MS S VILLALBA v MERRILL LYNCH & CO INC & OTHERS [2006] UKEAT 0223_05_3103

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2006] UKEAT 0223_05_3103

Case No Appeal No. UKEAT/0223/05

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MS S VILLALBAAPPELLANT

MERRILL LYNCH & CO INC & OTHERSRESPONDENT

Before

Mr Justice Elias

Date 31 March 2006

[1]APPEARANCES For the Appellant MISS DINAH ROSE MR BRIAN KENNELLY of Counsel Instructed by: Messrs Lewis Silkin Solicitors 12 Gough Square London EC4A 3DW For the Respondent MR THOMAS LINDEN of Counsel Instructed by: Messrs Lovells Solicitors Atlantic House Holborn Viaduct London EC1A 3FG SUMMARY Victimisation discrimination. Tribunal found victimisation discrimination to a limited extent. Did the Tribunal apply the right test when determining whether such discrimination had arisen? Did it reach consistent and rational findings on the extent of the victimisation discrimination or should it have inferred that the discrimination was more extensive? Equal Pay. Where a woman receives less pay than a male employed on equal work, and where the pay arrangements do not demonstrate any adverse disparate impact on women and the employer shows that there is no direct discrimination on grounds of sex, must the employer also satisfy the tribunal that the difference in pay is objectively justified in order to rebut the presumption of discrimination? Is this a legal requirement established by the decision of the European Court of Justice in Brunnhofer v Bank der Osterreichischen Postsparkasse AG [2001] ECR1-4961? MR JUSTICE ELIAS: This is an appeal from the unanimous decision of the employment Tribunal sitting in London South in which it dismissed the appellant's claims of sex discrimination and unequal pay, but upheld certain complaints of discrimination on grounds of victimisation, and found the appellant's dismissal to be unfair. The appeal is directed to two areas only. The first relates to the Tribunal's findings on victimisation discrimination. It is alleged that the Tribunal applied the wrong test when determining whether victimisation had been a cause of Ms Villalba's removal from her post and subsequent dismissal; there were further acts of discrimination which the Tribunal wrongly failed to identify and which would have had a bearing on the causation issue; and that the Tribunal's findings are in certain respects inconsistent and irrational. The second ground relates to the equal pay claim. It is accepted that the Tribunal was entitled to find on the evidence that there was no discrimination on grounds of sex, but it is submitted that the effect of the decision of the European Court of Justice in Brunnhofer v Bank der Osterreichischen Postsparkasse AG [2001] ECR1-4961 is that in order to rebut an equal pay claim, Merrill Lynch ("ML") were also obliged to demonstrate that there was objective justification for the difference in the pay arrangements between her and her chosen comparators. The Tribunal did not require them to do this.

[2]The Tribunal in this case sat for some 28 days. They had to examine and analyse an enormous amount of material. They had 36 lever arch files of evidence. There were extremely detailed opening and closing submissions, and the Tribunal took 12 days over their deliberations. We pay tribute to the 78 page judgment which they have produced. It is a cogent, well structured and carefully distilled statement of the issues and the reasons for the Tribunal's conclusions. There are perceptive comments about the difficulties of determining, in cases such as this, whether discrimination had occurred or not. The Tribunal had the advantage of being provided with a daily transcript. But it wisely observed that (para 26):

"The transcript provided to us daily at the parties', expense has also assisted us and we are indebted to our stenographers for the speed and accuracy of their work. We remind ourselves however that much communication is non-verbal and that the way in which evidence was given by each of the witnesses, the nuances and the tone or emphasis given to particular answers, pauses in reply and so on, is not captured in a transcript. Indeed the provision of the transcript enabled us to concentrate even better on the witnesses as they were giving their evidence and to observe their demeanour during the course of questioning even more closely."

The Background.

[3]We sketch this out from the much fuller account given in the decision of the employment Tribunal. We do not focus here on all the matters of detail in issue in this case but only those of particular relevance to this appeal.

[4]Ms Villalba had a long and successful career with Merrill Lynch until her employment was terminated in June 2003. (There are a number of different companies within the ML corporate structure but employees were transferred regularly from one to the other and for practical purposes ML operates as a single operation). Ms Villalba began work with ML in August 1985 in New York, and apart from a short period when she worked for the Swiss Bank Corporation, she remained at the firm for some 16 years. Indeed, she came from what she described as a "ML family". Her father was highly respected having been something of a legend within ML. She had a sister who had worked for the company and also a brother who was, in fact, still employed by the company in New York when her employment ceased. She worked throughout her career on the Private Client side. ML serves many individual investors through 14,000 financial advisers in around 670 branches throughout the world. She worked closely with these financial advisers (FAs) who are the front line sales people. In 1993 she was assessed as being of high management capability. She held various challenging and responsible posts until she was relocated to London in January 2001, when she became Managing Director of MLIB Limited. This was a senior post and she reported directly to two regional managers, the Chairman of MLIB (Jose Malbran) and Raymundo Yu, head of IPCG Asia Pacific and Japan. Her role at this time required her to work with some of the FAs to provide supporting banking services to the clients. She was an extremely successful, highly motivated and ambitious woman. She was subject to a detailed assessment in April 2002 and was considered to be of "emerging high potential".

[5]Shortly thereafter, Mr. Yu was appointed to take responsibility for all IPCG global markets. This was a difficult time for the company because the stock markets had been performing poorly since 2000. Mr Yu decided that there should be a new position of Market Executive for Europe. Ms Villalba was offered and accepted the position on 16 May 2002. There were to be other Market Executives for the Middle East, Latin America, The Pacific Rim and Japan. Initially it was proposed to have a separate Market Executive for the U.K., but shortly after her appointment Ms Villalba's role was expanded to include the U.K. also.

[6]The job of a Market Executive was to be responsible for the profitability of the client markets within his or her respective geographical region. The Tribunal found that Mr Yu considered Ms Villalba's appointment to be "a calculated stretch role". That meant that he was requiring her to exercise and demonstrate skills and talents which had not been required of her hitherto. In particular, she had to manage a direct sales organisation which had not been within her experience.

[7]She accepted the new post on the 16 May 2002 and took it up immediately. She was charged with producing a strategic plan to restructure Europe so as to increase its profitability and reduce expenditure. There had been a major decline in profitability and the immediate concern was to arrest that decline. She quickly adopted a strategic plan which involved significant cuts in the operation, including closing a number of offices. This strategy was approved by Mr Yu.

[8]When she took over there were certain particular problems which she had to face. There was a loss of morale amongst the FAs in Spain because a very popular but controversial manager there had been dismissed. It was thought that it was particularly important to deal with the Spanish problems, not least because Spain had been one of the most successful and profitable markets in Europe for ML.

[9]After initially being impressed by her enthusiasm for the new job and her strategic plan, Mr Yu became concerned about her performance. This was by the end of June, after she had been in the post for about six weeks. There were issues about her leadership. There were rumours and gossip to the effect that she was not performing well and was not implementing or delivering the strategic plan she had adopted. Mr Yu was concerned that she was too detail orientated and was not a good motivator. He also thought that travel was an extremely important part of her job and he was concerned that she was not travelling enough nor displaying the visibility to the more junior management which he thought was essential. Some indication of his concerns at that time is reflected by the fact that Mr Yu added to what are termed her "Critical Few Objectives" the need to "add attention to teamwork and working with others." The Tribunal concluded that by the summer of 2002 she was struggling a little in her job (para 79) and that the criticisms of her were valid. (Para 80).

[10]On the 25 th July 2002, Mr Yu had a breakfast meeting with Ms Villalba. He expressed some of his concerns and indicated that he was getting some negative feedback about her. She explained matters from her perspective and provided a detailed riposte to each and every criticism that had been raised. She considered them all to be wholly unjustified. Mr Yu was dismayed by this reaction. He felt that she was being inflexible and defensive. It was not the constructive response that he had hoped she would display. He was frustrated and exasperated by her failure to take his comments on board. He felt she was being obtuse and not open to constructive criticism.

[11]In mid August a decision was taken not to permit the restructuring plans for Europe to continue. It was thought that the shareholders would be unhappy about it. This, said the Tribunal, was a blow both to Mr Yu and Ms Villalba who had the restructuring well under way. The effect of this in particular was to make the concentration on business generation even more important. However, Ms Villalba did not travel with any frequency to the offices within her region, and Mr Yu became very concerned that she was not delivering the results that he had anticipated she would do.

[12]In September 2002 Mr Yu decided that he needed someone to exercise managerial functions between himself and the Market Executives in Europe and the Middle East. The profitability problems by this stage were acute. He appointed Ausaf Abbas to that role. Mr Abbas came with a very high reputation. Mr Yu told Mr Abbas that steps had to be taken urgently to stem the losses in Europe and return the region to profitability. The job which he described to Mr Abbas was very similar to that which Ms Villalba had been performing. The Tribunal found that in fact Mr Abbas was taking over some of Ms Villalba's functions. However, Mr Yu told Ms Villalba that the appointment of Mr Abbas did not involve demotion. He said Mr Abbas was effectively taking over Mr Yu's functions and that she would retain her reporting lines to Mr Abbas.

[13]Increasingly there was concern about Ms Villalba's failure to visit Spain. It was thought that her lack of visibility was compounding the serious problems there and engendering a sense of drift. Both Mr Yu and, after his appointment, Mr Abbas encouraged her to spend more time in Spain. At this time (in October) Mr Yu told Mr Abbas that Ms Villalba was not "flexible".

[14]Mr Abbas first visited London from the 11 th to 28 th November. Prior to that he would discuss matters with Ms Villalba regularly on the telephone. Ms Villalba appeared to be feeling under pressure. The Tribunal recorded that by the end of October she had become demotivated, was losing confidence and had became less decisive. Mr Abbas felt that she was placing too much reliance on him and was not exercising the independent and positive role that was needed. In an email on 4 th November 2002 he commented to a colleague that she was "turning out to be very high maintenance", by which he meant requiring considerable management time and effort. She cancelled a number of planned trips to Spain and would have repeat meetings on the same issues. The Tribunal noted that the perception was developing generally that she was ineffective. There was a great deal of frustration and disappointment that she was not tackling the issues that were facing the company and appeared to be indecisive and focussing on relatively unimportant matters.

[15]On 11 th November, Mr Abbas asked Ms Villalba to cover the Market Leader Europe (South) position. She agreed to that although there were some concerns that she expressed as to whether this should be explicitly identified on an internal organisational chart. Mr Abbas was riled because, said the Tribunal, he did not appreciate her sensitivities about the perception of her status within the organisation. In the event it was not shown on the chart.

[16]On 25 th and 26 th November, Ms Villalba and Mr Abbas visited the ML office in Frankfurt and Milan for country strategy meetings. These were meetings with senior management of ML. Part of that trip involved a plane journey from Frankfurt to Milan where the corporate jet was used. Ms Villalba took exception to the fact that she had to sit slightly apart from the rest of the management group in a seat on its own nearest the drinks cabinet. As a consequence it fell to her to pour drinks for the fellow travellers. Much was made of this incident before the Tribunal but in the event the Tribunal was satisfied that there was nothing discriminatory about this. Someone had to sit in that seat, and whoever it had been would have had to provide drinks for the others.

[17]By this stage Ms Villalba was feeling vulnerable, isolated and unsupported. She went to see Pauline Cahill who was the Head of Human Resources of the company in London, on the 27 November. She treated Ms Cahill as a confidante. She explained to her that the trip had not gone well and she made what the Tribunal described as "a tentative allegation of discrimination". She contrasted how she was treated when compared with one of the other executives. Miss Cahill knew that the senior management in general perceived that Ms Villalba was struggling at her job. She sought to placate Ms Villalba and urged her to work constructively with Mr Abbas. However, the Tribunal found that at least by 11 th December, Mr Abbas had been told that Ms Villalba had made these criticisms of him and that she had suggested that he may be discriminating on sex grounds against Ms Villalba.

[18]On 28 th November, Mr Abbas returned to Singapore after his trip to Europe. Ms Villalba sought to work on their relationship. She sent an email to him outlining her plans for Europe. He was not, however, impressed. He felt that she was not doing enough to stem the losses in Europe and was still lacking the visibility that was required to improve morale of the European staff. He had told her on a number of occasions that she should travel much more. The expectation of management at ML was that someone in Ms Villalba's position would quickly respond to management advice and suggestions. Ms Villalba was not receptive to his requests or hints at all. Problems continued in Spain and Mr Abbas reminded Ms Villalba that she must focus on that country.

[19]On December 11 it became known that the final audit report would give an "unsatisfactory" opinion of the control infrastructure in the Spanish offices. Ms Villalba was due to visit Spain on 12 th December and she was told by Mr Abbas to focus on that unsatisfactory audit. In fact, however, she emailed Mr Abbas to say she was cancelling the Spanish trip in order to introduce a new client to London. Mr Abbas responded impatiently to this news. He felt she was ignoring instructions and was failing to get to grips with the problems.

[20]There was an incident on 11 th December when Ms Villalba announced the appointment of Mr Bussolati as Market Manager in Italy. She had not shown a draft to Mr Abbas, he objected and she apologised, saying that it was just a mix up. He forwarded his email to Ms Cahill of the Human Resources Department. This was the first matter in respect of which the Tribunal found victimisation discrimination. The Tribunal inferred that by this stage Mr Abbas knew that she had complained about him and was trying to find fault with Ms Villalba. The Tribunal found that at this time Ms Villalba was demoralised and unhappy and not getting the constructive support from Mr Abbas which she might have expected.

[21]On 13 th December Ms Villalba told Ms Cahill that Mr Abbas was bullying her and "micromanaging her", that is involving himself in the detail of her activities. She drafted an email to Mr Abbas which was in extremely strident terms and included an allegation of managing by bullying. She was persuaded by Ms Cahill not to send that email. This was in response to an email from Mr Abbas in which he had told her that not going to Spain in order to introduce a client to the office in London showed a skewed sense of priorities. The Tribunal in fact concluded that Mr Abbas was not bullying Ms Villalba at this stage. His communications were terse and frank but not unreasonable. He himself was under considerable pressure to turn Europe around. There were a series of e-mails in early December which had emphasised the grave state of the financial position in Europe.

[22]In December the company had introduced a major cost cutting exercise involving significant redundancies. They had to be implemented before the bonus day on 15 th January 2003 but it was decided to wait until after Christmas to announce them. Ms Villalba was consulted as to who should be put on the list. One of the names she had recommended was Mr San Salvador who worked in Spain. That had been agreed by Mr Abbas and Mr Yu but subsequently on 30 th December Ms Villalba wavered and recommended not dismissing Mr Salvador at that point. This also exasperated Mr Abbas who considered that the matter had been reviewed several times and that a decision had been taken. It was very much the atmosphere within ML that decisions once taken should be implemented swiftly and decisively.

[23]The Tribunal found that increasingly by mid December Mr Abbas was taking control of Europe and the Middle East and was meeting with Ms Villalba's reports direct. This was mainly because his role involved these functions but partly because he was reluctant to leave matters with Ms Villalba because she was not performing well. He perceived her as difficult and to be avoided if possible. (para 125)

[24]In January 2003 Ms Villalba was involved in preparing up to date financial figures. Part of this involved assessing costs and there were disputes as to how costs should be allocated across certain regions. Obviously, the greater the costs, the lower the profit and the smaller the bonus pool. Mr Abbas was again frustrated by Ms Villalba's concentration on these financial matters. He thought she should be out generating revenue and improving the standing of the business in Europe. He felt that she did not have the ability to prioritise her work properly and could not manage in a crisis. Mr Abbas arranged to have lunch with Ms Villalba on 10 th January 2003. She feared that her job may be at risk. In fact, during the lunch, she agreed to focus on Switzerland but without taking the name of Market Leader Switzerland. She was, said the Tribunal, particularly status conscious and Mr Abbas knew that she would not be happy at being named Market Leader Switzerland. Mr Abbas was trying to improve his working relationship with her by having this lunch.

