may lead to the creation of obstacles to claims of sex-related pay discrimination. Kerr L.J. noted that the Court in its judgment, although less explicit than the Advocate-General in explaining its reasoning, did not express disagreement with his approach (see paragraphs 95 and 101). In a case, such as the present appeal, which involves a different factual context for considering the section 1(3) defence, we too have derived assistance from the Advocate-General's observations on the nature of sex-related pay discrimination, with which we find ourselves wholly in agreement. At page 150G to 151D he said this:
"14. …Sex-related pay discrimination takes various forms, the categorisation of which can pose a legal problem. In order to render them susceptible to legal categorisation, the courts have adopted the categories of direct and indirect discrimination. The conceptual scheme applied should in no way be construed in the sense of any exclusiveness of possible forms of sex discrimination. A glance at the conceptual scheme applied in these proceedings under the laws of the United Kingdom bears this out. The reference there to intentional or unintentional direct discrimination and to intentional or unintentional indirect discrimination shows that there are four possible ways of categorising the same phenomenon for legal purposes. 15. The purpose of a conceptual scheme is to comprehend methods by which women are placed at a disadvantage in their working lives and not to create additional obstacles to claims being made before the courts in respect of sex-related pay discrimination. For this reason, a formalistic approach should not be adopted when categorising actual instances where women are placed at a disadvantage at work. In accordance with the result-orientated line taken by the Court of Justice in the past, a pragmatic approach ought to be pursued. On the obligation as to the result to be achieved laid down in article 119 of the E.E.C. Treaty, see the Defrenne case; Rinner-Kühn v. F.W.W. Spezial-Gebäudereinigung G.m.b.H. & Co. K.G. (Case 171/88) [1989] E.C.R. 2743, 2760, para. 9, and the case law on indirect discrimination in general: the Jenkins case: Bilka- Kaufhaus G.m.b.H. v. Weber von Hartz (Case 170/84) [1987] ICR 110 ; Kowalska v. Freie und Hansestadt Hamburg (Case C33/89) [1992] I.C.R. 29; Nimz v. Freie und Hansestadt Hamburg (Case C-184/89) [1991] E.C.R. 1-297 and Arbeiterwohlfahrt der Stadt Berlin e. V. v. Bötel (Case C360-90) [1992] E.C.R. 1-3589. 16. For example, in Handels-og Kontorfunktionoerernes Forbund i Danmark v. Dansk Arbejdsgiverforening (Case 109/88) [1991] I.C.R. 74, the court did not expressly base itself on any of the sex discrimination concepts set out in its previous case law but gave an answer couched in general terms to the question posed in that case regarding the burden of proof, although there was there certainly cause for doubt as to whether it was direct or indirect sex discrimination that was in issue. 17. The present case is a good illustration of the difficulties caused by the classification of an actual phenomenon within one of the concepts, whilst in the result a woman can be clearly seen to be paid less than a man doing work of equal value for the same employer."
Later on, when considering indirect discrimination, he referred at page 153C to the fact that, in previous cases brought before the Court, the disadvantaging of female workers was affected by reference to an objective criterion. At page 153D-E he observed:
"The resultant disadvantage arose from the fact that women were affected by the criterion more than men. The court has accepted as the cause of that effect reasons linked to the social role of women. For example, when the court considers indirect discrimination against women to be possible in reference to the characteristic of part-time employment 'taking into account the difficulties encountered by women workers in working full-time' (see the Bilka-Kaufhaus case [1987] ICR 110 , 125, para. 29-a substantially similar approach was set out in Jenkins [1981] ICR 592 , 613, para. 13, and see also Bötel [1992] E.C.R. 1-3589, 3612, para. 18, with reference to the Rinner-Kühn case), it is thereby recognising that, as a result of their role in the family and in the bringing up of children, women regularly meet considerable difficulties in working full-time. If under those circumstances women have to rely on part-time employment, then the link to part-time employment affects women specifically."
He was thus emphasising that the approach of the Court, in particular in relation to Article 141, is to seek to eradicate pay discrimination where the disadvantage experienced by women is linked to their gender, that is because they are women. Where, as in Enderby , the Applicant belonged to a "purely female profession" he considered at 154B that:
"As I have already stated in my basic comments regarding the nature of indirect discrimination, attention should be directed less to the existence of a requirement or a hurdle by means of which women suffer a disadvantage, and more to the discriminatory result."
