EAT/0303/08/ZT MRS L GIBSON AND OTHERS v SHEFFIELD CITY COUNCIL [2009] UKEAT 0303_08_1702

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2009] UKEAT 0303_08_1702Case No Appeal No. UKEAT/0303/08/ZT UKEAT/0304/08Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
EAT/0303/08/ZT MRS L GIBSON AND OTHERSAPPELLANTSSHEFFIELD CITY COUNCILRESPONDENTEAT/0304/08/ZT SHEFFIELD CITY COUNCILAPPELLANTSMRS L CROSBY AND OTHERSRESPONDENTS
Before
His Honour Judge Peter Clark Mr D Chadwick Mr R LyonsDate 17 February 2009
[1]APPEARANCES For the Appellants (in case EAT/0303/08/LT) and For the Respondents (in case EAT/0304/08/ZT MS TESS GILL and MS ANYA PALMER (of Counsel) Instructed by: Messrs Thompsons Solicitors 23 Princess Street Albert Street Manchester M2 4ER For the Respondent (in case EAT/0303/08/ZT) and For the Appellant (in case EAT/0304/08/ZT) MS BEVERLEY LANG (One of Her Majesty's Counsel) MR DOMINIC BAYNE (of Counsel) Instructed by: Sheffield City Council Legal Services Town Hall Sheffield S1 2HH SUMMARY EQUAL PAY ACT: Material factor defence and justification GMF defence- whether objective justification required from employer. ET distinguished permissibly between 2 groups of (predominantly female) workers, finding that in relation to one group the defence was made out and in relation to the other it was not. Both findings permissible and upheld. No error of law. Surtees [2008] IRLR 776 (CA) and earlier cases considered. Appeals dismissed. HIS HONOUR JUDGE PETER CLARK In this equal pay litigation the issue determined by an Employment Tribunal sitting at Sheffield chaired by Employment Judge Trayler was whether or not, in relation to certain grades of female workers, the Respondent Sheffield City Council had made out the genuine material factor (GMF) defence afforded by s.1(3) Equal Pay Act 1970 (Eq PA), it being accepted that the female Claimants in those groups performed work rated as equivalent to that of their male comparators for the purposes of s.1(2)(b) based on job ratings contained in the 1987 'White Book' in Manual Grades 1 to 5. By a reserved judgment promulgated on 26 March 2008 that Employment Tribunal held that the GMF defence was made out in respect of that group of Claimants led by Mrs Gibson (the carers) but not in the case of the cleaners led by Mrs Crosby. Against the first finding the Gibson Claimants appeal; against the second the Council appeals (the Crosby appeal). Synopsis[2]The principal issue before the Employment Tribunal was whether the Council could show that the payment of a bonus to the predominantly male comparators and not to the Claimant carers and cleaners was genuinely due to a material factor which is not the difference in sex. In the case of male street cleansing workers that bonus uplifted basic pay by 33.3 per cent and in the case of male gardeners by 38 per cent.[3]In a careful and detailed fact-finding exercise the Employment Tribunal traced the history of bonus payments to the male comparator groups from the 1960s. Having done so the Employment Tribunal found as fact that historically the bonus payments to the comparator groups were genuinely linked to productivity and that when subsequently those bonuses were consolidated into the basic pay of those groups of workers that reflected past achievements and levels required as a minimum in an introductory period for compulsory competitive tendering (CTT) of services.[4]Having found that the comparator groups' pay was and remained genuinely linked to productivity, the Employment Tribunal considered the position of the Claimant groups. As to the 'Carers', which included escorts, assisting special needs children from home to school, care workers and school supervisors (formerly 'dinner ladies'), they found that the nature of their work was such that the principle of bonus payments was not conducive to personal care. The same was not true, however, of cleaners, to whom a bonus system could be applied.[5]Based on those critical factual findings the Employment Tribunal concluded(a) that the failure to pay a bonus element to the carers was not tainted by sex, no objective justification of the difference in pay was required and that the GMF defence was made out in those cases, but that(b) a productivity bonus scheme could be applied to the cleaners; a pay policy was applied which had an adversely disproportionate impact on those women when compared with their male comparators; accordingly the Council was required to objectively justify the difference in pay and, in respect of the cleaners, had failed to do so. In these circumstances the GMF defence failed in the case of Mrs Crosby and others. GMF Defence[6]In reaching their conclusions in this case, the Employment Tribunal considered two earlier judgments of Elias P in cases before the Employment Appeal Tribunal, namely