[25]Ms Villalba was not able to attend the planned management meeting in Arizona, where the bonuses were fixed. Her bonus had been fixed by Mr Yu. He had decided her appraisal rating in a conference with Mr Woodroffe and Mr Gardner, two other very senior managers. There were three possible performance ratings, AD – which was "achieved with distinction"; AR – "achieved requirements"; and IA – "inconsistent achievement". Mr Yu considered that she should be categorised as IA – that is the lowest of the three categories- but he did not think it appropriate to do this and for presentational purposes she was given an AR rating. She was, however, extremely disappointed. She had hoped the promotion would lead to a significantly better bonus than she was going to receive.

[26]Meanwhile, as the Tribunal found, by early January, Mr Yu had decided that Ms Villalba should not continue in the Market Executive role for Europe. He reached this view partly from his own perception of her performance and partly as a result of reports received from Mr Abbas and various other colleagues. He considered that she was not leading the field and she was not travelling enough or creating the powerful drive necessary to improve performances, in Spain in particular. He was aware of her poor relationship with Mr Abbas.

[27]The Tribunal noted that his view of her shortcomings was confirmed in what is termed a cross evaluation report in 2002. That is where managers are appraised by certain nominated colleagues, both peers, subordinates and higher managers. The Tribunal noted that this appraisal had been carried out some months before Mr Yu removed her from her role and whilst they felt that he would not have paid too much attention to it, they also considered that it provided "compelling corroboration of Mr Yu's perception of her performance which provided the reason for his decision" (para 145). Mr Yu identified Ms Palmer as a suitable replacement for Ms Villalba.

[28]By mid-January the Tribunal found that Mr Abbas had become increasingly exasperated by Ms Villalba and had become critical of all Ms Villalba's actions and omissions. He found her exasperating, frustrating and obstinate. She in turn thought he was entirely at fault for the problems they were facing. The Human Resources Department and senior management were, by then, believing that Ms Villalba was attempting to construct a legal case to take against the company. Ms Villalba had on the 9 January asked for her previous year's performance rating and the HR department were suspicious of the reason for that request for information that would have been obvious to her. The Tribunal found, however, that they had already been alerted to the possibility of a potential claim as a result of her tentative complaint of sex discrimination on the 27 November.

[29]On 16 th January Ms Villalba wrote an email to Mr Yu questioning her performance rating of AR and saying that she did not understand the basis of that rating. Shortly after that, her name was placed in a draft organisational chart as Market Leader for Switzerland. She strongly objected to that and Mr Abbas considered that the situation was becoming intolerable. Mr Yu considered that there should be a meeting of all interested parties. That occurred on 21 January. The working relationship between her and Mr Abbas had broken down. The Tribunal found that the HR Department was guiding Mr Abbas' dealings with Ms Villalba and advising him at every point. They wanted to minimise contact between them because of the risk of victimisation claims. Ms Villalba did not in fact attend the meeting on 21 st January. She continued to object to being described as Market Leader Switzerland and Mr Abbas called her arrogant. There was a meeting on 23 rd January in which the Tribunal found that Mr Abbas had not bullied her but there had been a very frank exchange. The Tribunal found that by then the relationship had broken down completely. HR was by then simply trying to prevent Mr Abbas from victimising Ms Villalba; they were not, said the Tribunal, seeking at that stage to find a solution to her difficulties.

[30]Following that meeting on the 23 rd , Mr Yu thought that there must be a job and a plan for Ms Villalba. He had, as the Tribunal found, already decided that she could not stay where she was. There was a meeting between Ms Villalba, Mr Yu and Mr Woodroffe arranged for the 10 th February. This was to discuss her performance rating in response to the email she had sent. Mr Yu was visiting London on that day. She did not, in her email, identify sex discrimination as a possible explanation of what she considered to be an unfair rating but the Tribunal found that this was understandable and it was not inconsistent with her claim that she had been subject to such discrimination. They said that she would have been, understandably, reluctant to identify that specifically in her communication to Mr Yu. Mr Yu told her why he had not considered that she should be rated AD, that is at the highest level. He said that everyone's bonus had been down because of the losses.

[31]The following day Mr Yu did offer Ms Villalba a new post. He told her that the continuing role of Market Executive for Europe was no longer sustainable. The new post on offer was not at a commensurate level with the Market Executive position. It did not have the same status, career prospects or likely compensation and she was concerned that it may be precarious. The Tribunal accepted that Mr Yu had worked hard to find this post for Ms Villalba and that it was the best job that could be found in the time available to him. Ms Villalba was seeking to advance arguments why she should remain in her Market Executive position and Mr Yu wanted to concentrate on her future having reached a clear view that she could not continue in her current role. Mr Yu had in fact asked Human Resources to prepare a performance appraisal. This was not strictly in accordance with procedures which would have required Ms Villalba to prepare the first draft and then discuss it with her managers. The Tribunal noted that there were two matters in respect of which the summary was inaccurate but broadly it was a fair reflection of her performance in the role of Market Executive. The Tribunal were satisfied that Mr Yu and Mr Woodroffe were genuinely wanting her to agree the performance assessment and to persuade her to accept the new job on offer. She, for her part, would not accept that the performance assessment was a fair reflection of what she had done and she wished to retain her job.

[32]On 21 st February she sent a very detailed response to the performance appraisal and for the first time raised a complaint that she might have been discriminated on grounds of sex. There was then a conference call between Ms Villalba, Mr Woodroffe, Mr Yu and Mr Abbas. On 24 th February Ms Villalba rejected the new post she had been offered and said she would not consider jobs outside the United Kingdom. She would not agree to being removed as Market Executive and said she did not understand the reasons for her removal although the Tribunal found that they had been fully explained to her but that she did not take them in. A commitment was made that she would not be "repriced" which meant that she would not suffer any loss in her level of pay for the following year. Mr Yu and Mr Woodroffe also agreed to look for alternative positions for her. She had not been told that the likely consequence of her failure to accept the post on offer would be dismissal. But, the Tribunal concluded that Mr Yu and Mr Woodroffe did genuinely want her take that position. She had much experience, she had the skills for that post and it would have reduced an area of conflict.

[33]Ms Palmer arrived on 24 th February to take over from Ms Villalba. The Tribunal found that Ms Villalba was not uncooperative but nor was she especially helpful. She was in communication with Mr Yu and Mr Woodroffe. She was offered another post but that represented a demotion to a more junior position and she rejected it. By this stage, however, the Tribunal found that the job was being put forward by HR cynically in the anticipation that it would be turned down. Mr Yu was meanwhile becoming very frustrated by the continual bombardment of emails in which Ms Villalba was repeating her earlier complaints. He asked Mr Woodroffe to prepare a script. The Tribunal found that the script which he read in a conference call with Ms Villalba was a "gracious and dignified attempt to move forward." They said it was respectful of Ms Villalba. The Tribunal believed Mr Yu was genuinely hoping that Ms Villalba would take the position. Mr Woodroffe might also have had an eye on any potential legal outcome but the Tribunal considered that his motives were genuine too. She rejected the offer finally one week later.

[34]On 28 th March Mr Woodroffe offered Ms Villalba a three month paid leave of absence. He said that they would continue to search for opportunities to be presented to her. She did not accept the offer of leave and told Mr Woodroffe that she had instructed solicitors. Mr Abbas was finding it extremely frustrating that he was not able, formally, to announce Ms Palmer's new position and identify clearly in an organisation chart who was performing which post. Ms Villalba was in fact required to remain at home from 4 th April until her contract was terminated at the end of July. The Tribunal found that a major factor in converting what initially had been an offer of sabbatical leave to a requirement that she should remain at home was the fact that she had engaged solicitors to advise her. The Tribunal also found that Ms Villalba had not been told that the consequences of refusing both posts which had been on offer would result in her dismissal. That was spelt out in a letter dated 18 th June 2003 during her administrative leave. She was told that if no other job emerged by the end of July her contract would be terminated. The Tribunal concluded, however, that she would not have been considered for any role which was at the same level as her former role as Market Executive even if one had been available.

[35]The Tribunal found that by the end of June, Mr Woodroffe was going through the motions of identifying possible vacancies; by then it was plain that nothing would be suitable for her. Accordingly, following the paid leave, she was dismissed with pay in lieu of notice. Her directorships with relevant ML companies were terminated on the same date. The Tribunal found that no real efforts had been made to find an alternative position once she had gone on leave, although no vacancies of a similar rank did in fact become available. Her contract finally terminated at the end of July. The pay complaints.

[36]One of the complaints of Ms Villalba is that she was discriminated against in relation to pay. She named a total of nine comparators. ML agreed that some were proper comparators but disputed others. However, it was agreed that the Tribunal should in any event determine whether any difference in bonus was the consequence of sex discrimination. The Tribunal considered this issue in some detail. They outlined the culture of secrecy which concerned pay at ML. In general, pay rates are kept secret and only the Finance and Human Resources Departments will be privy to the figures. The Tribunal noted that there does not appear to be a concept of rate for the job and bonuses figure extremely heavily in the overall compensation, often amounting to 75% to 80% of total compensation and sometimes even more. Bonus levels were a very important indicator of the perceived worth of the employee to the company. ML used it as a motivational tool.

[37]The Tribunal found that when fixing her bonus for the year 2002, Mr Yu took the view that she had performed badly in her role, though he felt this was partly his own fault for over-promoting her. He did appreciate that it was an extremely difficult and complex job and that was in part the reason he gave her the middle grade, an AR rating, rather than the lowest IA rating. The latter would have given the very clear signal that she had no future in the firm and he considered that that would be unfair, albeit that the rating would have been strictly accurate. The Tribunal assessed the explanations for the bonuses of all the other comparators and concluded that, albeit that the method of fixing bonuses was opaque, the difference was not sex based. Ms Rose, for the Appellant, accepted before the Tribunal that in the light of the decision of the EAT in Parliamentary Commissioner for Administration and Health Service Commissioners v Fernandez

[2004] ICR 123

there was no duty on the Tribunal to consider the issue of objective justification. However she reserved her right to pursue that point on appeal, which she now does. The Claims before the Employment Tribunal

[38]It is pertinent to note that the employment Tribunal was faced with a broad array of claims. First and very much in the forefront, Ms Villalba alleged that she had been directly discriminated against on grounds of sex. It was said that this influenced the decision of Mr Yu to remove her from a position of Market Executive, and caused her not to be considered for suitable alternative vacancies. It was also contended that Mr Abbas in particular had diminished her role and sidelined her and had sought to push her into a position where she would need to resign.

[39]Second, she alleged discrimination by way of victimisation. She claimed that as a result of her complaint that she was being discriminated against, made to Ms Cahill on 27 th November, she had been subject to a number of acts of discrimination. Five specific acts were identified including each of the grounds on which she had allegedly been subject to sex discrimination, and in addition the decision to place her on administrative leave. Third, there was a complaint of unfair dismissal. Fourth, there were complaints under the Equal Pay legislation in relation to her bonus

[40]The Tribunal rejected all her claims of sex discrimination. They found that her removal from the position of Market Executive was based not on her gender but on the perception of her performance. They considered that the explanations given by ML were both genuine, cogent and in fact justified. The Tribunal was critical of the conduct of Mr Abbas, though in part it considered that Ms Villalba had unreasonably resented ordinary management control. None of his conduct, however, was found to be on grounds of sex. The Tribunal also rejected her claims under the equal pay legislation, after carefully assessing the way in which the bonuses had been determined for herself and her alleged comparators.

[41]The Tribunal did, however, find that in certain respects Ms Villalba had been the subject of unlawful victimisation. Initially, in fact, she had alleged that acts of victimisation had occurred only after 16 th January 2003, when she made a complaint about her bonus. By a late amendment, however, she made the allegation that victimisation had resulted from the complaint to Pauline Cahill indicating discrimination on grounds of sex on 27 November. As we have indicated, the Tribunal found that she did indeed make such a complaint, although Ms Cahill had denied it. Ms Villalba alleged that Mr Abbas had denigrated and bullied her thereafter.

[42]The Tribunal found that although her complaint of sex discrimination was unfounded, nonetheless there were certain acts of hostility which did reflect some victimisation. Only one of these occurred prior to the decision to remove her from the position of Market Executive, namely that relating to the Bussolati e-mail, but there were some after that too. They are set out in para 262, reproduced below. As far as bonuses were concerned, the Tribunal found that in each case the differential had nothing to do with sex and they concluded that nothing more was required, since there was no question of her establishing disparate impact, or anything of that kind. The question of objective justification did not arise.

[43]We first consider the appeal relating to the Tribunal's findings in relation to victimisation, and later the equal pay appeal. They are wholly distinct. The victimisation appeal. The law.

[44]The essential law on victimisation discrimination is not in dispute. Section 4(1) of the Sex Discrimination Act 1975, so far as is material, is as follows:

"(1) A person ("the discriminator") discriminates against another person ("the person victimised") in any circumstances relevant for the purposes of this Act if he treats the person victimised less favourably than in those circumstances he treats of would treat other persons, and does so by reason that the person victimised has –…. (d) alleged that the discriminator or any other person has committed an act which (whether or not the allegation so states) would amount to a contravention of this Act or give rise to a claim under the Equal Pay Act 1970 [or sections 62 to 65 of the Pensions Act 1995]"

Section 6(2)(b) then provides as follows:

"It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her… (b) by dismissing her, or subjecting her to any detriment"

[45]The contention here is that there was a breach of Section 4(1) read together with Section 6(2)(b) on the grounds that ML had victimised Ms Villalba unlawfully by removing her from her role, which constituted a detriment, and by her subsequent dismissal. The Tribunal found that the dismissal followed almost inevitably from the removal from office. By Section 41 of the Sex Discrimination Act, anything done by any of the ML employees in the course of their employment is to be treated as done by ML itself. Section 63A of the Act deals with the burden of proof in the following way:

"(1) This section applies to any complaint presented under section 63 to an Employment Tribunal. (2) Where, on the hearing of the complaint, the complainant proves facts from which the Tribunal could, apart from this section, conclude in the absence of an adequate explanation that the respondent --- (a) has committed an act of discrimination against the complainant which is unlawful by virtue of Part 2, or (b) is by virtue of Section 41 or 42 to be treated as having committed such an act of discrimination against the complainant, the Tribunal shall uphold the complaint unless the Respondent proves that he did not commit, or, as the case may be, is not treated as having committed, that act."

[46]The Tribunal found in terms that Ms Villalba had established a prima facie case of discrimination sufficient to shift the burden of proof. An issue here is whether the Tribunal could properly have concluded on the evidence that ML had discharged the burden of proof. The Tribunal's conclusions on victimisation.

[47]The Tribunal's conclusions on victimisation discrimination were summarised as follows (para 262):

"We have considered all the allegations of victimisation: both those set out in the pleadings and the summary of allegations document. The deteriorating relationship between Ms Villalba and her employer was, as is often the case due to a number of factors. Our task is to identify the extent to which it was on grounds of victimisation. Clearly the problems predated her first protected act and were ongoing pre-November 27 2002. Ms Villalba in effect complains of a pattern of behaviour, alleged as direct discrimination prior to the first protected act and as both direct sex discrimination and victimisation thereafter. That many incidents complained of occurred before the Cahill meeting of 27 November illustrates the difficulty of our task in isolating the extent of the influence of the discrimination complaint in the motivation of the Respondent's actions towards her. It also assists the Respondents a little. In summary we have found that the only allegations of less favourable treatment which took place on grounds of victimisation are: the two emails from Mr Abbas - the golf corporate hospitality email of 16 January 2003 (CB6/1586-7) and the email rebuke about Gianluca Bussolati's appointment; in her increased isolation from mid-January until her dismissal exemplified in her exclusion from Mr Tucker's feedback sessions following his bonus announcement and the way she was treated with "caution" and their dealings with her became strained; and the timing of her enforced administrative leave. We wish to emphasise our disappointment at the behaviour of the HR department in Ms Villalba's victimisation and their unprofessional behaviour."