[41]These sentiments, arising as they did in the context of pay discrimination, were recognised by the Employment Appeal Tribunal in Bhudi and Others v I.M.I. Refiners Limited [1994] ICR 307, where, at page 315C the then President, Mummery J, stated:
"… We accept the submission of the employers that the decision in Enderby was solely concerned with the interpretation and application of article 119 of the Treaty and the Equal Pay Directive (75/117/E.E.C.). Although the provisions relating to equal pay are an aspect of indirect discrimination, different considerations apply. The provisions relevant to equal pay have not been drafted so as to impose expressly the onus of establishing a requirement or condition which a significantly smaller number of women than men can surmount. We recognise that it may be held in a later case, at a higher level, either in the United Kingdom, or more probably, in the European Court of Justice, that the approach taken by Mr. Advocate General Lenz in Enderby should also apply in the case of the Equal Treatment Directive (76/207/E.E.C.) and national provisions enacted to implement the Directive. It is not necessary for us to express a view on this now or at this level of decision."
[42]There is nothing in Bhudi which conflicts with the decision of the House of Lords in Marshall , where it was common ground between the parties that there was in fact no sex discrimination in the pay arrangements; and therefore what constitutes sex discrimination in relation to section 1(3) was not the focus of the case. Mummery J. was recognising that, in the pay context, the burden of establishing a requirement or condition, which a significantly smaller number of women than men can comply with, is absent from the provisions relating to equal pay. Further, several years after the Enderby judgment the European Court in the case of Stadtlengerich v Helmig [1995] IRLR 216 referred once again to the "equal pay principle" and to the nature of indirect discrimination under Article 141. At page 222, paragraph 19, the Court stated:
"Article 119 of the Treaty lays down the principle of equal pay for men and women for equal work. Article 1 of the Directive states that that principle means, for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration. As the Court emphasised in case 96/80 Jenkins [1981] IRLR 228 , Article 1 is principally designed to facilitate the practical application of the principle of equal pay outlined in Article 119 of the Treaty, but in no way alters the content or scope of that principle as defined in the latter Article. The principle of equal pay excludes not only the application of provisions leading to direct sex discrimination, but also the application of provisions which maintain different treatment between men and women at work as a result of the application of criteria not based on sex where those differences of treatment are not attributable to objective factors unrelated to sex discrimination. It is common ground that the provisions criticised by the Commission and the plaintiffs in the main actions do not entail direct sex discrimination. It must therefore be considered whether those provisions may constitute indirect discrimination incompatible with Article 119 of the Treaty. To that end it must be determined whether they establish different treatment for full-time and part-time employees and whether that difference affects considerably more women than men."
All these authorities and the persuasive opinion of Advocate-General Lenz, in our judgment, indicate that indirect discrimination in relation to pay bears a broader meaning than that which applies in the non-pay, Sex Discrimination Act context. There is therefore no necessity for an Employment Tribunal, as a matter of law, always to adopt a formulaic approach, consistent with the provisions of section 1(1)(b) of the 1975 Act (and since 12 October 2001, section 1 (2)), in considering whether there is sex-related pay discrimination and disparate impact for the purposes of section 1(3). What matters is whether, in any particular case, a Tribunal is satisfied on the evidence before them and the facts found that the pay difference is caused by a factor or factors which are related to the difference in sex between the Applicant and her comparator.[43]This was not a case where, as arose in Nelson v Carillion Services Limited [2003] IRLR 428 in relation to a section 1(3) defence, the Applicants in an equal pay claim were suggesting that it was sufficient for them merely to raise a "credible suggestion" that relevant, valid and significant statistics might establish disproportionate impact. The Court of Appeal held, on the particular facts of that case, that such a suggestion(a) was not sufficient to discharge the burden on an Applicant to prove facts from which the Tribunal could conclude that she had been unlawfully discriminated against in the absence of an adequate explanation from the employer; and(b) imposed no further burden of explanation on an employer. In the present case, for the purposes of the preliminary issue, this Tribunal were asked to assume that the Applicants were doing like work or work of equal value to that of their comparators. The variation between the Applicants' pay and that of their comparators was therefore, in the clear words of Lord Nicholls in Marshall "presumed to be due to the difference of sex" and the burden therefore passed to the Appellants to show that the explanation for the pay difference was not tainted by sex, or to seek objectively to justify it if it was. The Appellants therefore had to discharge this burden by satisfying the Tribunal on the matters set out by Lord Nicholls in Marshall , referred to above, which address the fundamental issue of whether the employer's explanation for the pay difference is tainted by sex discrimination. In seeking so to satisfy the Tribunal the Appellants advanced the two material factors we have already described above. Applicants, however, can always advance their own explanation for the difference in pay, as they did in the present case, namely the discriminatory assumption that ACOs were in receipt of retired pay. It was open to the Tribunal to consider this explanation for the difference in determining the preliminary issue and deciding whether the Appellants have established the section 1(3) defence.