Middlesborough County Council v Surtees [2006] IRLR 869 and Cumbria County Council v Dow [2008] IRLR 91 . In Surtees the Employment Appeal Tribunal held that where the employer proves a non sex-based reason for the difference in pay it will not be necessary for the employer to go on to show objective justification for that pay differential. That conclusion was reached by reference to the earlier Court of Appeal decision in Armstrong v Newcastle upon Tyne NHS Hospital Trust [2006] IRLR 124 , applying the House of Lords' decision in Strathclyde Regional Council v Wallace [1998] IRLR 146 and Glasgow County Council v Marshall [2000] IRLR 272. In short, the President drew back from the line which he took on what may be termed 'the Brunnhoffer point' in Villalba v Merrill Lynch & Co Inc [2006] IRLR 437 (see Surtees ; para. 46).[7]It is unnecessary to revisit that argument for present purposes because Surtees , among other cases, has now been considered by the Court of Appeal [2008] IRLR 776 since the Employment Tribunal decision in the present case. Ms Gill accepts before us, whilst reserving her position should this matter go further, that it is not open to her to argue, as appears from her first ground of appeal in the Gibson appeal, that this Employment Tribunal was wrong in failing to require objective justification by the employer of the difference in pay between the carers and their male comparators in accordance with what she wished to submit is the European law position.[8]In these circumstances the facts of Dow and the Employment Appeal Tribunal's approach in that case are material. It should be noted that Mr Lyons, who sits in this division, was also a party to the decision in Dow .[9]As in the present case, Dow was concerned with comparisons between female Claimant groups, including carers and cleaners whose jobs had been rated as equivalent to those of male workers, principally road workers, under the job evaluation scheme which led to the White Book setting out relevant terms and conditions of employment. It was there held by the Employment Tribunal that a similar productivity scheme as was applied to the road workers could not be applied to the carers and so the authority made out the GMF defence in answer to those claims. However, the Employment Tribunal held that there was no link between bonus payment and productivity in respect of other comparators, so that the GMF defence to those carers who compared themselves with those comparators failed. Similarly the defence failed in respect of cleaners to whom the bonus scheme could be applied.[10]For our purposes the Employment Appeal Tribunal upheld the Employment Tribunal decision as to the cleaners and the carers comparing themselves to road workers. The Crosby Appeal[11]Against that background Ms Beverley Lang QC challenges the Employment Tribunal's finding that the Council failed to make out the GMF defence in relation to the cleaners.[12]First, Ms Lang points out and Ms Gill agrees that Mrs Crosby brought her claim for equal pay as a Grade 1 School cleaner and was treated as a test case for cleaners on that grade. She also held a grade 3 post as cleaner-in-charge. That may explain why the Employment Tribunal upheld her claim by reference to two male comparators, Gary Jackson and Craig Thompson, respectively a grade 2 gardener and grade 3 AFC sweeper driver (Reasons, paragraph 3.107-108). However, it is also common ground that Mrs Crosby compared herself to two Grade 1 male workers, Stephen Brentnall and Vincent Crawford (Reasons paragraphs 2 and 3.104-106). Accordingly, for the avoidance of doubt, we proceed on the basis that Messrs Brentnall and Crawford were the relevant comparators in Mrs Crosby's case.[13]Secondly, Mrs Crosby raised a cross-appeal in the Council's appeal on the basis that the Employment Tribunal was wrong to identify, at paragraph 1.55 of their Reasons, as an issue whether the cleaners had refused to accept or had agreed to the removal of a bonus. That cross-appeal is not now pursued.[14]Having dealt with those two matters we turn now to the substance of the Council's appeal. The appeal is advanced on the basis of perversity and inadequacy of reasons. As to the former, it is submitted that the Employment Tribunal misunderstood the Council's case and thus fell into error in the way described by Mummery LJ in Yeboah v Crofton [2002] IRLR 634 , para 95.[15]Specifically, in the conclusion section of their reasons, at paragraph 5.13 the Employment Tribunal said:
"The Respondent argued that a bonus scheme was not practicable because of the finite nature of building cleaning work. We found against them in respect of that. We have found also that there is no adequate evidence to find that a bonus had been refused by cleaners and that there is no evidence of comparable wages or conditions."