Summary of the arguments

[48]Ms Rose challenges the findings on victimisation and contends that they do not go far enough. Essentially she alleges that on the facts actually found by the Tribunal, they acted irrationally in not concluding that the decision of Mr Yu to remove Ms Villalba from her position of Manager Marketing Executive Europe, and her dismissal which flowed ineluctably from that decision, was by reason of victimisation. They only expressly identified one act of victimisation discrimination prior to Mr Yu's decision to remove her from her post, but Ms Rose submits that simply having regard to their own findings of primary fact, and not seeking to question those in any way, the only proper conclusion as a matter of law was that there were further acts of victimisation by Mr Abbas in that period which they ought expressly to have identified. These concerned in particular certain findings that Mr Abbas had sidelined her with respect to two employees answerable to her, a Mr Sullivan and Mr Tucker; and that Mr Abbas had been lodging complaints with the Human Resources department from the time of the Bussolati e-mail on 11 December. The failure to follow the logic of their findings and identify these as acts of victimisation betrayed an inconsistency in their analysis and a failure to have regard to relevant factors when applying the law to the facts. These additional acts of victimisation by Mr Abbas must further have influenced his perception of her performance, even if only subconsciously, and that perception, as the Tribunal found, was one of the matters which Mr Yu took into account when reaching his decision. She also contends that the Tribunal erred in failing at all to consider the extent to which Mr Abbas' perceptions of her abilities might have unconsciously been influenced by victimisation.

[49]In addition to failing to have regard to these other acts of victimisation, it is also alleged that the Tribunal did not apply the right causation test; they analysed whether the victimisation was a significant reason for the removal, in the sense of an important reason, whereas they ought to have asked whether it was a more than trivial reason. The appellant submits that if the proper question had been asked in relation to all the acts of victimisation that ought to have been identified, the only possible answer that could be reached was that it was more than trivial, and therefore the Tribunal's conclusions on this point were irrational. Finally, it was alleged that the Tribunal erred in its failure to draw certain inferences from the fact that the witnesses for ML lied about whether they knew that a sex discrimination complaint had been made.

[50]Mr Linden contends that the appellant is painting a wholly misleading analysis of the findings of the Tribunal. He says that it is plain that, when its decision is properly analysed, the Tribunal specifically found that there was no improper conduct by Mr Abbas in relation to either Mr Tucker or Mr Sullivan until after Mr Yu's decision had been taken (although there was after that.) There was only the one act of victimisation discrimination prior to Mr Yu reaching his decision relating to the Bussolati e-mail. Moreover, in relation to the alleged logging of incidents, he says that the Tribunal were having regard not to what was happening immediately after the 11 th December but what happened a little later, namely the flow of logged emails from the middle of January onwards which they identified as containing a very different tone than the earlier emails had done. He submits that the Tribunal applied the right test when assessing whether any victimisation had been a cause of her removal from office. He contends that a fair reading of the Tribunal's decision shows that it had considered and rejected the possibility that Mr Abbas' perception was influenced by unconscious victimisation considerations. He suggests moreover that the period of time between 11 December, when Mr Abbas became aware of her complaint, and early January when the decision to remove her from her post was taken, was so very brief that it is entirely fanciful to suggest either that the performance of Ms Villalba would have been further adversely affected to any significant extent in that period, or that his knowledge of her making a tentative complaint would have had any real influence on Mr Abbas' perception of her qualities. Mr Abbas had expressed continuing concerns that she was not up to the job well before 11 December. Moreover, it was the perception of all those who worked with her at that point, as well as Mr Yu himself, and he says that the Tribunal were entirely right to say that the influence thereafter was very small. Finally he submits that even if, contrary to his principal submission, the Tribunal did not specifically apply the proper causation test, it would be quite unreal to suggest that the influence of victimisation on the decision to remove Ms Villalba from office was anything more than trivial. It would be pointless to refer the matter back to the Tribunal since that was the only possible conclusion on the evidence, and therefore the decision should stand. As to the lies, he says that the Tribunal dealt with the significance of those perfectly properly. The Tribunal's findings.

[51]Before considering the detail of this challenge, it is necessary to set out the relevant passages of the Tribunal's decision which have a bearing on the matters which we must consider. First, we identify the passage where the Tribunal found that there had been victimisation discrimination arising out of the email sent to Ms Villalba concerning the appointment of Mr Bussolati (para 118):

"Ms Villalba made a general announcement about the appointment of Mr Bussolati to the role of Market Manager for IPC, Italy on 11 December 2002 (CB5/1410). Mr Abbas objected to the announcement as he had not seen a draft of it before it went out. He emailed Ms Villalba rebuking her and she quickly emailed a reply apologising for the "mix up" explaining she thought it had been pre-agreed with Mr Abbas that she would send a low key email to Italy and that he would have, and will in the future, be the last check, repeating that it was "just a mix up"

. We accepted that the terms of the announcement had been discussed with Mr Abbas by Ms Villalba in general terms before hand. Mr Abbas forwarded his email to Ms Villalba to Ms Cahill with the general comment "For your information – this violated the no surprises rule in my opinion". We understand the comment to mean that he was criticising Ms Villalba for breaching the rule and it is not intended as a criticism of Ms Cahill. The email demonstrates the degree to which Mr Abbas was involving the HR department at this stage and the closeness between them, which adds strength to our finding that Mr Abbas was by now aware of Ms Villalba's conversation with Ms Cahill on 27 November. His reaction to the announcement seems surprising given his evidence to us (which we accepted) that Ms Villalba was not taking decisions. We infer that he was looking to find fault with her and seeking to log incidents with HR with a view to their being stored and noted, rather than resolved. The email is not in a bullying tone, but is a rebuke that did not appear justified on the evidence we heard."

[52]Then at Paragraph 137 in the course of setting out the history, the Tribunal deals expressly with the allegations relating to Mr Tucker and Mr Sullivan as follows:

"We accepted Ms Villalba's evidence that she was not consulted about the performance appraisal and bonus for Mr Tucker (recently appointed UK market executive), nor involved in the discussions in January 2003 with him about the award and that she was neither debriefed nor consulted about the discussion. Nor was she involved in discussions Mr Abbas had with Mr Sullivan, an influential FA from the USA."

[53]Then in setting out certain conclusions in relation to the sex discrimination allegations, all of which were rejected, the Tribunal dealt expressly with the question of Ms Villalba being sidelined as follows (para 241):

"We have also found that Ms Villalba was, to a certain degree, sidelined. Have the Respondents proved to us that this was not on grounds of her sex? The reason for this was a consequence of Mr Abbas' appointment. His role and his responsibilities sidelined her from strategic issues in Europe. Notwithstanding, Mr Abbas initially sought to involve Ms Villalba beyond just using her to inform himself better of the issues in Europe. He involved her in a number of areas, for example his request that she accompany him to the country meetings in Italy and Germany in November 2002. He involved her however commensurate with his position as her new boss following his appointment and not as an equal partner. In our view, based on the evidence before us, the side-lining of her following her appointment, was not on grounds of sex and we accept the Respondents' explanation in this regard. From mid-January however we conclude that victimisation played a part in her being sidelined."

[54]Specifically, in connection with the allegation that his perception of her performance was influenced on grounds of sex, they said this (para 244):

"We have also found that Mr Abbas belittled Ms Villalba behind her back and did not speak warmly of her. We find that this was initially on grounds of his frustration at her failure to focus on the priorities that he had set and their different perceptions of the steps needed to address the problems. He considered that the problems for ML in Europe were exacerbated and worsened under her stewardship and it was his task to resolve and improve matters. He found her difficult to manage and she did not accept his guidance which led him to have a lower regard for her abilities than the regard with which he held Bruno Daher. We have accepted that Mr Abbas would have shared his not very complimentary view of Ms Villalba's abilities in the role of market executive for Europe with colleagues and superiors and that he did so on grounds that these were his genuinely held views of her abilities, they were not on the grounds of her sex. From mid-January onwards however the tone of the emails between himself and Mr Woodroffe and Ms Cahill is of a distinctly more personal and hostile nature which we conclude is on grounds of victimisation."

[55]In relation to victimisation they concluded as follows (paras 253-255):

"We next considered whether Mr Abbas had denigrated and attacked Ms Villalba behind her back on grounds of victimisation. As already discussed in the context of direct discrimination, we found he shared his views of Ms Villalba's abilities and shortcomings with senior colleagues and these views, whilst uncomplimentary, were not formed on grounds of sex. However when we come to see the email traffic between Mr Abbas and the HR department (in particular Mr Woodroffe and Pauline Cahill) from mid January 2003 onwards, and, importantly the email to Mr Gorman of 3 February 2003 (CB6/1672) a different picture emerges and we accept Ms Rose's submissions that they displayed a degree of hostility, personal attack and denigration disproportionate to Ms Villalba's perceived shortcomings. They border on the vindictive. She was being isolated and disrespected in a quite unpleasant and personal way behind her back and no cogent explanation has been given. In fact the only plausible explanation for such treatment was her allegations of sex discrimination. There is a stark contrast to the emails about Mr San Salvador when his performance was perceived as wanting, when he is discussed in a matter of fact way. They were looking for things to criticise her for, and not seeking to assist her and support her in performing her role. There was a snide edge and a sneering tone to the emails about Ms Villalba that emerges from mid-January onwards that is not present in earlier emails. It is particularly disappointing to see some of these emanating from the human resources department. We attribute the change to the allegation of discrimination raised by Ms Villalba. We can also see a contrast between the comparatively gentle, somewhat wry, observation of Ms Villalba as "high maintenance" to Ms Matsuoka in early November with the tone of the emails about her from mid-January onwards which further bolsters our conclusion that a significant factor in the denigration and attack, as demonstrated in the emails is on grounds of victimisation, We also note that the later emails were written in the consciousness that they might become discoverable in legal proceedings and there is a degree of self censorship by the references to not preferring not to "script on email", but to discuss her over the telephone. It is therefore reasonable for us to infer that the email exchanges were more restrained than the telephone conversations between them around this time……. It was surprising that Ms Villalba was not involved in the bonus and appraisal feedback meetings with Mr Tucker and was not informed about the Mike Sullivan meeting beforehand."

[56]They then dealt with the extent to which Mr Abbas' perceptions may have influenced Mr Yu's assessment of Ms Villalba's abilities. They said this (para 258):

"... We conclude, on the basis of the evidence before us and the facts that we have found that Ms Villalba's complaint to Ms Cahill was only a very small factor, not a significant influence, in the decision to remove her from her role as market executive, which was predominantly on the grounds of Mr Yu's assessment of her performance in the role. The extent of the influence was the effect the complaint had on the relationship between Mr Abbas and Ms Villalba. Ms Villalba's complaint to Ms Cahill was only part of the reason for the deteriorating relationship between her and Mr Abbas. In turn the relationship between Mr Abbas and Ms Villalba was only part of Mr Yu's decision to remove her from the role of market executive."

And they summarised their conclusions in relation to victimisation in paragraph 262 which we have set out above. Victimisation discrimination: an analysis of the grounds of appeal.

[57]We turn to analyse more fully the particular grounds of appeal in the light of these findings. Should the Tribunal have identified other acts of victimisation discrimination?

[58]It is submitted that the Tribunal erred in concluding that the only act of specific victimisation discrimination prior to early January had been the Bussolati e-mail. Ms Rose submitted that having found that Ms Villalba had been kept out of certain meetings which she would normally have been expected to attend with both Mr Tucker and Mr Sullivan, the Tribunal could only sensibly have concluded that these actions were caused, at least in part, by victimisation discrimination. Moreover, these meetings would have occurred in the normal way prior to early January, that is before Mr Yu made his decision, and they demonstrate that Mr Abbas' conduct at the material time was strongly influenced by his hostility to Ms Villalba because of her sex discrimination complaints. In addition, the Tribunal found that from 11 December, Mr Abbas was beginning to log emails with the HR Department, not with a desire constructively to improve the relationship, but rather to build up a case against Ms Villalba. It is submitted that if the Tribunal had properly recognised that these were further examples of victimisation discrimination, then the impact of that victimisation becomes much stronger. It may well have had a greater influence both on Ms Villalba's deteriorating performance, and also on Mr Abbas' perception of that performance.

[59]The first matter related to the fact that Mr Abbas had excluded Ms Villalba from having an input into the 2002 bonus awards or Mr Tucker. Mr Tucker reported to her on a direct basis and it was alleged that she should have had some say in the discussions leading up to his bonus payment. Before the Tribunal this allegation was, as Mr Linden reminded us, but one of very many allegations of discrimination by Mr Abbas. He also contended that the way in which the issue came before the employment Tribunal was relevant to an analysis of this argument. The issue of sidelining in relation to Mr Tucker was raised in the original application to the Tribunal, but exclusively in the context of sex discrimination. Further allegations of discrimination were made to the Tribunal after Mr Yu had given his evidence. This was in a document headed "List of Issues" produced after Mr Yu had given evidence. In that document this particular allegation was again said to be an act of sex discrimination. It was not specifically identified as an act of victimisation discrimination, although certain other matters were. To the extent that it was covered at all as a victimisation complaint, it was in the sweep up paragraphs (paras 8 and 9) to the effect that Mr Abbas' treatment from 11 December onwards was alleged to be significantly influenced by the fact that she had complained about him.

[60]These incidents were again referred to in the appellant's closing submissions, but again in the context of sex discrimination. One of the sub headings dealing with the conduct of Mr Abbas notes that he was bypassing Ms Villalba. Under that sub heading there are four further sub-headings, the first of which relates to Mr Tucker. The complaint was that although she had direct responsibility for him and was the executive with the closest knowledge of his performance, nevertheless she was not consulted about his performance appraisal or bonus. The complaint continues:

"..Ms Villalba was not consulted about Mr Tucker's performance appraisal or bonus. Mr Tucker was unhappy about his bonus award and met with Mr Abbas to discuss it in January 2003. She was not consulted or debriefed about the discussion"

[61]That meeting took place on the 16 January and in fact the Tribunal did find that there was victimisation discrimination with respect to the failure to consult her following the feedback session. That of course was after Mr Yu's decision had been taken.

[62]Another example of sidelining concerns a Mr Sullivan, an FA who met Mr Abbas in December 2002. Ms Villalba was not informed of this meeting and was upset by this. It was said that Mr Abbas was dismissive towards her when she raised the matter with him. Mr Sullivan does not seem to have figured at all in the original originating application, nor in the "issues" document. But the grievance did surface, albeit again as one of very many complaints, in the evidence and the complaint, albeit again in the context of sex discrimination, was referred to in the closing submissions.

[63]We agree with Mr Linden that in fact these two matters were only expressly raised as examples of discrimination on grounds of sex. They do not figure specifically in the part of the closing submission dealing with victimisation. It is said that Mr Abbas discriminated against Ms Villalba by way of victimisation by sending bullying and provocative emails and denigrating and attacking her behind her back to senior managers. Indeed, the major complaint at the time about victimisation was that it was alleged that Mr Yu had decided to remove Ms Villalba from her post because she made a compliant about her pay on 16 th January. In fact, the Tribunal rejected that entirely and concluded that Mr Yu had made his decision well before that date.