[44]It will be clear from our analysis of the law that we do not accept Ms. Slade's submission that indirect pay discrimination can arise only in the three situations which she identified, namely:(a) where the rate of pay is determined in accordance with characteristics which are gender-based, for example part-time work;(b) where the rate of pay is determined by reference to factors which, although not gender-based, have the consequence in practice that the disadvantaged group is exclusively or almost exclusively female ( Enderby ) or that a significant majority of the disadvantaged group are women, ( Loughran ) thus requiring an Applicant to establish that she is part of a group performing "women's work"; or(c) where the rate of pay is determined in accordance with the application of a requirement or condition or, since the amendments to the legislation on 12 October 2001, a provision, criterion or practice which is applied equally to men and women but is such that a substantially larger number of women than men suffer a detriment. In this category Ms. Slade submits that evidence will be required of a pool of people comprising men and women to whom the requirement or condition (or since 12 October 2001 provision criterion or practice) is applied equally but with disparate impact. We accept of course that indirect pay discrimination can arise in all these circumstances. We do not accept however that the categories of such discrimination are closed; or that, if the facts of a particular case do not fit precisely into one of these categories, it is doomed to fail; or that a Tribunal will have erred if it finds that there is disparate impact and sex-related pay discrimination on the evidence before them, outwith these categories, and in particular does so without applying the test for indirect discrimination set out in the 1975 Act. In her submissions to us, in support of her contention that tribunals should always adopt a clear and structured approach to section 1(3), Ms. Slade sought to reformulate the tests referred to by Lord Nicholls in Marshall , in order to incorporate the concepts of direct or indirect discrimination. However her reformulation, as advanced in oral argument differed, as she acknowledged, from the written formulation in her skeleton argument and we took the view that such attempts were not necessarily a helpful exercise. We consider that, for the present, Tribunals should continue to adhere to what we shall describe as the " Marshall approach", since that currently provides the most recent and authoritative statement of the law in the domestic authorities as to the tests to be applied in determining the section 1(3) defence.[45]We add the following observation, for completeness, in relation to our analysis of the legal framework. We shall say nothing in this appeal about the decision of the ECJ in Brunnhofer v Bank der Osterreichischen Postsparkasse AG [2001] IRLR 571 which, as we are aware, a number of commentators have suggested is not easily reconcilable with the decision in Marshall , suggesting as it does that employers are required under Article 141 to justify objectively variations in pay, notwithstanding that it was not suggested that the factors relied upon were indirectly discriminatory. Neither party addressed us upon this decision and, in any event, it is not relevant to the issues which arise in the present appeal since these Applicants were alleging that there was sex-related pay discrimination in their case. That is therefore a matter which we are not required to consider but which, we recognise, may arise for consideration on another occasion.[46]In conclusion therefore the principles to be applied in determining the section 1(3) defence, in our judgment, involve the Tribunal focusing on substance, rather than form and on the result, rather than the route taken to arrive at it. We agree with Mr. Linden's submission that, in approaching these issues, technicalities should be eschewed. The fundamental question for the Tribunal is whether there is a causative link between the Applicant's sex and the fact that she is paid less than the true value of her job as reflected in the pay of her named comparator. This link may be established in a variety of different ways, depending on the facts of the case. It may arise, for example, as a result of job segregation or from pay structures or pay practices which disadvantage women because they are likely to have shorter service or to work less hours than men, due to historical discrimination or disadvantage, or because of the traditional social role of women and their family responsibilities. The Issues on Appeal[47]Ms. Slade's main challenge to the Decision (grounds of appeal (a), (b), (c), (d)(ii), and both sub-paragraphs (e)) is on the basis that the Employment Tribunal:(i) appears to have asked itself the wrong question: and(ii) failed to adopt the correct, or any, structured approach to the issue before them. In relation to (i) she submits that the Tribunal wrongly stated that there