That latter finding is taken from paragraph 3.145 of their findings of fact.[16]Ms Lang submits that the Employment Tribunal's misunderstanding of the Council's case arose in this way; it was not that cleaning work was incapable of attracting bonus payments (as the Council successfully argued in relation to the carers) rather, that the cleaners had refused a bonus scheme in the past for fear of job losses.[17]In advancing this submission Ms Lang has taken us to parts of the evidence before the Employment Tribunal, particularly that of Mr Poynton, a Council employee with 30 years service, who held the post of Head of Business Services for Street Force at the time of the hearing. In general, the Employment Tribunal accepted his evidence; however, as Ms Lang accepts, Mr Poynton's evidence as to the reason why no bonus scheme was introduced for cleaners in the 19790s was based on his recollection of conversations held with colleagues, since retired, who were not called to give first-hand evidence before the Employment Tribunal. In these circumstances we are satisfied that it was open to the tribunal of fact, having properly admitted the hearsay evidence of Mr Poynton, to then conclude that that evidence was of insufficient weight to establish the proposition contended for by the Council, namely that cleaners had refused a bonus scheme in the past.[18]As to the first finding at paragraph 5.13, Ms Gill points to the oral evidence given on behalf of the Council by Kenneth Green, Assistant Chief Executive, that the difference between street cleaners and office cleaners was that buildings are of a fixed size whereas there is an almost infinite amount of cleaning available for street cleaners. (Agreed Notes of Evidence Bundle p328). Thus the argument was advanced on behalf of the Council and rejected by the Employment Tribunal as it was entitled to do.[19]In these circumstances we reject the Council's appeal in the case of the school cleaners typified by Mrs Crosby. We are satisfied that they properly understood the Council's case on this aspect; permissibly rejected it and gave adequate reasons for that conclusion. The Gibson Appeal[20]Having accepted, for the purposes of this Employment Appeal Tribunal hearing, that in the light of the Court of Appeal decision in Surtees the Council is not required to provide objective justification for the pay differential between carers and their male comparators where it shows that the difference in treatment as to bonuses is not 'tainted by sex', Ms Gill's principal challenge is to the findings addressed at paragraph 5.9 of the Employment Tribunal's Reasons, that gender was not a factor in the payment of bonuses, consolidated into the basic pay of the male comparators but not the carers.[21]In support of this submission Ms Gill summarised the findings of fact by the Employment Tribunal as follows: First, the level of consolidated bonus in the basic pay of male street cleaners (33.3 per cent) and gardeners (38 per cent). Secondly, the Employment Tribunal concluded (para. 5.3) that the bonus scheme was introduced to provide incentives to work efficiently and at assessed levels to provide 100 and 110 (per cent) performance and that schemes were kept up to date thereafter. The consolidation of the variable bonus recognised achieved production levels and provided stable reward for continuing to work at that level. Third, the predominantly female occupational groups occupied by these Claimants were never paid the bonus. Next, the statistics, annexed to the Employment Tribunal's Judgment, demonstrated the level of disparate impact. Those statistics are analysed by the Employment Tribunal at para 3.114 of their Reasons, leading the Tribunal to conclude that the bonus was given to predominantly male workers (para. 3.115) and to conclude that it was correct to say that there were stereotypical assumptions that the Claimants' work was essentially "women's work" and the comparators' work considered "men's work" (para. 3.116).[22]Ms Gill also referred to the findings at paragraphs 3.96, 3.98 and 3.99 in relation to internal Council reports and to the findings that the carer groups were a dedicated group of individuals who placed the interests of their clients first (para. 3.136) and achieved productivity by working harder without the incentive of a bonus scheme (para. 3.130).[23]She does not challenge, in this appeal, the finding "that the difference in pay results from outcomes being measurable for the comparators but not for the carer Claimants" (para. 3.131) or that in paragraph 3.144; "that the tasks for the carers in terms of outputs are not measurable and it would not be practicable for such a bonus scheme to be applied". We see that in the next sentence of paragraph 3.144 the Employment Tribunal noted from the facts found in Dow that there had never been such a scheme for carers nationally.[24]She relies upon the Employment Tribunal's finding (now upheld by this tribunal in the Crosby appeal) that in respect of cleaners their output was measurable (para. 3.145) and that a productivity bonus scheme could be applied to that group (para. 5.6), and the Employment Tribunal's reasoning in upholding the cleaners' claims.[25]The Employment Tribunal found (para. 5.8) that the reason why the carers did not receive a bonus was the need to provide payments for increased productivity which it cannot and does not need to make to the carers.[26]In applying the law to those essential factual findings Ms Gill places particular reliance in a passage taken from the judgment of Mummery LJ in Surtees (para. 59) where he said this:
"…The EAT considered that, if a tribunal found that there had been disparate adverse impact (at least if the statistical evidence was convincing), it would usually be impossible in practical terms for the employer to show that the pay disparity was not related to the difference in sex. In particular, in an Enderby -type case, where the disadvantaged group comprised all or almost all women and the advantaged group were all or almost all men, it would be impossible in practical terms for the employer to show that the pay differential was not related to the difference of sex. Thus, although in theory, it was right to say that an employer could still show that the pay differential was not due to the difference of sex, even in the face of disparate adverse impact, it would only be possible in a case where the statistical evidence was not very strong or convincing. We are inclined to think that that analysis of the decision [of the Court of Appeal in Armstrong ] is correct."