[64]We have spent a little time identifying how the case was put to the Tribunal for two reasons. First, it seems to us that it is necessary to focus on precisely what the Tribunal reasonably understood they had to determine in a case which had raised so many detailed allegations spanning so many months. We have to say that we think it is far from clear that there was ever any specific allegation identified at any stage - not even in the closing submissions which after all were bringing together the case at that point - that there had been any victimisation discrimination resulting from the way in which Mr Abbas is said to have sidelined her in relation to either Mr Tucker or Mr Sullivan. Notwithstanding that, the Tribunal did in fact identify victimisation discrimination as regards Mr Tucker. Second, it suggests that as far as victimisation was concerned, these matters were not perceived as being of very much relevance by the appellant herself.

[65]Miss Rose submits that having identified in Para 137 that Ms Villalba was right to say she had not been involved in the performance appraisal and bonus of Nick Tucker or the discussions with Mr Sullivan, and having also concluded that it was surprising that she was not involved in Mr Tucker's appraisal feedback meeting or informed about the Mike Sullivan meeting beforehand, the Tribunal could only have properly concluded that these matters demonstrated discrimination on grounds of victimisation. In fact, as Mr Linden points out, the feedback meeting occurred on 16 th January after the decision had been taken by Mr Yu remove her from her post. In relation to that, as we have seen, the Tribunal did find, expressly, that there had indeed been discrimination on grounds of victimisation. Mr Linden submits that the Tribunal carefully considered all these matters and they found victimisation to a limited extent only. They did not identify any discrimination in relation to earlier discussions about Mr Tucker prior to the feedback meetings, nor in relation to the failure to notify her when Mr Sullivan came to London (although they did observe that the latter was surprising.) Moreover, Mr Linden points out that at para 125 of its decision, the Tribunal sets out, in some detail, both the fact that Mr Tucker was deliberately choosing to by-pass Ms Villalba by December and was dealing directly with her reports, and the reasons for that. Mr Linden says that there is simply no proper basis in which it can be said either that the Tribunal failed properly to appreciate the implications of its own findings in relation to this matter, or that they must have intended to conclude that a failure to consult earlier about the bonus of Mr Tucker or to involve her in the meeting with Mr Sullivan did indeed demonstrate victimisation discrimination.

[66]We agree with that submission. It seems to us that this Tribunal has analysed with very great care and clarity the matters that were put before it. As we have indicated, it is far from clear that it was ever suggested that the earlier failure to discuss the question of Mr Tucker's bonus with Ms Villalba was a complaint relating to victimisation at all. If so, it was sounded in the most muted form.

[67]The fact that the Tribunal observed that it was "surprising" that Ms Villalba was not called to the meeting with Mr Sullivan does not, we think, begin to justify the inference that they must have intended to conclude that the failure to do so was victimisation discrimination. We have fully in mind that it was for the employer to rebut that presumption, but in other passages of their decision they make it plain that, as we have said, Mr Abbas was, for good reason, sidelining Ms Villalba in many ways. It may have been a matter of particular surprise that he excluded her from this particular meeting because it involved assessing the performance of her direct report, but it is entirely consistent with their finding that he was deliberately sidelining her for non-discriminatory reasons.

[68]Ms Rose runs this part of her argument together with two other points. First, she says that in relation to the Bussolati e-mail the Tribunal had commented that Mr Abbas was seeking to find fault with her and was logging incidents with HR with a view to them being stored and noted, rather than resolved. Miss Rose contends that this shows that the attitude of Mr Abbas by that stage was generally hostile to the Appellant for reasons which related to the fact she had made her sex discrimination complaint. However, Ms Rose could not identify any other email which was logged with the HR Department until the middle of January, and the Tribunal did not do so. As the Tribunal found, from mid January the tone of the emails became much more hostile and ironic, they were lodged with Human Resources, and the Tribunal found that there was victimisation discrimination with regard to them. The Bussolati email was plainly seen by the Tribunal as an example of logging, but it was at that stage simply a one-off. As Mr Linden pointed out, the Tribunal found that in various ways, even after 11 th December, Mr Abbas was still acting reasonably in relation to Ms Villalba and indeed was seeking, in certain respects, to try and improve the relationship between them. It is by no means surprising, and far from irrational, for the Tribunal to treat this as a one-off incident at that stage.

[69]Ms Rose also suggests that it is wholly unreal to say that there would have been any difference between Mr Abbas' attitude from 11 December when he sent the Bussolati email, through to the middle of January when the Tribunal found that he was thereafter in cahoots with the Human Resources Department and sending denigrating emails which were victimising her because of her complaint. She says that there is no rational basis on which the Tribunal could conclude that there had been any change in attitude at all in the intervening month. If he was victimising at the later period, it is fanciful to suggest that the same attitude did not poison his actions at the earlier period, indeed from when he became aware of her complaints.

[70]Again we entirely reject that; it is far from irrational for the Tribunal so to conclude. As Mr Linden pointed out, they did indicate certain matters which could fully explain a change in that period. The obvious one was the letter from Ms Villalba to the Human Resources Department on the 9 January 2003 which had further alerted them to the possibility, which they felt was now a more significant one, that she would lodge a claim in relation to her bonus. Then, of course, there was the complaint about her bonus in mid-January. Miss Rose says, quite rightly, that in those complaints Ms Villalba did not in terms making any allegations of sex discrimination. That is entirely correct, but misses the point. It was plainly perceived by management that she was likely to do so and if one is looking for some explanation for the change in attitude, that would be an obvious one. Indeed, in her closing submissions to the Tribunal, the appellant herself saw the making of the bonus complaints as something of a watershed. She herself initially suggested that the victimisation had arisen after that time. It is hardly surprising, therefore, that the Tribunal should have found that matters deteriorated rapidly at around that period.

[71]Be that as it may, we are quite satisfied that the failure by the Tribunal to identify the Tucker or Sullivan sidelining as acts of victimisation could not possibly be considered to be either irrational or inconsistent with findings which they did make. Nor was it irrational for the Tribunal to find that the attitude of Mr Abbas changed markedly from around mid January. We accept Mr Linden's observation that this is bringing a fine tooth comb to the analysis of the Tribunal's decision to seek to analyse the decision in the way suggested by the appellant.

[72]The overall conclusion on this issue seems to us to be quite clear. There was this incident on 11 th December, the Bussolati email, in which the Tribunal found that Mr Abbas' irritation had manifested itself in victimisation discrimination, but thereafter matters were kept under control until events in mid-January when the discrimination resurfaced. This was after, as they found as a fact, Mr Yu had reached the decision to remove Ms Villalba from her post. Were the Tribunal entitled to find that victimisation discrimination was a "very small factor in her removal ?

[73]We turn to the next complaint which Miss Rose makes. It relates to the Tribunal's conclusion that Mr Abbas' victimisation of Ms Villalba, arising from her complaint to Miss Cahill, was only "a very small factor, not a significant influence" in the decision to remove her from her role as Market Executive. The submission is that this was not a cogent finding.

[74]There are two related strands to this argument. The first is the complaint which we have rejected that there were the additional matters which the Tribunal should have identified as victimisation discrimination and did not. The second is this. It is said that in the passage at para 258, reproduced above, the Tribunal noted and recognised that victimisation played some part in the deteriorating relationship between Ms Villalba and Mr Abbas, and therefore affected her performance. However, it is submitted that the Tribunal erred in failing to go on to consider the effect which the victimisation may have had on Mr Abbas' own perception of her performance. This is important, it is contended, because the Tribunal found in terms that Mr Yu reached his view that Ms Villalba should be removed from her post partly as a result of reports received from Mr Abbas.

[75]Ms Rose submits that the Tribunal ought to have recognised that Mr Abbas' perception of Ms Villalba may have been - and indeed, she says almost certainly was - unconsciously influenced by the knowledge that she had made the complaint to Miss Cahill. She recognises that the Tribunal found in terms at para 244 that Mr Abbas' perception of her abilities was a genuine one not tainted by sex. If genuine, it could not be influenced by conscious victimisation discrimination either. But she submits that this does not prevent a conclusion that he was unconsciously influenced by victimisation, and the Tribunal has made no finding on that matter.

[76]We do not accept that argument. We think that read fairly, the Tribunal plainly considered that Mr Abbas had formed a view of her performance which was not tainted by any form of discrimination, conscious or unconscious. It is true that the Tribunal did not, in terms, negate the possibility of unconscious discrimination in relation to victimisation, but we have no doubt that they had it well in mind and would have identified it had they thought that it may have existed. They had after all expressly adverted to the risk of unconscious discrimination at para 225. Indeed in the following paragraph they carefully noted that "since we may be dealing with unconscious motivation, a witness is likely to be all the more compelling in his or her evidence if they are unaware of their own discrimination." That was in the context of sex discrimination but they specifically referred again to the possibility of unconscious discrimination at para 227, when dealing expressly with victimisation; and further observed at para 228 that the burden of proof provisions were the same in the case of victimisation as in sex discrimination. Moreover, in para 253, when considering the issue of victimisation, they expressly reiterated that Mr Abbas' views as to Ms Villalba's performance were genuine and not influenced by sex. We think it plain that they were also concluding that his views were not unconsciously influenced by victimisation. Hence the reason why they do not identify this as a factor having any influence whatsoever on the decision of Mr Yu to remove her from her post. In our judgment a fair reading of the decision demonstrates that they did not simply fail to address this issue of Mr Abbas' perception; they dealt with it and found that the perception was genuine and not tainted in any way by any form of discrimination.

[77]Moreover, we accept Mr Linden's alternative submission that even if there were unconscious discrimination, it is unrealistic to think that it could have been other than wholly trivial. It is quite unreal to think that Mr Abbas' perception of Ms Villalba's abilities, if unconsciously affected at all, would have been affected in anything other than the most marginal way as a consequence of his irritation at the sex discrimination allegation. At that stage that irritation was manifest in only one terse e-mail and its logging with the Human Resources department. As we have said, he had essentially formed his view of her abilities by then and had shared them on a regular basis with Mr Yu. As the decision of the Tribunal makes abundantly clear, the relationship was in dire straits, her performance was far from satisfactory and he had formed a poor opinion of her abilities before any discrimination came into the picture. Furthermore, as the Tribunal point out, Mr Yu was influenced by a whole series of assessments and not merely from Mr Abbas; and these were assessments gathered over many months. There was no victimisation discrimination by any of these other individuals at least before Mr Yu's decision. (At one stage it was suggested that others might have been unconsciously discriminating also, but that is not what the Tribunal found.) So we do not think that it could possibly be said that any unconscious influence could have been material in any event. Did the Tribunal apply the right test?

[78]The appellant submitted that the Tribunal applied the wrong test when considering whether or not victimisation had influenced the decision of Mr Yu. The Tribunal had directed itself in the light of the observations of Lord Nicholls in Nagarajan v London Regional Transport

[1999] ICR 877

, at p. 886 case when he said this:

"Decisions are frequently reached for more than one reason. Discrimination may be on racial grounds even though it is not the sole ground for the decision. A variety of phrases with different shades of meaning, have been used to explain how the legislation applies in such cases: discrimination requires that racial grounds were a cause, the activating cause, a substantial and effective cause, a substantial reason, an important factor. No one phrase is obviously preferable to all others, although in the application of this legislation legalistic phrases, as well as subtle distinctions, are better avoided so far as possible. If racial grounds or protected acts had a significant influence on the outcome, discrimination is made out."

[79]That decision was in turn considered by the Court of Appeal in the light of the new burden of proof directive (which is in part set out in para 118 below) in Igen Ltd v Wong

[2005] ICR 931

. In that case Peter Gibson LJ identified what it is that an employer needs to establish to rebut a prima facie case of discrimination by demonstrating that his actions were not on a prohibited ground (in that case it was sex but it is not disputed that the same principles would apply to victimisation). Peter Gibson LJ stressed that because it is necessary under the relevant principles of European Union law to eradicate "all discrimination whatsoever", the concept of "significant influence" which was adopted by Lord Nicholls must mean significant in the sense of "no more than trivial." He said this: (paras. 36 & 37):

"In Nagarajan , a race discrimination case, unsurprisingly there does not appear to have been any consideration of the Burden of Proof Directive relating to sex discrimination. That Directive is emphatic in its definition in Article 2(1) of the principle of equal treatment as meaning that there shall be no discrimination whatsoever based on sex, either directly or indirectly, and in requiring by Article 4(1) that once the burden shifts for the second stage it is for the Respondent to prove that there has been no breach of that principle…. In any event we doubt if Lord Nicholls's wording is in substance different from the "no discrimination whatsoever" formula. A "significant" influence is an influence which is more than trivial. We find it hard to believe that the principal of equal treatment would be breached by the merely trivial."

[80]Ms Rose submits that there is no reason to suppose that the Tribunal applied that limited notion of "significant", particularly since their decision was prior to the Igen ruling. She says that normally "significant" means "important" or some such concept, and it is reasonable to assume that in this case the Tribunal had applied that test in determining whether victimisation had an impact on the decision to remove Ms Villalba from her post.

[81]In this connection she pointed out that in para 237 of the decision the Tribunal had expressly referred to the difference in view expressed in two decisions of this Tribunal, Barton v Investec Henderson Crosthwaite Securities Limited

[2003] ICR 1205

and Chamberlin Solicitors and Emezie v Emokpae

[2004] IRLR 592

. In the former the EAT held that once the burden moves to the employer (as in this case) then the employer must show that there is no the prohibited ground played no part whatsoever in the decision. Chamberlin entered the caveat that the discrimination must be a significant influence. The Tribunal said that it preferred the Chamberlin approach but that since Ms Rose had expressly reserved the right to argue that the Barton approach was to be preferred, they said that they had "also considered the evidence on the more stringent test in Barton ." Igen in fact preferred the approach in Barton but with the modification that there would be no discrimination if any discriminatory influence was trivial. Ms Rose says that whilst they adopted that approach with respect to sex discrimination they did not apply that more stringent test to victimisation discrimination.

[82]We accept that the Tribunal could not have been applying the "no influence whatsoever" approach in the context of victimisation because they found that victimisation was "a very small factor, not a significant influence" in the decision to remove Ms Villalba. Mr Linden submits that there was no error by the Tribunal. It had reproduced the approach of Lord Nicholls which was not criticised by the Court of Appeal in Igen . There is no reason to suppose that the Tribunal had any different understanding to the concept of a "significant reason" to Lord Nicholls. We agree with his submission. We recognise that the concept of "significant" can have different shades of meaning, but we do not think that it could be said here that the Tribunal thought that any relevant influence had to be important; as Mr Linden pointed out, the juxtaposition of "a very small factor" with "not a significant influence" strongly supports the view that they did not think that such victimisation as there was amounted to anything more than trivial in relation to the decision taken by Mr Yu. It was not material to the decision to remove Ms Villalba from office, or the subsequent decision to dismiss. If in relation to any particular decision a discriminatory influence is not a material influence or factor, then in our view it is trivial.

[83]Again the whole of the evidence supports this view. As the Tribunal pointed out, the only influence was the effect the Bussolati e-mail had on the performance of Ms Villalba. It could only have affected her in the three weeks or so prior to Mr Yu making his decision. Moreover, the real criticism of it was that it had been logged with Human Resources, a fact not known at that time to Ms Villalba. She was already demoralised, in part because of her mistaken belief that she was being subjected to sex discrimination. If one bears in mind the history of events, as recounted in the Tribunal decision, it becomes clear that it is just fanciful to believe that this single e-mail could have had more than the most marginal influence on her performance and therefore on Mr Yu's decision to remove her from office.