was no directly applicable case law, when there was. Further, the question phrased in paragraph 93 of their Reasons omitted any reference to the key consideration, namely whether the genuine material factor was not the difference in sex. The Tribunal's conclusions were therefore, she contends, all predicated on an erroneous basis. We do not agree. Firstly the Tribunal were right to say that, on these facts, there was no directly applicable case law. They had before them a set of facts which had not previously arisen in the authorities, namely where the reason for the difference in pay between the Applicants and their comparators was an assumption that members of the Applicants' occupational group were paid sums which, in the case of the women, they were not in fact paid because the women had insufficient service. The pay of ACOs was determined on the assumption that they were receiving retired pay. That assumption was 100 per cent correct in relation to male ACOs but almost 100 per cent incorrect in relation to female ACOs. Secondly, we do not consider that the Tribunal were directing themselves that materiality was the only issue to determine. They referred expressly to the words of section 1(3) and the difference of sex in paragraph 85 and recognised the importance of sex-related pay discrimination when directing themselves on the authorities in paragraphs 86 – 90. Their conclusion at paragraph 103 clearly reflects their awareness of the statutory provisions and the necessity to have regard to the difference of sex in relation to causation. We do not accept therefore that there was any error of law on the face of the Reasons. The real question was whether they applied the legal principles correctly to the facts they found.[48]The more substantial challenge was that the Tribunal failed to adopt the correct, or any, structured approach to the issue. Ms. Slade's submissions were essentially these. The Tribunal failed to set out any proper, reasoned basis for its conclusion in paragraph 106 that the section 1(3) defence had not been established by the Appellants. They failed to adopt a logical, analytical and evidence-based approach in determining the preliminary issue. It is necessary for a Tribunal, when considering the section 1(3) defence, properly to set out the necessary building blocks and to adopt a structured approach to determining the question whether there has been any sex-related pay discrimination. At no stage here did the Tribunal make a finding of sex discrimination in relation to the factors put forward by the Appellants as genuine material factors. There was no suggestion made of direct discrimination in this case. Thus, in so far as the Tribunal referred to any structure, they referred to what she described as the "classic" indirect discrimination approach, namely the disparate impact of the pay arrangement on women (paragraph 103). She contends that this indicated that the Tribunal were adopting the Sex Discrimination Act 1975 test for indirect discrimination, yet they failed to go on to identify any requirement or condition; or to identify the pool of people of which the Applicants and their SAR comparators formed part and the relative proportions of men and women in the pool who can and cannot comply with the requirement or condition. She contends that the Tribunal did not even identify the pool into which the Applicants fell, that is whether it was all ACOs, ACO2s, ACO3s or ACO2s and ACO3s. If it was ACO2s or ACO3s, as paragraph 104 of their Reasons suggests, she submits that that was the wrong pool and the Tribunal accepted that there was insufficient statistical information to enable them to arrive at any conclusions in respect of ACO3s. She submits therefore that the Tribunal did not and could not themselves resolve the points that they identified as central to the decision. They say as much at paragraph 105 and, further, by stating at paragraph 106 that the defence under section 1(3) was rejected "as matters stand".[49]Ms. Slade submits further that the Tribunal did not, in the alternative, adopt an " Enderby approach" to determining the preliminary issue, by making findings of relative proportions of men and women in the two comparator groups. In fact this would not have availed the Applicants since both groups, SARs and ACOs, were composed mainly of men. Finally, the Tribunal approached the question of disparate impact wrongly, by considering the impact upon female ACOs as compared with male ACOs and not as compared with SARs, the named comparators. The Tribunal's conclusion was that there was sex discrimination as between the Applicants and male ACOs in relation to retirement pay and not discrimination as between the Applicants and their SAR comparators.[50]In considering these submissions we remind ourselves firstly of the Tribunal's conclusions. At paragraph 95 they returned to the material differences which had been pleaded by the Appellants and considered to what extent the Appellants had made good their case in respect of the various factors advanced. As we have already observed above they rejected the Appellants' case on the SARs' liability to deployment, on the basis that the risk of deployment was found to be so remote as to be fanciful. It was therefore not a material factor and not causative of the difference in pay between the Applicants and their comparators. Similarly, at paragraph 97, they rejected the Appellants' case that ACOs and SARs were engaged on entirely different bases because they were "subject to differing market forces", on the basis that there had been no evidence adduced in support of that contention. They also rejected the suggestion (paragraph 102) that the variation in arrangements under which ACOs and SARs were engaged were "economically and administratively efficient". There is no appeal in relation to the findings in paragraphs 97 and 102.