[27]Ms Gill is able to point to strong statistical evidence of disparate impact. In these circumstances, she submits, the Employment Tribunal ought to have looked behind the apparent reasons for the difference in treatment (providing a productivity incentive to the male group which could not be applied to the female carers) and concluded that the pay difference was 'tainted by sex'.[28]We enquired, during the oral argument, as to when the expression 'tainted by sex' first appeared in the cases and were referred by Ms Palmer, appearing with Ms Gill, to the judgment of Mummery P, as he then was, in Tyldsley v TML Plastics [1996] ICR 356 see 362C. That case was cited with approval by Lord Nicholls in his speech in Glasgow County Council v Marshall [2000] IRLR 272 , para. 21 and his Lordship adopted a similar expression in his classic exposition of the working of s.1(3) Eq PA. At paragraph 18 he said:
"… 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 s.1(2)(c) [not the present case] may be a 'material' difference, that is, a significant and relevant difference, between the woman's case and the man's case."
[29]At paragraph 19 Lord Nicholls went on to hold that 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.[30]In his analysis in Surtees of the Court of Appeal judgments in Armstrong Elias P concluded (para. 46) that it ought in principle to be open to an employer to show that even although there is disparate adverse impact, that it is not in any way related to any act of the employer which is sex tainted. That, it seems to us, accurately reflects the approach of Arden LJ (para 34) as endorsed by Buxton LJ (para. 107) in Armstrong .[31]Elias P postulated three practical results of his legal analysis at paragraphs 51-55 of the Judgment in Surtees , the third of which (para. 55) was where the employer identifies some particular and specific factor which he contends causes the difference in pay but which is applied only to the predominantly male group. In such circumstances it will be sex-tainted unless he can show that the factor applied only so as to benefit the male group but for non-discriminatory reasons. An example given is where a bonus arrangement is offered to both 'male' and 'female' groups and the latter chose not to adopt it. That was the argument advanced by the Council in the present case in relation to the cleaners and (permissibly) rejected on the facts by the Employment Tribunal.[32]We do not find it a particularly helpful exercise to engage in a close textual analysis of the summary of the Employment Appeal Tribunal's reasoning in relation to Armstrong in Surtees at para 59 of the judgment of Mummery LJ in Surtees . Suffice it to say that the Employment Appeal Tribunal's approach on this aspect was approved. What is not referred to in the Court of Appeal judgment in Surtees is the Employment Appeal Tribunal decision in Dow . Whilst judgment was handed down in Dow on 12 November 2007 the IRLR report of Surtees in the Court of Appeal to which we have been referred does not state when argument was heard in that case (reserved judgment was handed down on 29 July 2008). We shall proceed on the basis that Dow correctly states the law.[33]On its facts, we see that Ms Gill, appearing for the Claimants in Dow , challenged the Employment Tribunal's finding that carers could not be the subject of a bonus scheme similar to that of their male comparators. That challenge was roundly rejected (paras 144-145).[34]Although Ms Gill makes a similar perversity challenge in respect of the carers in respect of the present appeal we return to the principal issue. It seems to us that, applying Armstrong as analysed by the President in Surtees without disapproval by the Court of Appeal in that case, even assuming that disparate impact was made out, it remained open to the Employment Tribunal to find that the difference in carers' pay was not sex tainted and they so found, permissibly, on the basis that(a) the consolidated bonus in the male comparators' pay was genuinely referable to productivity and(b) that a similar productivity bonus was inappropriate for the carers. In this way the Council negatived the taint of sex in the pay differential and thus were not required to objectively justify that differential.[35]Having rejected Ms Gill's principal submission in this appeal we can deal shortly with two further grounds. First, she relies upon the statistical impact on the carers and their comparators, together with the Employment Tribunal's finding of 'stereotypical assumptions' (para. 3.116) for the proposition that the Employment Tribunal failed to look behind the reason found for the difference in pay to its impact on the disadvantaged group. With respect, that seems to us to be another way of seeking to circumvent the effect of Armstrong . Even where there is disparate impact which has an adverse effect on the women's group it remains open to an employer to prove that the pay differential is not sex tainted. On the facts, that is what the Council succeeded in doing in relation to the carers (but not the cleaners).[36]Finally, perversity. Here the challenge is to the Employment Tribunal's finding that the original bonus scheme was genuinely productivity based and maintained after consolidation for the reasons given at paragraph 3.148. We do not propose to rehearse the detailed submissions advanced on each side. Suffice it to say that we are satisfied by Ms Lang that there was evidence to support the Employment Tribunal's reasoning in that paragraph. This ground of appeal therefore fails regardless of whether the finding at para 3.148 was essential to the Employment Tribunal's conclusion. Disposal[37]It therefore follows that we can see no basis in law for interfering with the Employment Tribunal's judgment. Consequently both appeals fail and are dismissed.