[84]We should add this. It seems to have been assumed in Ms Villalba's favour that if discriminatory conduct causes a deterioration in performance, and there is thereafter a non-discriminatory assessment of performance, then the non-discriminatory assessment can still be deemed to be tainted by the earlier discriminatory treatment. It may be that the analysis is incorrect. We recognise of course that a decision taken by A may still manifest discrimination even if A has no discriminatory motive if in fact A's decision is influenced by B who has a discriminatory motive. This was made clear by Lord Nicholls in Nagarajan

[1998] ICR 877

at page 887 . However, in this case, once it is found that Mr Abbas' assessment was genuine and did not betray discrimination, then it seems to us at least to raise the issue whether Mr Yu's decision can properly be described as discriminatory in any way. (It would be otherwise if Mr Abbas' perception had been influenced by discriminatory motives.) Mr Yu assessed performance genuinely and without any discriminatory influences tainting his decision at all. What was affected by the discriminatory conduct was the performance itself. It seems to us arguable that in such circumstances the proper analysis may be that the fact, if it be a fact, that the dismissal flows from the deterioration in performance will be relevant to the amount of damages for the discriminatory conduct causing the deterioration in performance, but that the actual decision to dismiss will not itself be an independent act of discrimination. However, we have heard no argument on the point and it is a case for another day.

[85]There was a further criticism directed at the Tribunal's analysis of the burden of proof. It is said that the Tribunal fundamentally misdirected themselves in para 262 (reproduced in para 44 above) in saying that it was their task to "identify the extent to which [the deteriorating relationship] was on grounds of victimisation" and later when they described the task as "isolating the extent of the influence of the discrimination." Ms Rose says that this mis-stated their task and showed that they had not properly applied the burden of proof. This does less than justice to the very carefully crafted judgment and the fact that in some detail the Tribunal set out in impeccable terms how the burden of proof was to be discharged (see paras 234ff.) The Tribunal here is doing no more than identifying the fact that they had to determine from what point the victimisation began to have an influence, and in respect of which acts. They are not saying anything here about the burden of proof and we think it would be wholly unjust to assume that they had simply ignored the careful directions which they had given themselves. The significance of lying to the Tribunal

[86]There are two further interrelated matters which are relied upon by the Appellant. The Tribunal found that four of Merrill Lynch's witnesses had lied when they said that they did not appreciate, following Ms Villalba's communications with Miss Cahill on 27 th November, that she was then making an allegation of sex discrimination. In the course of a hearing on costs, it was further suggested by Ms Villalba that these witnesses had in fact conspired together to give false testimony to the Tribunal. The Tribunal indicated at that hearing that they were not prepared to make such a finding. It is submitted that they ought to have done, and that it should have weighed heavily against ML.

[87]When the Tribunal dealt with this question of lying, they concluded that the witnesses were motivated by a desire, as they put it, "to cover all bases" and not to conceal actual victimisation (para 258). In other words, it was to reinforce their case. It is commonplace in criminal law for Judges to direct juries that even if the defendant has told a lie they must take care how they deal with it and not automatically infer that it reveals guilt, because sometimes lies are told in order to bolster a good defence, even by innocent defendants. The Tribunal found that witnesses for both parties had, in different ways, been trimming their evidence. It is quite impossible to suggest that the fact that these witnesses had each told this specific lie ought to have compelled the Tribunal to conclude that there was discrimination on grounds of victimisation. That is an impossible argument to sustain.

[88]Equally, it is by no means obvious that there was necessarily any conspiracy to mislead the Tribunal. As Mr Linden pointed out, that was never put to any of the relevant witnesses. Indeed, it is apparently a matter of some complaint from Mr Yu that it was not in fact put to him whether or not he knew that there had been allegations of sex discrimination made to Miss Cahill on 27 th November. Be that as it may, there are other possible explanations that might explain these witnesses giving like evidence. One witness may well have been in court when another was giving evidence, or they may have read each others' witness statements at different times. The Tribunal was not prepared to say that there had been any conspiracy. They were in the best position to assess that. They saw the witnesses and were in pole position to assess their reliability and motivation. A finding of conspiracy was far from an inevitable conclusion from the evidence which they had heard, and there is no basis for upsetting their determination on that issue. Conclusion.

[89]For all these reasons, we conclude that there is no error in the way in which the Tribunal approached this issue. The equal pay appeal.

[90]The issue can be put simply. Ms Rose submits that once a woman is held to be working on work of equal value with a male comparator, the employer must show that there is an objective justification for the difference in pay, or else the claim must succeed. It is not enough simply to demonstrate that there is no discrimination on grounds of sex. Moreover, the need to establish this defence arises whether or not the employer has adopted arrangements which have an adverse or disparate impact on women as a group.

[91]Ms Rose submits that her argument is supported by the decision of the European Court of Justice in Brunnhofer . She says that the decision in that case, whilst an extension of established European jurisprudence on the point, is an entirely logical and predictable development. Mr Linden submits that on the contrary, Brunnhofer, properly understood, was not intended to alter the pre-existing law and did not do so. He submits that Ms Rose was seeking to redefine the concept of discrimination in a way which stripped it of any meaning.

[92]The point was not run before the Employment Tribunal because at that stage it was accepted that the Tribunal was bound by the decision of the EAT in Parliamentary Commissioner for Administration and Health Service Commissioners v Fernandez [ 2004] ICR 123 (HH Judge Clark presiding) which had held that this argument is wrong in law and that Brunnhofer had not effected the change attributed to it. However, Ms Rose expressly reserved her position to argue the point at a higher level. Since the Tribunal's decision another division of the EAT in Sharp v Caledonia Group Services Limited

[2006] IRLR 4

(HH Judge Ansell presiding) expressly chose not to follow the Parliamentary Commissioners decision and held that Brunnhofer had indeed altered the law in the manner now relied upon. An appeal in Sharp is apparently due to be heard by the Court of Appeal in June. Ms Rose made submissions to the effect that we should not hear argument on this point and that the issue should be stayed pending the Court of Appeal ruling. The Tribunal declined to accede to that request for reasons given separately to this decision. We therefore have to determine which decision it is right to follow. The Equal Pay legislation.

[93]In order to understand the arguments of the parties on this issue, it is necessary to deal briefly with the way in which the equal pay law has developed, and in particular the concept of indirect discrimination.

[94]The starting point is Article 141 on the Treaty Establishing the European Community (formerly Article 119). This is as follows: 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. 2. For the purpose of this Article, 'pay' means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer. Equal pay without discrimination based on sex means:(a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement;

(b) that pay for work at time rates shall be the same for the same job."

[95]The original Article 119 merely required that men and women should receive "equal pay for equal work." It was not clear whether in fact this required equal pay just for the same work or where the work was different but of equal value. However, in 1975, in Council Directive 75/117/EEC (The Equal Pay Directive), Article 1 provided, in terms, that the principle of equal pay meant "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".

[96]At that time the European Court in Defrenne v SABENA [1976] ECR 455 ;

[1976] ICR 547

ECJ took the view that this Directive "implements Article 119 from the point of view of extending the narrow criterion of equal work". That suggested that it is widening the scope of the Article. However, subsequent decisions of the Court have given this particular Directive a more significant status. In Jenkins v Kingsgate (Clothing Productions) Limited

[1981] ICR 592

the Court commented on the relationship between the Directive and Article 119 (now 141) in the following terms (paras 20 - 22):

"As may be seen from the first recital in the preamble the primary objective of the above-mentioned Directive is to implement the principle that men and women should receive equal pay which is "contained in Article 119 of the Treaty."

For that purpose the fourth recital states that "it is desirable to reinforce the basic laws by standards aimed at facilitating the practical application of the principle of equality." The provisions of Article 1 of that Directive are confined, in the first paragraph, to restating the principle of equal pay set out in Article 119 of the Treaty and specify, in the second paragraph, the conditions for applying that principle where a job classification system is used for determining pay. It follows, therefore, that Article 1 of Council Directive (75/117/E.E.C.) which is principally designed to facilitate the practical application of the principle of equal pay outlined in Article 119 of the Treaty in no way alters the content or scope of that principle as defined in the Treaty." This has been repeated on numerous occasions, including in the Brunnhofer case itself.

[97]So the two instruments should be read together in order to understand the proper scope of the equal pay principle. This of course means that the reach of the Directive is not limited by the principle that directives are not horizontally effective; it is equidistant with Article 141 itself, and that has been held to have direct effect: see Defrenne .

[98]Meanwhile, the UK had implemented the Equal Pay Act in 1970, prior to its accession to the EEC. That Act did not, however, come into force until 1975. Initially it failed to provide for a woman to have the right to claim for equal pay for work of equal value, but that was introduced following an adverse ruling from the European Court in 1983. The Equal Pay Act, as subsequently amended, sets out the principles of equal pay in the following terms:

"Subsection 2 provides that the equality clause will apply wherever a woman is employed on like work with that of her comparator, or work rated as equivalent in an employer's job evaluation scheme; or work which has been determined to be of equal value."

[99]However, this equality clause does not operate where the employer can satisfy the Tribunal that subsection 3 applies. This is the key provision in this case. It is as follows:

"An equality clause falling within subsection 2(a), (b) or (c) above shall not operate in relation to a variation between a woman's contract and a 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."

[100]There are two points to note about the formulation of equal pay adopted in both Article 141 and the Equal Pay Act itself. The first is that the defining principle of equal pay for equal work does not, in terms, use the language of discrimination. However, there is express reference to it in Article 141(2) and in the Equal Pay Directive; and the long title of the Equal Pay Act is "An Act to prevent discrimination, as regards terms and conditions of employment, between men and women". So it cannot be in doubt that these instruments are all concerned with eradicating discrimination between men and women.

[101]Second, they do not on their face make any reference to the concepts of direct or indirect discrimination. Protection for the latter was the result of judicial developments, although as we shall see, there are now various legislative provisions defining these concepts, both in Europe and domestically. Indeed, there was a definition of indirect sex discrimination in the Sex Discrimination Act 1976, which broadly regulates all other aspects of discrimination in employment not caught by the Equal Pay Act, although that concept has undergone some modifications since. We shall return later to consider some of these legislative definitions.

[102]There are certain differences between the scope of Article 141 and the Equal Pay Act. The principal one perhaps is that Article 141 relates to pay although that concept has been very widely construed by the European Court and will include both contractual and non-contractual aspects of remuneration. By contrast, the domestic legislation is not limited to pay but applies to all contractual terms and conditions of employment. Non-contractual aspects therefore have to be dealt with under the Sex Discrimination Act 1975 rather than the Equal Pay Act as a matter of domestic law. But a woman can, in any event, rely directly upon Article 141 in such circumstances where the issue is pay: The regulation of non-pay issues is regulated in European law by the Equal Treatment Directive 76/ 207/EEC.

[103]The domestic courts have emphasised that the equal pay and sex discrimination laws should, as far as possible, be treated as a single code: see e.g. Shields v E Coomes Holding

[1978] ICR 1159

. The same is true in European law. Indeed, in a recent amendment to the Equal Treatment Directive there is a definition of indirect discrimination which in terms is stated to apply to Article 141. (See Directive 2002/73 article 3.1(c), discussed further at para. 120 below). The structure of the equal pay claim .

[104]It will seen from the structure of the equal pay legislation that the principle is that once a woman demonstrates that her job is either like work or work of equal value to that of her male chosen comparator, there is a presumption of discrimination on grounds of sex. It is then for the employer to rebut that presumption. The issue in this case is how that is to be done.

[105]Plainly, an employer will have to satisfy a Tribunal that the difference is not expressly on grounds of sex. But that is not necessarily sufficient to demonstrate that there is no direct sex discrimination in the arrangements which the employer has made. This was recognised by Mr Justice Browne-Wilkinson, then President of the EAT, in the case of Jenkins v Kingsgate Clothing

[1981] ICR 715

. In that case the employer paid full time workers ten percent more per hour than part time employees. The reason given was that they wished to discourage absenteeism and achieve a more efficient use of their machinery. One of the agreed facts was that the employers did not intend to discriminate against women by this arrangement. The EAT sent a reference to the European Court asking that Court, in effect, to determine whether Article 119 applied to a case of indirect discrimination. The EAT found that its answer was somewhat equivocal; on one reading Article 119 only applied where there was an intention to discriminate on grounds of sex. But Mr Justice Browne-Wilkinson, giving the judgment of the EAT, held that it was necessary to treat the Equal Pay Act and Sex Discrimination Act as a single interlocking and comprehensive code (relying on some dictum of Bridge LJ in Shields v E Coomes Holding

[1978] ICR 1159

at 1178) and concluded that accordingly, even if Article 141 (then Article 119) did not cover indirect discrimination, he was satisfied that the Equal Pay Act should be construed so as to do so, and section 1(3) should be interpreted accordingly. Since in that case the part timers were overwhelmingly women who generally experience more difficulty than men in meeting a condition of full time work, it was necessary that any difference in treatment had objectively to be justified.

[106]Subsequently, in Bilka-Kaufhaus Gmbh v Weber von Hartz

[1987] ICR 110

the European Court of Justice held that Article 141 did indeed extend to unintentional indirect discrimination. That again was a part time workers case relating to pension rights. The court said this (paras 29-30):

"If, therefore, it should be found that a much lower proportion of women than of men work full time, the exclusion of part time workers from the occupational pension scheme would be contrary to Article 119 of the Treaty, when, taking into account the difficulties encountered by women workers in working full time, that measure could not be explained by factors which exclude any discrimination on grounds of sex. However, if the undertaking is able to show that its pay practice may be explained by objectively justified factors unrelated to any discrimination on grounds of sex, there is no breach of Article 119."

[107]There have since been many cases in the European Court where the principle of unintentional indirect discrimination has been applied in that way and indeed elaborated upon in both the private and governmental sphere: see e.g. Rinner-Kuhn v Speziel-Gebaudereinigung GmbH [1989] ECR 2743 and Secretary of State for Employment v Seymour-Smith and Perez

[1999] ECR I-623

[108]In Rainey v Greater Glasgow Health Board

[1987] 1 AC 224

, the House of Lords considered the scope of the genuine material factor defence in Section 1(3) of the Act and adopted the approach of the European Court in Bilka . Lord Keith, giving the only speech in their Lordship's House, held that there was no difference between European law and domestic law on this matter. He summarised the position in the following terms:

"The decision of the European Court [in Bilka ] on Article 119 must be accepted as authoritative and the judgment of the Employment Appeal Tribunal on section 1(3) of the Act of 1970, which in my opinion is correct, is in harmony with it. There is now no reason to construe section 1(3) as conferring greater rights on a worker in this context than does Article 119 of the Treaty."

[109]Later in his judgment, Lord Keith noted that the concept of justification under section 1(3) was identical to that applicable to the concept of indirect discrimination in the Sex Discrimination Act.

[110]The classic way in which indirect discrimination is established is to identify a practice, criterion or provision which adversely impacts upon women. Jenkins , Bilka and Rinner - Kuhn all fall into that category. However, the concept of indirect discrimination was extended by the decision of the European Court of Justice in Enderby v Frenchay Health Authority [1993] ECR 1-5535. In that case Mrs Enderby was speech therapist employed in the National Health Service. Speech Therapists were overwhelmingly female. She claimed that she was paid less well than Clinical Psychologists and Pharmacists, who were, in different degrees, predominantly male. It was assumed that the work performed was of equal value. The Industrial Tribunal had found in terms that in the fixing of pay there had been no discrimination, either direct or indirect. The employers therefore contended that they had rebutted the presumption imposed upon them by Article 141. Since there was no scintilla of sex discrimination, there could be no recovery under the principle of equal treatment. The Applicant was not claiming that there were any specific hurdles which created an impediment to her gaining access to either of the other professions. The pay structures of the different professions were governed by different processes of collective bargaining and the Tribunal had found that they were conducted without discrimination.