[51]The qualifications for ACOs and SARs were held to be "materially different" and "mutually exclusive" and there were found to be different schemes for promotion and for training (see paragraphs 96, 99 and 101). However, the Appellants did not in the event rely on any of these factors as genuine material factors causative of the pay difference, as was clear from their closing submissions. The Tribunal also found, as was the case, that the remuneration of ACOs and SARs had been determined by entirely separate and independent means and that they were paid according to different scales. This was held to be directly and exclusively related to the different bases upon which the two comparator groups were engaged. It thus explained why, historically, the differences between the two groups existed, because they had each proceeded along different routes.[52]In our judgment it is clear from their Reasons that the Tribunal considered the material factors which were relied on by the Appellants, applied the right tests and decided that they were not the reason for the difference in pay. On the contrary they found in that respect that there was an obvious and recognisable form of sex discrimination in the pay structure. In relation to the differences between the two groups which the Tribunal had identified, with regard to skills, knowledge and experience, they found that they were effectively precluded from considering these issues because of the assumption that the jobs involved like work or work of equal value, already built into the preliminary issue. This explained the expressions of concern, in paragraphs 105 and 106, and their conclusion that the Appellants had not made out the section 1(3) defence "as matters stand".[53]With regard to what did cause the difference in pay, the Tribunal identified as the "central and key point" the disparate impact on women of the dependence of pay on pension, because it was linked to service, namely the Applicants' primary case.[54]It is correct that, in concluding as they do at paragraph 103, the Tribunal do not adopt the structured, "classic" 1975 Act indirect discrimination approach, which Ms. Slade submits was essential once the Tribunal had embarked on the disparate impact route. However, in our judgment, it was unnecessary for them in this case to adopt that approach. Ms. Slade's submissions seemed to us to be based more on form and technicality, than on substance and effect. Having rejected the factors advanced by the Appellants as being causative of the pay difference, the Tribunal accepted the Applicants' primary case and in paragraph 103 identified an "obvious and recognisable form of discrimination against women in a pay structure" on the basis of their earlier findings. The reason why female ACOs were placed at a disadvantage in relation to pay was a reason linked to their gender, because the dependence of pay on retirement pay was linked to service.[55]In reality the reason why the service requirement for female ACOs had to be reduced to three years was because, as a result of historic discrimination and disadvantage, so few women had been able to complete 16 years service in order to qualify for appointment. This also explained why there were no or very few female SARs. The Tribunal's findings of fact show that this was in fact recognised as a gender issue by the Appellants themselves (see for example the last part of paragraph 21, paragraphs 26 and 29, paragraph 30(d) and paragraph 31 of the Reasons). The Appellants seem to have been aware that an anomalous situation was having a disparate impact on women. The Employment Tribunal were deciding at paragraph 103 that this was not merely an unfair practice but a pay practice which was tainted by sex discrimination for the reasons they identified in paragraph 103, based on their earlier findings of fact. This was, in our judgment, a permissible approach as a matter of law and a permissible conclusion on the evidence and the facts found. The Appellants did not themselves advance this as a genuine material factor and did not seek to justify it.[56]Nor do we accept Ms. Slade's submission that the Tribunal lost sight of the necessary comparison between the Applicants and their named SAR comparators and wrongly compared income (not pay) of female and male ACOs. The Applicants' complaint under the Act was based on the pay difference between themselves and named SARs with whom, for the purposes of the preliminary issue, they were assumed to be doing like work or work of equal value. The comparison between male and female ACOs was being made not with a view to comparing their income but in order to explain the existence of a pay arrangement which disadvantaged female ACOs because of their gender; and which led to a substantial difference in pay between them and their SAR comparators. That was a sex-discriminatory pay practice, which depressed the pay of the female ACOs and explained why they were paid less than SARs.[57]Ms. Slade submitted that the fact that most female ACOs were not in receipt of retired pay was because of the different qualifying conditions for employment as an ACO. The reasoning of the Tribunal implied that this indirectly discriminated against women. She criticised this reasoning and submitted that that could not be right where the qualifying condition relied on in fact discriminated in favour of women and against men, in that it was very significantly less onerous for a woman to qualify for engagement as an ACO than a man. She submits that an Applicant cannot base a claim for equal pay on discrimination which results from more favourable treatment of women.