[111]The ECJ rejected this submission. It recognised that the case was quite unlike the standard indirect discrimination case, such as Bilka , where there has been some criterion or practice resulting in the adverse treatment of women, and said this (paras 16-19):

"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 the situation are valid. 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 of short term phenomena, and whether, in general, they appear to be significant. 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 a prima facie case of discrimination did not shift to the employer the onus of showing that the pay differential is not in fact discriminatory: see, by analogy, Handels-og Kontorfunktionaerernes Forbund I Danmark v Dansk Arbejdsgiverforening (Case 109/88) [1991] ICR 74, 79, para 13. 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."

[112]In subsequent cases there have been attempts to limit the effect of this decision to cases where the disparate impact is such that the disadvantaged group are "almost exclusively" women. That was the factual situation in the Enderby case and indeed the decision of the Court did not extend wider than that, as the extract reproduced above indicates. However, that approach has been rejected and the position appears to be that a presumption of unintentional indirect sex discrimination arises even where the statistics are less stark. Precisely how less stark is still a matter of some uncertainty, as we indicate, at para 123 below.

[113]In effect, therefore, Enderby establishes that statistics alone may in a sufficiently powerful case create an irrebuttable presumption of prima facie indirect sex discrimination. Once there is statistically relevant and material evidence to demonstrate that a group is in fact being adversely affected on sex grounds, which will oblige the employer to justify the pay arrangements. It is not enough in those circumstances for the employer to demonstrate that the arrangements have resulted without any direct sex discrimination being practised of any kind. In effect the court is holding that there must somewhere have been some element of indirect discrimination- in other words there is an assumed indirect discrimination. The statistics demonstrate a sufficiently marked adverse impact to constitute a prima facie case requiring not merely an explanation that the difference is not caused directly by sex, but in addition an objective justification. The statistics must at least show that it is reasonable to infer that the treatment of the disadvantaged group must have resulted from some factor or combination of factors which impinge adversely on women because of their sex, even though no obvious feature causing this disparate treatment can be identified, and indeed even though the employer has apparently demonstrated to the contrary.

[114]Following Enderby, therefore, there are three different circumstances in which pay arrangements may, to use an expression frequently found in the cases, be "tainted by sex".

[115]First, there may be a difference in treatment which is specifically on sex grounds. A woman is paid less simply because she is a woman. That is the classic form of direct discrimination.

[116]Second, there may be a difference in treatment which, whilst not specifically on grounds of sex, results from the adoption of a criterion or practice which adversely impacts on women because they are women. Typically this may be because the social role which women habitually perform makes it more difficult for them to place themselves in the category of the worker attracting the higher pay. Treating part timers less favourably is the classic example.

[117]Third, where cogent, relevant and sufficiently compelling statistics demonstrate that women suffer a disparate impact when compared with men, there is an irrebuttable presumption that sex has indirectly tainted the arrangements even though it may not be possible to identify how that has occurred, and the differential needs to be objectively justified. The burden of proof directive.

[118]A legislative concept of indirect discrimination was introduced into the field of equal pay and sex discrimination in general by Directive 97/80/EC on the burden of proof in cases of discrimination based on sex. That Directive specifically applies, inter alia, to Article 141 and the Equal Pay Directive. (see Art. 3). It defines who has to discharge the burden of proof and in what way when there is an allegation of a breach of the principle of equal treatment. Article 2 is as follows:

" 1 . For the purposes of this Directive, the principle of equal treatment shall mean that there shall be no discrimination whatsoever based on sex, either directly or indirectly. 2 . For purposes of the principle of equal treatment referred to in paragraph 1, indirect discrimination shall exist where an apparently neutral provision, criterion or practice disadvantages a substantially higher proportion of the members of one sex unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex."

Article 4 deals with the burden of proof:

" 1 . Member States shall take such measures as are necessary, in accordance with their national judicial systems, to ensure that, when persons who consider themselves wronged because of the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the Respondent to prove that there has been no breach of the principle of equal treatment. 2 . This Directive shall not prevent Member States from introducing rules of evidence which are more favourable to plaintiffs. 3 . Member States need not apply Paragraph 1 to proceedings in which it is for the court or competent body to investigate the facts of the case."

[119]This Directive was given effect in English law by an amendment to the Sex Discrimination Act 1975, adding a new section 63A (see para 43 above), and also by amending the concept of indirect sex discrimination found in section 1 of the Act. This was cast in almost precisely the same terms as the Directive itself.

[120]There has since been a further amendment to the concept of indirect discrimination in the employment field to take account of the Equal Treatment Directive 2002/73/EEC. That, for the first time, introduced a concept of indirect discrimination into the Equal Treatment Directive, which in turn was designed to bring the concept into line with that which had been adopted to give effect to other forms of discrimination, such as race, sexual orientation and so forth.

(c) This definition is now framed as follows:

"Indirect discrimination: where an apparently neutral provision, criterion or practice would put persons of one sex at a particular disadvantage compared with persons of the other sex, unless that provision, criterion or practice is objectively justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary."

[121]The relevance of these two later Directives is simply that they identify - albeit in slightly different terms - how the European legislature now defines the concepts of direct and indirect discrimination. These formulations are largely a reflection of the concept as established in the case law of the European Court of Justice itself, but adopting the need for a provision or criterion or practice whose effect is to put one sex at a disadvantage. It does not simply provide that statistical evidence of disparate impact is itself enough. The different formulations reflect, in other words, the Bilka rather than the Enderby concepts of indirect discrimination. But even had the latter been adopted, it would still have required evidence of disparate impact.

[122]It is not suggested that these concepts of discrimination are necessarily exhaustive, and they are not wholly discreet. There is a certain overlap between them. Even in a case where the disadvantaged group is not entirely female, it may be open to a Tribunal properly to infer that there has been direct, and not simply indirect, discrimination. For example, it is possible that an employer might choose specifically to discriminate against part timers with the intention of treating them less favourably because of their sex; that is at least arguable direct discrimination. Again, it may be that women have been paid less because of unconscious stereotyping which has led to the common assumption that their work is not as difficult, and therefore not as deserving of reward, as that of their chosen comparator. Perhaps historically the women have received lower pay than would have been given for men doing work of a similar kind or of equal value, and the consequences of that have never been wholly eradicated. Indeed, the Enderby case itself began principally as a complaint of direct discrimination of this kind, but failed on the facts before the industrial Tribunal.

[123]There remain certain differences between these concepts of discrimination. First, direct discrimination cannot be justified, or at least only in very exceptional circumstances. Second, there is a real issue as to whether the statistics which would be sufficient to establish the Bilka form of indirect discrimination will also be sufficient to establish the Enderby form, or whether the latter, where there is no apparent reason why women have been adversely affected, should require more striking statistics. Enderby itself was a case where the disadvantaged group was overwhelmingly female and the advantaged group largely male. It may well be, as we have indicated, that the principle can operate in less extreme circumstances (see the judgment of the EAT in Paterson v London Borough of Islington

UKEAT/0347/03

, following the majority decision of the Northern Ireland Court of Appeal in British Road Services v Loughran

[1997] IRLR 92

) but precisely when is far from clear. In Home Office v Bailey

[2005] EWCA Civ 327

;

[2005] ICR 1057

the Court of Appeal, reversing the EAT on this point, thought that there was no difference in the statistical requirement for both forms of discrimination. However, that may not be the last word on the subject. It is far from obvious that the evidence sufficient to justify a finding that a particular criterion or practice adopted by the employer adversely affects women is the same as the statistical evidence required to justify an inference that there must be prima facie discrimination where none apparently exists. This seems to be the assumption behind the burden of proof directive since it is difficult to see why it would require the need for a provision, criterion or practice to bring about the adverse disparate impact if that requirement is wholly redundant and adds nothing to the Enderby form of discrimination. Bailey is apparently going to the House of Lords and this important issue will no doubt be resolved there. It is important to note in the context of this case, however, that both concepts of indirect discrimination rest on the need to establish some adverse disparate impact which either is caused, or in the case of Enderby is assumed to be caused, by the employer's pay arrangements.

[124]What is striking about this whole jurisprudence is that prior to any uncertainties that may have been created by Brunnhofer, no-one has ever thought that the mere fact that a woman is paid less than a man for work of equal value is enough to trigger the obligation objectively to justify the difference in pay. If it were enough then the legislation would be concerned with fairness rather than with sex discrimination. All the case law is premised on the basis that whilst that basic comparison is enough to raise a prima facie case of direct sex discrimination which the employer will have to rebut, if the claim is one of indirect discrimination then the claimant will have to establish a prima facie case. This may be done either from the relevant statistics or in some other way (perhaps, for example, because the criterion involved plainly discriminates against women, such as treating part timers less favourably, in which case formal statistics may not be necessary). But it is only once indirect discrimination is established that the employer has to go on to show objective justification.

[125]In short, European law has not taken the view that even in the absence of any evidence, actual or assumed, of a causal link between the pay arrangement and the sex of the claimant, there is still an obligation objectively to justify the difference in pay. The issue is whether Brunnhofer has altered all that. The domestic case law.

[126]There have been a number of attempts before the English courts to establish that the mere fact of a difference in pay between a man and a woman triggers the obligation objectively to justify the difference. In Strathclyde Regional Council v Wallace

[1998] ICR 204

, it was conceded that the pay arrangements did not manifest any discrimination on grounds of sex in any of the ways set out above. In other words, it did not demonstrate any statistical basis for alleging that women had been adversely affected. The Employment Tribunal found that although the employer had relied upon factors which had explained the pay differentials and which were not at all related to sex, nonetheless the equal pay claims succeeded because they had not objectively justified the difference in treatment between the applicants and the comparators. That is of course precisely the argument that is being advanced in this case. It was unambiguously rejected by the House of Lords. Lord Browne-Wilkinson, giving the only speech in the house (and with whose speech Lords Steyne, Hoffman, Hope and Clyde concurred) said this:

"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. Mr. Pannick, for the appellants, submitted that the industrial Tribunal were right to consider whether the factors relied upon (even though not gender related) "justified" the disparity in pay. He submitted that for a factor to be a "material" factor within subsection (3) it had to be demonstrated that the matters relied upon unavoidably led to the disparity in pay: the industrial Tribunal was throughout engaged upon a consideration of whether the factors were "material" in that sense. I cannot accept that submission. The words of the subsection indicate no requirement of such a justification inherent in the use of the words "material factor."

It has long been established by the decision of this House in Rainey v Greater Glasgow Health Board

[1987] ICR 129

, 140D that a factor is material if it is "significant and relevant," a test which looks to the reason why there is a disparity in pay not whether there is an excuse for such disparity. To my mind decisively, if one were not to accept Mr Pannick's submission that would be to turn the Equal Pay Act 1970 into a "fair wages" Act requiring the elimination of disparity of wages even though such disparity has nothing to do with sex discrimination. As I have said, the long title of the Act renders such an argument impossible." His Lordship went on to demonstrate that in each of the European cases relied upon by the employees, there had been statistical evidence demonstrating disparate impact.

[127]It is perhaps hardly surprising that the House of Lords held that where the allegation is of unlawful treatment contravening laws which discriminate on grounds of sex, an applicant cannot expect to succeed if there is no discriminatory treatment on grounds of sex. What is perhaps more difficult to explain is why the same point should have come before the House of Lords on a second occasion in Glasgow City Council v Marshall

[2000] ICR 196

. This time, however, the argument advanced by the employees focussed not so much on European Law as the basis for requiring objective justification even in the absence of adverse disparate impact, but rather on the language of Lord Keith in the Rainey case (in the passage reproduced above) where he had observed that to satisfy Section 1(3), the material factor was one which had to be "significant and relevant". It was contended that is was not enough, in those circumstances, simply for the employer to show that there was a genuine reason other than sex. The argument was that there was no reason why English Law should not lay down stricter requirements upon the employer than European law demanded, and it was suggested that this was what the Equal Pay Act had done. Lord Nicholls, with whose speech Lords Slynn, Mackay, Hope and Hutton agreed, said this:

"I can well understand that an instructor in a special school, whether a man or a woman, may feel aggrieved that a teacher at the same school is being paid more for doing the same or broadly similar work. I have more difficulty in understanding how, in the absence of sex discrimination, this perceived unfairness is said to be caught and cured by a statute whose object, according to its preamble, is to prevent discrimination between men and women as regards terms and conditions of employment. The instructors' contention is that this conclusion follows from the clear wording of section I. Further, they contend that this conclusion is not surprising. Proof that women are being paid less than men for like work is prima facie evidence of sex discrimination. Part of the purpose of the Act of 1970 was to ensure that discrimination does not arise through accident or inertia. If an employer fails to rebut the presumption of sex discrimination because he is unable to show a proper reason for the disparity in pay, the case falls within the mischief the Act was intended to remedy. This conclusion may go further than the provision regarding equal pay for equal work in article 119 (now renumbered 141) of the E.C. Treaty. But there is no reason why the equality of pay legislation in a member state should be confined in its scope to that of article 119. I am unable to agree with the main thrust of this submission or with the approach adopted by the Industrial Tribunal. This approach would mean that, in a case where there is no suggestion of sex discrimination, the equality clause would still operate. That would be difficult to reconcile with the gender-related elements of the statutory equality clause. The equality clause is concerned with variations in pay or conditions between a woman doing like work with a man and vice versa. But if the equality clause were to operate where no sex discrimination is involved, the statutory starting-point of a gender-based comparison would become largely meaningless. On this interpretation of the Act, what matters is not sex discrimination. What matters is whether, within one establishment, there is a variation in pay or conditions between one employee doing like work with another employee. The sex of the employees would be neither here nor there, save that to get the claim off the ground the chosen comparator must be of the opposite sex. On this interpretation the Act could be called into operation whenever mixed groups of workers are paid differently but are engaged on work of equal value. In such a case the statutory equality clause would operate even when the pay differences are demonstratively free from any taint of sex discrimination. Indeed, a notable feature or the industrial Tribunal's decision in the present case is that a male instructor succeeded as well as seven female instructors. It is a curious result in a sex discrimination case that, on the same facts, claims by women and a claim by a man all succeed. 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 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." (emphasis added).

[128]His Lordship then dealt with the construction to be given to the expression "material factor". He construed that concept in the following way:

"Some of the confusion which has arisen on this point stems from an ambiguity in the expression "material factor."

A material factor is to be contrasted with an immaterial factor. Following the observations of Lord Keith of Kinkel in Rainey v Glasgow Health Board

[1987] ICR 129

, 140, the accepted synonym for "material" is "significant and relevant." This leaves open the question of what is the yardstick to be used in measuring materiality, or significance and relevance, One possibility is that the factor must be material in a causative sense; the factor relied on must have been the cause of the pay disparity, Another possibility is that the factor must be material in a justificatory sense. The factor must be one which justifies the pay disparity. As already indicated, I prefer the former of these two interpretations. It accords better with the purpose of the Act. The distinction may not greatly matter in practice when an employer is having to justify the disparity in pay. But the matter stands differently when sex discrimination is not under consideration. Then the distinction may be of crucial importance, as the present case exemplifies. The industrial Tribunal, in the course of its self-direction on the applicable law, held that a purely historic explanation of the pay difference between sexes is insufficient. That is correct, when justification is in point. It is not correct when, as in the present case, the absence of sex discrimination was not in issue."

[129]The House of Lords therefore held that when read in context, the material factor defence did not require the employer to demonstrate a justifiable reason for the differential in the absence of any evidence at all of sex discrimination.

[130]We pause respectfully to note that there is arguably some ambiguity in the judgment of Lord Nicholls. His third requirement is that the employer should show that the reason for the difference in pay is not the difference of sex. If that is satisfied, then he does not have to prove a "good" reason for the pay disparity (i.e. objective justification.) The question is, how does he prove that the reason is not a difference of sex? In our view Lord Nicholls was clearly assuming that where the claimant shows that there is the necessary relevant adverse disparate impact, that of itself makes the decision tainted by sex and so requires objective justification. We think that is plain from the passage which we have emphasised in his judgment. It seems to us that this is necessary to comply with Enderby . In other words we consider that he was intending to treat a decision as tainted by sex if it falls into any of the three kinds of discrimination which we have outlined above. In effect an employer whose pay arrangements result in an adverse disparate impact cannot demonstrate that his pay arrangements are not tainted by sex; the presumption of indirect discrimination arises and he will have to show that the arrangements are objectively justified.

[131]However, the Court of Appeal has apparently taken a different view in Armstrong v The Newcastle upon Tyne NHS Trust Hospital

[2006] IRLR 124

. The Court in that case has read Lord Nicholls as establishing that even where there is an adverse disparate impact the employer can avoid liability simply by showing that the difference is genuinely caused by a reason which is other than sex. If he proves that, then objective justification does not arise: (see in particular the judgments of Arden LJ at paras 32-33 and Buxton LJ at para 110 and the questions he poses for the Tribunal to answer on remission at para. 129.). In our respectful view this is to ignore the argument which was run and lost in Enderby which does not appear to have been referred to by the court on this point. Once the relevant disparate impact is shown, the employer must effectively satisfy the Tribunal of both aspects i.e. that there is an objective justification which is not itself the difference of sex.

[132]Mr Linden suggested that we were bound by Armstrong, which of course post dates Brunnhofer , and which we should assume had been considered by it. Plainly it is wholly at odds with Brunnhofer , but that case was not cited to it, or if it was, it was not referred to in the judgments (save indirectly in a passage reproduced in the employment tribunal's decision), and therefore it seems to us that the Armstrong decision does not relieve us of the duty to determine whether Brunnhofer did achieve the sea change which the appellant maintains that it did. We have respectfully indicated our difficulty with the judgment in Armstrong because Enderby is an important step in the appellant's argument, and we think that Lord Nicholls' observations in Marshall both can and should be read as consistent with it. Suffice it to say that if we are wrong and the law is indeed as the Court of Appeal has construed Lord Nicholls' remarks, then the change brought about by Brunnhofer would be even more profound than is otherwise the case.

[133]Prior to the Brunnhofer case, therefore, it is plain that neither European nor domestic law has required an employer objectively to justify a difference in pay merely because the Applicant is a woman and the comparator a man employed on equal work. The implications of the argument .

[134]Before considering the actual decision in Brunnhofer itself, it is we think pertinent to make the following points as to the implications of a ruling that objective justification is required even absent any evidence of adverse disparate impact, most of which were identified by Mr Linden.

[135]First, as the House of Lords pointed out, both in the Strathclyde and Marshall cases, if the contention of the Appellant is right, and objective justification needs to be established in every case where a woman can raise a presumption of equal pay because she is employed on work of equal value with her chosen comparator, then the effect is to convert a law which is designed to eliminate discrimination on grounds of sex into fair wages legislation. An irrational system of pay may be unfair, but it is obviously not automatically discriminatory on sex grounds, such as –to take a wholly extreme example- if pay is determined by a toss of a coin.

[136]Second, there is something fundamentally inconsistent with the notion that laws which are designed to eliminate discrimination on grounds of sex should be construed so as to give relief even where there is no hint of any kind of discrimination on grounds of sex at all.

[137]Third, and in our view very importantly, as Ms Rose fairly accepted, if her argument is correct then it means that a woman may recover under the Equal Pay legislation, read with Article 141, simply because she happens to be a woman . That fortuitous and chance fact will give her the right to a remedy in circumstances where a man would be denied one. Take a case where, for example, 100 men are employed in job A at £x and 100 men in job B at £x+10% for historical reasons which could not be objectively justified. The men in the lower paid job have no grounds for complaint under discrimination law. Put a woman into a lower grade job, however, and, says Ms Rose, she can require the employer objectively to justify the difference in pay. Since he cannot do that, she must receive the higher pay. It cannot conceivably be said that her lower pay has anything whatsoever to do with discrimination on grounds of sex, yet she will be able to bring a claim because she happens to be a woman, in circumstances where a man could not do so. Once her claim has succeeded, of course, the men in job A can thereafter compare themselves with her so as to lead to an improvement in their pay also. The overall result may be a fairer wage, but the root by which it is achieved is the fact that a woman can rely upon the fortuitous and arbitrary fact of her sex as a basis for making the claim. At the heart of anti-discrimination law is the notion that it is wholly obnoxious to permit one sex to obtain benefits or advantages by the mere fact of their sex. Yet on this analysis the law has done just that; it is permitting the chance fact that the new recruit is a woman to determine legal rights. Of course the principle could directly benefit the men. If in the example we have given a woman is employed in job B then all the men in job A can immediately claim equal pay with her since there is no objective justification. Yet the notion that there has been sex discrimination is absurd. We think it would be surprising if any court were willingly to adopt an approach so lacking in principle.

[138]Fourth, the argument draws what on the face of it seems to be a wholly artificial and highly significant distinction between sex discrimination in relation to pay (and other contractual terms under English law) and the same form of discrimination in all other non-pay aspects of employment. It is difficult to see any rationale for such a fundamental distinction given that the objective of removing discrimination is the underlying principle in both sets of circumstances.

[139]Fifth, it also creates a further distinction between sex discrimination in relation to pay and all other forms of discrimination which are now proscribed under European Law, including race, sexual orientation, religion and so forth. They all draw a clear distinction between direct and indirect discrimination and they all require as a condition of establishing indirect discrimination that there should, in some way, be an adverse impact upon the disadvantaged group. Again, it is extremely difficult to see what the justification is for giving sex a preferred status when compared with all other grounds of discrimination.

[140]Finally if the argument is correct then all the myriad of difficulties which the European Court has grappled with over the years, such as what constitutes indirect discrimination, how one determines the relevant pools, whether the focus should be on those who can or those who cannot comply with the criterion when assessing whether there is disparate impact, what statistics are or are not reliable- all these have been so much wasted breath. Brunnhofer has dispatched all these to history. And as Mr Linden pointed out, it renders obsolete the concept of indirect discrimination which was adopted by the Equal Treatment Directive 2002 after, it should be noted, the Brunnhofer decision had been decided. Ms Rose correctly says that a later Directive cannot affect the proper construction of the earlier Treaty article, but it does indicate that Brunnhofer has not been perceived, even within the EU itself, to have effected the significant change suggested by the Appellant.

[141]Ms Rose's answer to all these points is three-fold. She submits that whatever the force of these objections, Brunnhofer has now established that objective justification is required in these circumstances, or at the very least has raised sufficient doubt about the matter to warrant the issue being referred to the European Court of Justice. Second, she contends that even before Brunnhofer , there were some indications in the case law, in the language of Article 141, and indeed in the general concept of discrimination, which foreshadow the decision in Brunnhofer and support the proposition that it is merely a logical development of the earlier authorities. Third, she submits that pragmatic considerations justify the difference in treatment, however much a purist may find them objectionable. This takes us to analyse what Brunnhofer did indeed decide. The Brunnhofer case

[142]Before considering these responses, we turn to analyse the Brunnhofer case itself. The facts are important. Ms Brunnhofer was employed by the bank from July 1993 to July 1997. She claimed equal pay with a male colleague who had been employed from August 1994. He, from the time of his recruitment, had received an individual supplement which she had not received. The bank did not seek to contend that there were any genuine differences which would have justified a difference in pay at the date of his recruitment. Indeed, both the applicant and her comparator were classified in the same category under the relevant collective agreement. The employers sought to justify the difference in pay by relying on circumstances which were only established after he had taken up the post. These were that his performance was better than the applicant's performance, and that he carried out more important functions. The bank never put its case on the simple basis that the difference in pay was genuinely due to factors other than sex. It sought to maintain that there were objective factors explaining the difference in salary. No doubt it was for that reason that when the questions were put by the Oberlandesgerisch Wien (the Higher Regional Court in Vienna) one of the questions was this:

"Are Article 119 (now Article 141) of the Treaty and Article 1 of the Directive 75/117/EEC to be interpreted as meaning that the fixing of different pay may be objectively justified by circumstances which can be established only ex post facto, such as in particular specific employee's work performance."

[143]The Advocate General noted that the case raised a question of direct and not indirect discrimination. He observed that the court had not been given relevant factual information and that it was not clear whether it was simply being suggested hypothetically that there may a difference in level of performance justifying the difference in pay. But, in answering this question, the Advocate General said this: "In the absence of more facts we must fall back on Article 141(2) EC to answer the question whether difference in individual aptitude can justify differences in pay".

[144]He concluded that since pay can be determined either on piece rates or time rates, whereas it would be perfectly proper to take into account different standards of performance in relation to piece rates, the employer was not entitled to do that in relation to time rates.

[145]The European Court came essentially to the same conclusion. The Court observed at para 29, as it has frequently said, that the terms of the Treaty Article and the Equal Pay Directive have the same meaning. The Directive in no way alters the scope or content of Article 119, but neither is it inconsistent with it. At para 36 the Court defined the effect of Article 1 of the Directive as follows:

"The principle of granting men and women equal pay for the same work as laid down in article 119 of the Treaty and elaborated by the Directive means eliminating, for the same work or work to which equal value is attributed, all discrimination on grounds of sex with regards to all aspects and conditions of remuneration."

[146]That is wholly uncontroversial and in line with the previous authorities. There must be elimination of the possibility of sex tainting in the employee's arrangements. Again at Para. 40, it said this:

"The differences in treatment prohibited at Article 119 are exclusively those based on the difference in sex of the employers concerned ( Case 98-80 Jenkins [1981] ECR 911 Para 10)."

[147]Again, we note that the language is the language of causation –the differences must be based on the differences of sex; and reference is made to a classic decision on unintentional indirect discrimination.

[148]The Court held that it did not necessarily follow that the applicant and comparator were employed on work of equal value merely because they were found in the same category in the collective agreement. It further noted that where the male colleague was responsible for dealing with more important customers and had more authority, that would be potentially material to the question of whether there was indeed equal work. The Court then went on to consider whether the difference of pay was justified, assuming it was comparable work. At Para 62 the court said this:

"The employer could also justify the difference in pay by objective factors unrelated to any discrimination based on sex, by proving that there was a difference, unrelated to sex, to explain the payment of a higher monthly supplement to the chosen comparator."

[149]Ms Rose relies upon this as an indication that the court is intending to show that objective justification is always necessary. However, we reject that and accept certain observations about this paragraph made by Mr Linden. First, it does not seem that the Court is seeking to be exhaustive about all the circumstances in which an inference of sex discrimination may be rebutted. Second, and in any event, the use of "objective" seems to be used in the causative and not the justificatory sense, as it is arguably used elsewhere in this judgment. The court is saying that the employer must identify factors unrelated to discrimination based on sex which explain, that is cause, the difference in pay. So read, there is nothing inconsistent with the previous authorities.

[150]The court then goes on to consider whether the performance after recruitment can constitute a justification for unequal pay. As it noted, performance is something which is by definition not known at the time the contract is made. Accordingly, the employers had accepted, so far as this element of the case was concerned, that at the time of recruitment there was difference in pay which could not be explained by this factor. In other words, there was prima facie direct discrimination. The issue, therefore, was whether a subsequent difference in performance in the context where the jobs were paid by time rather than piece, could remove the discriminatory treatment. It is perhaps not surprising in that context that the bank was seeking to provide a justification argument rather than claiming that a genuine non-sex reason would suffice. It was in effect running an argument which is counter to the jurisprudence of the court to the effect that justification for direct discrimination was possible.

[151]Then in Para 66, the court says this:

"It is appropriate to recall here the case law according to which a difference in the remuneration paid to women in relation to that paid to men for the same work of equal value must, in principle, be considered contrary to Article 119 of the Treaty and consequently, to the Directive. It would be otherwise only if the difference in treatment were justified by objective factors unrelated to any discrimination based on sex (see inter alia, MacCarthys para 12 and Hill v Stapleton , paragraph 34)."

[152]Read literally this is perhaps the high watermark of support for the appellant's argument, however we do not accept that a literal meaning is justified. It must first be noted that the court is merely "recalling" the case law, not departing from it. Moreover, it is to be noted that the Court cites the cases of MacCarthys and Hill and Stapleton . The relevance of referring to these well established authorities is twofold. First, it reinforces the point that it does not appear to have considered that its formulation of the basic principles was at odds with the earlier jurisprudence. Second, it plainly thought that it was simply confirming the earlier statements in the paragraphs to which it referred. Para 12 of MacCarthys v Smith is as follows:

"It must be acknowledged, however, that as the Employment Appeal Tribunal properly recognised, it cannot be ruled out that a difference in pay between two workers occupying the same post but at different periods in time may be explained by the operation of factors which are unconnected with any discrimination on grounds of sex. That is a question of fact which is for the court or Tribunal to decide."

The reference to "explaining" the difference is, as Mr Linden observes, wholly consistent with the conventional jurisprudence and suggests that justification is indeed being used in a causative sense.

[153]Hill and Stapleton was a case where there was different treatment of job-sharers who were predominantly women; it was therefore a classic case of discrimination of the Bilka kind. Paragraph 34 referred to justification by objective factors unrelated to discrimination based on sex. That was, however, in the context of a discussion of indirect discrimination in a typical indirect discrimination case (see in particular paras 23-24). As Mr Linden pointed out, the fact that the ECJ relied on Hill , rather than stating that it was based on a false analysis, is inconsistent with the appellant's case.

[154]It is also pertinent to observe that curiously, if this argument is right, the court seems to be suggesting that there could be justification even for direct discrimination. It is that which would be novel, and we very much doubt whether that is what the Court intended.

[155]Having set out the relevant principles, the court then concluded, in so far as the reliance on performance was concerned, that where the payment was by time rather than piece rates, the employer cannot seek to defend a difference in pay by a factor not known at the time when the employment begins. That is entirely at one with the earlier jurisprudence. Observations on the decision.

[156]As Mr Linden pointed out, there are a number of features about this decision which powerfully indicate that the ECJ was not intending to develop the law in the manner now suggested.

[157]First, this was a decision of a chamber of the court rather than the full court itself. There is no reason in principle why the law cannot be altered in that way, but one would have thought that if such a significant change was knowingly being made to the concept of discrimination law – effectively removing the need to establish discrimination and moving to a concept of fair wages – the a full court would have been summoned to determine it.

[158]Second, the circumstances were highly unusual in that the assumption was that there was no genuine reason explaining the difference in pay at the point of recruitment (at least on the premise which was disputed, that the jobs were of equal value.)

[159]Third, there is no indication whatsoever that the court thought that it was in any way breaking fresh ground in reaching the decision it did. Nor indeed were arguments advanced to it which sought to establish that any such change in the law should be effected.

[160]Fourth – and this is a related ground – by its reference to previous authority, the court appears to have believed that it was saying nothing novel or untoward at all. It cited without any apparent criticism the well known cases of Enderby and Seymour Smith , both indirect discrimination cases.

[161]Finally, the court recognised that Article 141 had to be read together with the Equal Pay Directive as we have shown. That suggests that it was fully cogniscant of the fact that it was concerned with discrimination on grounds of sex. It would be wholly inconsistent with that approach then to construe Article 141 so as to extend beyond such discrimination and to include within its scope circumstances where there was no such discrimination at all.

[162]We note that Mr Linden is not suggesting that the decision itself in Brunnhofer is wrong. Indeed, it is difficult to see how one can meet a charge of unequal pay simply by relying upon factors which were not in existence when the comparator was originally recruited and were therefore concealed from the applicant. Such factors do not establish a genuine difference other than sex to explain the pay differential at that point. He contends, and we agree, that a careful analysis of the decision does not support the proposition that Brunnhofer altered the law in the way the appellant suggests. Supporting arguments.