[58]We reject this submission for two reasons. Firstly, it does not follow, even if it were correct to categorise this as "more favourable treatment" of women, that female ACOs cannot bring a complaint under the Equal Pay Act 1970 if they are receiving less pay than another male comparator in the same employment who is doing work of equal value. Secondly, and more fundamentally however, it is in any event misconceived to describe the qualifying condition as amounting to "more favourable" treatment of women. It is well established in European jurisprudence that discrimination can occur both when like cases are treated differently and, conversely, when different cases are treated in the same way. In Spain v Council of the European Communities [1988] ECR 4563 for example, the ECJ held (paragraph 25) that the prohibition on unlawful discrimination requires that "…comparable situations are not to be treated differently…and different situations are not to be treated alike". This description of the double-sided nature of discrimination has often been repeated in the Court's decisions. It recognises that sometimes, in order to address historical patterns of disadvantage and discrimination affecting women, positive steps or special measures have to be taken in order to eradicate that disadvantage and to ensure that women can achieve substantive equality. In this case historical disadvantage, which resulted in men and women being in different situations with regard to access to appointment as ACOs, required special measures to be taken by the Appellants to enable women to have equal access to work as ACOs. (No doubt it also ensured that the Army were able to attract more women recruits and thus provided benefits for the Appellants in addition.) Such special measures do not mean that women can legitimately be said in these circumstances to be receiving "more favourable" treatment. Nor do they preclude women who benefit from them from subsequently complaining of a discriminatory pay practice which depresses their pay, compared with pay received by a male comparator with whom they are doing like work or work of equal value. We therefore reject these grounds of appeal.[59]Ms. Slade makes two further challenges to the Decision, at paragraphs 7(d)(i),(iii) and at paragraph 7(f)(i) of the Notice of Appeal. Paragraph 7(f)(ii) is no longer pursued. We can deal with these challenges shortly in view of our earlier findings. Firstly, she relies on paragraphs 96 and 97, where the Tribunal found that qualifications for the posts of ACOs and SARs were materially different and mutually exclusive; and that remuneration of ACOs and SARs had been determined by entirely separate and independent means and each was paid according to different pay scales. She contends that there was no finding that these genuine material factors were themselves directly or indirectly discriminatory and that the Respondents had therefore established a defence under section 1(3). However, by the end of the case, the Appellants no longer advanced the different qualifications between the two groups as being causative of the difference in pay and the Tribunal clearly did not regard them as such. Secondly, despite the separate pay scales and remuneration, the Tribunal rejected the Appellants' "market forces" argument and found further that there was an obvious and recognisable form of discrimination in the pay structure, which was causative of the pay difference between the Applicants and their comparators. They were not therefore obliged to find in the Appellants' favour on section 1(3), as is suggested.[60]Finally, Ms. Slade contends that, by rejecting the evidence as to liability for deployment, which the Appellants did advance as a genuine material factor, the Tribunal's finding that this was not a material factor was perverse. She submits that the Tribunal should have concluded that the liability of SARs to be deployed on operations amounted to a genuine material factor and that the Tribunal failed to recognise that the relevant factor was the liability to be deployed not the probability that an SAR would in fact be deployed.[61]We cannot accept this criticism of the Tribunal's findings. The Tribunal did not fail to recognise that the Appellants' case concerned the liability of SARS to deployment, as is clear from their reasons. In our judgment the Tribunal's findings of fact and their reasoning on this issue cannot properly be categorised as perverse, having regard to the very high threshold which must be crossed in order to make good such a ground of appeal; see Yeboah v Crofton [2002] IRLR 635 . In our judgment the Tribunal heard all the evidence and were entitled to conclude as they did on this issue.[62]For these reasons therefore we dismiss the appeal. In the circumstances there is no need for us to consider the alternative basis on which Mr. Linden submitted that the Tribunal's conclusions could be upheld, based on the Applicants' secondary case as argued below. If it had been necessary for us to consider it we take the view that we would not in any event have been able to reach our own conclusions on the alternative analysis, in particular given the uncertainty surrounding the incomplete statistical picture as to the proportions of women in the category of ACO3 at the various times. In these circumstances, had it been necessary, we would have remitted the case to a freshly constituted Tribunal for further consideration. Since we have dismissed the Appellants' appeal, it is unnecessary for us to take this course.