[163]We turn to four matters which Ms Rose, in resourceful and wide ranging submissions, relied upon in particular to support the Brunnhofer decision. It must be said that only one of these seems to have been identified by the court in Brunnhofer itself.

[164]First, she submits that the purposes of Article 141 are to ensure social progress and they express a fundamental human right. She identifies, in particular, some observations of Advocate General Colomer in Paolo Vergani v. Agenzia delle Entrate, Ufficio locale di Arona (case 207/04) , where he observed that the principle of equal pay was: " 'one of the foundations of the Community', being the most striking expression of the prohibition against discrimination between male and female workers. It is acknowledged in Article 141 EC, whose economic component, which focuses on the elimination of distortions of competition between undertakings established in different Member States, is secondary to the social theme on which the provision is based. I have already expressed the view, in point 32 of my opinion in Mayer , that the legislation contains a provision not usually found in an International agreement. First, it represents a social ideal and the means - albeit Indirect - of harmonising employment policy in the Union. Secondly, it establishes a legal obligation of result, an economic and social objective in itself. Its wording is based on

Article 2 of Convention

100 of the International Labour Organisation of 1951.

[165]She says that equally here, it is important to focus on the result. She adds that great caution should be exercised regarding Article 141 as merely concerned with the elimination of sex discrimination in pay rather that the objective of achieving fair pay.

[166]We do not think that these observations help her argument. It is perfectly correct to say that non-discrimination on grounds of sex is a fundamental human right, but as we have indicated, the argument she advances would require equal pay even where the employer has rebutted any direct discrimination and where there is a complete absence of any evidence of indirect discrimination. To reject a claim of sex discrimination in such circumstances does not involve frustrating that fundamental human right at all; it is merely saying that there is no breach of it. Conversely, it would in fact involve discrimination against men who would not have an equal right to establish equal pay. Nor can the argument be sustained by focussing on the "result" which Article 141 read with the Equal Pay Directive is designed to achieve. That will entitle the law to require equal pay even where there is no intention to discriminate, or where, as in Enderby, the evidence strongly points to discrimination although its precise nature cannot be identified. Indeed, the Advocate General in Enderby justified the decision on the basis that a results orientated approach was necessary (para 28). But an argument based on "result" cannot justify extending the reach of the equal pay principle to areas where direct sex discrimination has been rebutted and there is no evidence of any adverse impact on women at all.

[167]The contention that it is only English law that is in some parochial way concerned with sex discrimination whilst by contrast Article 141 can properly be directed to establishing a principle of fair wages is impossible to sustain. As we have said, the ECJ has regularly observed that the Article should be read as one with the Equal Pay Directive which expressly talks in terms of eliminating such discrimination. Ms Rose is surely right to say, as she did with respect to the later burden of proof directive, that subsequent directives cannot change the meaning of a Treaty article (see for a recent example Mangold v Helm C-144/04

[2006] IRLR143

ECJ.) However, Article 141 is an exceptional case in view of the Court's jurisprudence –repeated most recently in Brunnhofer itself – that the Equal Pay Directive spells out what is already implicit in the Article itself.

[168]Second, she submits that the cases such as Bilka-Kaufhaus are merely fact specific applications of the general principle enunciated in Brunnhofer , namely that where there is a prima facie case, the principle of equal pay will be breached unless the difference in pay is objectively justified. That is again, in our view, an unsustainable position. The emphasis on the need to establish disparate impact in those cases is not merely an incidental feature of the analysis. It is central to the establishment of a prima facie case of indirect discrimination. It is quite impossible to suggest that Brunnhofer is simply a more generalised application of the principles established in those cases.

[169]Third, she contends that there are indications in some of the pre- Brunnhofer jurisprudence which anticipated and support this development. She referred to a passage in Rinner-Kuhn , but that was a well established case of traditional indirect discrimination involving part time workers. In this context she focussed in particular here on certain observations of Advocate General Lenz in Enderby . Her contention is that Brunnhofer is a natural evolution from what was said by the Advocate General in that case. If that is so, it is something which eluded the ECJ in Brunnhofer itself since no mention is made of these observations at all. However, it is necessary to analyse the Advocate General's opinion.

[170]In dealing with the facts in that case (which we have already summarised), Advocate General Lenz noted that it was not clear whether the case was one of indirect or direct discrimination. He observed that "a formulistic approach should not be adopted when categorizing actual incidences where women are placed at a disadvantage at work" (Para 15), and he referred to what he described as the "result orientated" line which the court had adopted and supported a pragmatic approach in this case. It was for that reason he considered it would be wrong to require specific evidence that they were disadvantaged because of some arrangement which adversely affected them; the mere fact they were an overwhelmingly female profession was sufficient to raise the inference of prima facie sex discrimination.

[171]Much of the Advocate General's analysis was entirely consistent with the case law as it has always been understood. For example, at Para 20, he said "since, in the case of direct discrimination, sex is, by definition, the cause of the less favourable treatment, there must also exist a causal connection between the sex of the worker and the lower pay". He refers in Para 35 to the need to focus not on the hurdle by means of which women suffer a disadvantage "more to the discriminatory result". Ms Rose relies upon that as an illustration of the "results orientated" approach to Article 141, but he is not dispensing with the need to establish a causal relationship between the result and sex.

[172]In Para 39, he said this:

"The structure of the reasoning for both direct discrimination and indirect discrimination is comparable with regard to the evidentiary aspect of the proceedings in as much as a rebuttable presumption of discrimination can be raised, in one case by means of a specific comparison and, in the other, by a comparison of groups, which places the onus on the employer to adduce evidence in rebuttal of that presumption or to produce a justification."

[173]In our view that is entirely consistent with the traditional analysis. It is not requiring justification in every case where there is an allegation of discrimination, but merely where there is a comparison of groups. Absent that, it is enough merely to adduce rebuttal evidence demonstrating no direct sex discrimination.

[174]Ms Rose specifically relied upon Para 25 and 26 which are as follows:

"As stated, it is sufficient for the claimant to prove an example of the same (or equivalent) work by a man being better paid than that by a woman. It is then for the employers to furnish counter-evidence, for example, by adducing objective grounds for the unequal pay which is not based on the sex of the recipient. It may be concluded at this stage, therefore, that in cases of direct discrimination the employer must objectively justify differences in pay."

[175]We accept that read out of context that lends some support for her view. We say some support because it is given merely by way of example that the employer may adduce objective grounds for the unequal pay. But it also depends, as with the similar passage in Brunnhofer , as to what objective grounds means here. It may simply mean no more than that grounds which the employer relies upon to rebut discrimination do exist in fact. Indeed, if it were intended to mean more than that, then there would have been no point in the Advocate General discussing, at length, the concept of indirect discrimination where disparate impact is required. He need have gone no further than Para 26 in his analysis.

[176]The fourth feature of the argument relies upon the general concept of discrimination. This picks up an observation at Para 28 of Brunnhofer where the court said this:

"As the Court has already held in Case 43/75 Defrenne II [1976] ECR 455 , paragraph 12, that principle, which is a particular expression of equality which prohibits comparable situations from being treated differently unless the difference is objectively justified, forms part of the foundations of the Community."

[177]But this proves too much. If the principle is that all forms of discrimination are outlawed absent objective justification then, as Ms Rose was constrained to accept, there would be no logic in denying a man equal pay with another man who is doing equal work, absent objective justification. Indeed, one may as well jettison the carefully crafted structure of the discrimination laws altogether and rely upon this general principle.

[178]Ms Rose strongly disputes this. She says that men cannot claim because Article 141 involves comparing a man and a woman. She places heavy reliance upon a case from 1989 – Commission of the European Communities v The Kingdom of the Netherlands Case 353/89. That was in an entirely different context and concerned alleged discrimination contrary to Article 59 of the EEC Treaty. In that case the Kingdom of the Netherlands had established a law which required the users of television and radio to make use of technical resources such as recording studios, technicians etc. provided by a specific public limited company incorporated under Dutch law. It was said that this infringed the freedom to provide services under Article 59. The question was whether this involved discrimination on grounds of nationality. The Dutch government submitted that it did not as all its own nationals were equally adversely affected by this rule. Accordingly, it was submitted that there was no nationality discrimination as such. The Dutch were not put on one side and other nationalities on the other. It was a preferential system giving one company preference over all the others. The court rejected this argument. It held that this was discrimination on account of nationality, albeit that it was not exclusively directed at foreign nation companies. Ms Rose submits that this meets the objection that there may be discrimination against both men and women as a result of unfair wages but only women can complain. It was, she says, no different in that case; the Dutch national companies other than the preferred company could not complain.

[179]We recognise that the Netherlands case is indeed an example- and there are others- of the fact that in certain situations a discriminatory practice may hit at certain persons or groups who nonetheless cannot complain of the particular discrimination in issue because they do not fall into the relevant category of victims. But that begs the question as to whether there is a causal connection between the treatment and the proscribed ground. In the Netherlands case the policy adversely affected the foreign companies because they were foreign; there was a causal connection between the policy and their being disqualified from carrying out the service; it was an inevitable consequence of that policy. By contrast, here the argument is that women should have a right to make a claim even in circumstances where there is no causal connection between their sex and their pay at all. If the basis of the claim is the general non-discrimination principle – in this context a notion of fair wages- rather than sex discrimination, then there can be no justification for excluding men from enforcing that same principle. They are equally the victims of an infringement of a fair wages principle which would require equal pay for equal work in all circumstances.

[180]Moreover, there is no suggestion in Brunnhofer that the court was intending to rely on this general notion of discrimination to extend the law. On the contrary, the reference in para 12 to Defrenne v Sabena , the earliest equal pay case where the court had observed that the principle of equal pay formed part of the foundations of the community, suggests that the court was not intending to make, or perceiving itself as making, any earth shattering pronouncements. As Mr Linden observed, the general principle of non-discrimination has been translated into certain legal prohibitions on particular identified grounds, and it is those legal rules which must be applied. They are all superfluous if the general non-discrimination principle will suffice.

[181]Finally, Ms Rose pointed out that Brunnhofer has been cited in a number of cases since without any adverse comment whatsoever, for example, Lawrence v Regent Office Care Limited [2002] ECR 1-7325, Wippel [2004] ECR 1-9483 and by the Privy Council in Bishop of Roman Catholic Diocese of Port Louis v Suttyhudeo Tengur

[2004] UKPC 9

. But an analysis of these references does not suggest that these courts were approving the decision as having established the major shift in discrimination law now relied upon.

[182]The court in the Regent Office case merely repeated Para 28 of the decision to the effect that the principle of equality is one of the foundations of the community. It was not confirming any other part of the decision. In Wippel , para 28 of Brunnhofer was cited again for the same proposition, at para 56. Para 55 of Wippel , however, referred to the "settled case law" under which "national provisions discriminate indirectly against women, where although worded neutral terms they operate for the disadvantage of a much higher percentage of women than men, unless that difference in treatment is justified by objective factors unrelated to any discrimination on grounds of sex". In Port Louis the Privy Council simply cited it with other cases as an example of the principle that " when apparently discriminatory treatment is shown " (para.19, our emphasis) then it must be objectively justified. The case says nothing about when or how such treatment is established. We agree with Mr Linden that these cases do not advance matters at all. Summary

[183]We entirely agree with Mr Linden that Ms Rose's argument on this point changes totally the concept of discrimination. The elimination of discrimination on grounds of sex cannot in our view begin to require objective justification for differences in pay in circumstances where the employer has satisfactorily rebutted direct sex discrimination and there is no independent evidence of any kind to show that sex has had any influence on the difference in pay. It is only in the language of Lewis Carroll that such a pay differential not tainted in any way by sex could be rendered unlawful under provisions which outlaw sex discrimination . It could of course be rendered unlawful under a wider principle of fair wages which entitled the Tribunals to become wage setting bodies, but that is not the law.

[184]Ms Rose may well be right that the notion of fair wages, albeit not tied to sex discrimination, might in the long term do more for the rights of women than the legislation that is currently framed. But that is not to the point. She has to demonstrate that her argument is consistent with the law which has been currently framed and that requires that sex should be the cause of the difference in treatment, either directly or indirectly. We are entirely satisfied that it is not and that Brunnhofer , when properly analysed, does not begin to demonstrate otherwise. The EAT decisions .

[185]Finally, we refer to the conflicting decisions of this Tribunal. We do so briefly because we have rehearsed the arguments advanced in some considerable detail. In the Parliamentary Commissioner case (HH Judge Peter Clark presiding) the majority in that case concluded that the House of Lords authorities which we have cited were decisive: that it was illogical to require objective justification where there was no taint of sexual discrimination: that Brunnhofer had to be seen in the context of the question addressed to it which raised the issue of objective justification; and that so read it did not alter the well established principle which had been laid down in the earlier European jurisprudence. He followed his own decision in King's College London v Clark

EAT/1049/02

. By contrast, in Sharp v Caledonia a different Tribunal, this time with HH Judge Ansell presiding, felt that House of Lords authorities ought not to be followed because the Tribunal was bound by later decisions of the ECJ, and that Brunnhofer had altered the law. For the reasons we have given, we do not think that Brunnhofer can begin to sustain the weight of the argument which rests upon it, and we prefer the analysis in the Parliamentary Commissioner case. The question of reference.

[186]We pay tribute to the resourceful and imaginative arguments that have been constructed by Ms Rose to seek to justify the principle which she submits has been established in the Brunnhofer case, or at least arguably so. She says that even although some of her reasons for supporting Brunnhofer were not relied upon in the case itself , that merely reinforces the need for the case to go to Europe so that the ECJ can consider the whole issue. She reminds us of the observations of Sir Thomas Bingham MR, as he was, who noted in R v International Stock Exchange of the United Kingdom and Republic of Ireland Ltd Ex p. Else

[1993] Q.B 524

,545 that ordinarily the national court should make a reference if it has a real doubt about the state of EU law. We have to say that after a careful analysis of the case law we have no real doubt; we do not think that it can be seriously argued that Brunnhofer has changed the law in the way she suggests. Brunnhofer cannot, in our view be said to have changed the well established jurisprudence, and nor do we think that her arguments in support of such a change provide a principled basis for it. Such fundamental shifts in the law are not made in the decision of a Chamber without argument, any proper analysis of the implications, or even any appreciation by the Court itself that it was entering new territory. Moreover, the implications of such a change in the law would be very considerable both in social and economic terms. If such a change were to be made, it seems to us that it would have to be by legislation and after a very detailed consideration of the full implications.

[187]This is not a technical matter about identifying when and how the burden of proof can be rebutted, as important as those issues can be in practice for litigants. It is a fundamental undermining of the very concept of Article 141 being rooted in discrimination on grounds of sex. At one point in her argument Ms Rose submitted that the need to identify disparate impact imposed an additional hurdle on women making equal pay claims. We confess that we find that a curious use of language. If I make a claim for breach of contract, I must adduce evidence sufficient to show that a contract exists but it would be odd to describe this as an additional hurdle. Similarly here; if I make a claim of sex discrimination, I must adduce evidence sufficient to establish a prima facie case for saying that I have been subject to such discrimination. This is not some artificial hurdle; it is simply what is involved in establishing the claim. To dispense with this is to change the nature of the claim entirely. Conclusion

[188]The Employment Tribunal reached an exemplary decision. They analysed the evidence with conspicuous care. They found that there was no sex discrimination but there was some discrimination by way of victimisation. They gave cogent reasons for so concluding. We do not accept that they misdirected themselves in law nor did they reach an irrational or unjustified conclusion.

[189]The equal pay appeal also fails. The Appellant is seeking to advance an argument in favour of the appeal which in our view is wholly at odds with the principles of discrimination law.

[190]Accordingly this appeal fails. We will however give leave to appeal on the equal pay issue, given the contradictory jurisprudence in this court, the importance of the matter, and the fact that the issue is before the Court of Appeal in Sharp .