NEWCASTLE UPON TYNE NHS HOSPITALS TRUST v MRS S ARMSTRONG & OTHERS [2010] UKEAT 0069_09_2202

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2010] UKEAT 0069_09_2202

Case No Appeal No. UKEAT/0069/09

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

NEWCASTLE UPON TYNE NHS HOSPITALS TRUSTAPPELLANT

MRS S ARMSTRONG & OTHERSRESPONDENT

Before

Mr Justice Underhill

Date 22 February 2010

[1]decision of Employment Tribunal on issues remitted by the Court of Appeal in Armstrong v Newcastle upon Tyne NHS Hospitals Trust

[2006] IRLR 124

. Held : The Tribunal was entitled to find:(a) that the factor relied on by the Respondent was "tainted by sex" because it originated in the Respondent's intention (on a CCT exercise) to match market rates which it appreciated were depressed by factors peculiar to women ( Ratcliffe v North Yorkshire County Council

[1995] ICR 833

applied);

(b) that the continuation of the resulting differential in the period to which the complaint related had not been shown to be objectively justified by the costs or industrial relations implications of removing it or by the Respondent's attempts to phase it out. Discussion of ratio of Ratcliffe and of whether the Court of Appeal adopted the correct analysis of the necessary steps in considering a "GMF" defence where the factor relied on is alleged to be indirectly discriminatory. THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT) INTRODUCTION In order to explain the issues on this appeal, it is necessary to begin with a summary of the procedural history: (1) In late 2000 and early 2001 a large number of female ancillary workers employed (or previously employed) by the Newcastle-upon-Tyne Hospitals NHS Foundation Trust ("the Trust") commenced proceedings against it under the Equal Pay Act 1970 . [1] They were employed at four hospitals maintained by the Trust – the Royal Victoria Infirmary ("the RVI"), and the Newcastle General, Walkergate and Freeman hospitals – mostly as "domestics" (i.e., broadly, cleaners). The claims were for the benefit of "bonus payments" paid to the nominated male comparators: although other comparators were named at first, those ultimately relied on were all hospital porters working at the RVI. The period covered by the claims extends in principle six years back from the commencement of proceedings, i.e. to 1994/5. (2) The Trust in its response to the claims denied that the work of the Claimants and their comparators was comparable under s. 1 (2) of the Act; but it had two other general defences. First, it denied that the Claimants employed at the other three hospitals could compare themselves with porters employed at the RVI (the "wrong comparator defence"). Secondly, it contended that the non-payment of bonus to the Claimants was genuinely due to a material factor other than the difference of sex, so as to give rise to a defence under s. 1 (3) of the Act (a so-called "GMF defence"): we discuss the nature of the defence more fully below, but in bare outline it was that bonus entitlement had to be removed from domestics in order to compete with anticipated outside bids in a Compulsory Competitive Tendering ("CCT") exercise carried out in 1985 and that it had not been possible to remove the differential subsequently. (3) The issues raised by the GMF and wrong comparator defences were directed to be heard at a preliminary hearing. By a decision sent to the parties on 22 December 2003 ("the 2003 decision") an Employment Tribunal sitting at Newcastle upheld the wrong comparator defence but rejected the GMF defence. We are not in this appeal directly concerned with the 2003 decision, but it is necessary to record that its reasoning on the GMF issue was very shortly expressed and not easy to discern. (4) Both parties appealed to this Tribunal, which upheld the decision of the Employment Tribunal in relation to both issues (see

UKEAT/0158/04

). (5) Both parties then appealed to the Court of Appeal. By a decision handed down on 21 December 2005 – Armstrong v Newcastle upon Tyne NHS Hospitals Trust

[2006] IRLR 124

– the Court again upheld the decision of the Tribunal on the wrong comparator defence; but it allowed the Trust's appeal on the GMF defence, essentially on the basis that important issues had not been properly addressed; and the case was remitted to the Tribunal in order to decide three specific questions identified in the judgment of Buxton LJ, which it was directed to determine in the light of the guidance given by the Court. It is convenient to set those questions out here, though the background to them will need to be explained in due course. They are: [(A)] The Employment Tribunal should first consider whether the applicants have demonstrated that the bonus arrangements have a disparate adverse impact on female employees: see para. 108 above. [(B)] If the answer to question [(A)] is in the affirmative, the Employment Tribunal should then consider whether the decision to put domestic services out to tender, or to discontinue the domestic services' bonus scheme, was an act of discrimination on grounds of gender: see para. 126 above. [(C)] If the answer to question [(B)] is affirmative, the Employment Tribunal should then consider whether the Trust has established its genuine material factor defence: see para. 128 above. [2] The decision to remit on that basis was by a majority, consisting of Buxton and Latham LJJ: Arden LJ agreed that the Tribunal's decision on the GMF issue was flawed, but the basis on which she would have remitted it was different. (6) The Claimants sought permission to appeal to the House of Lords. The Trust was asked to submit a written response to the application, but in the event permission was refused. (7) The remittal affected the RVI Claimants only, since it was now only their claims which (potentially) survived. These number some 160. Almost all are domestics but a few work in catering or other ancillary roles. (8) The remitted hearing took place before the same Tribunal (chaired by Employment Judge Barton) over four days in September 2007, and the Judgment and Reasons were sent to the parties on 17 December ("the 2007 decision"). The Tribunal found in the Claimants' favour on all three of the remitted issues and accordingly rejected the GMF defence. (9) The Trust appealed against that decision as regards all three of the remitted questions. The appeal was initially rejected by Elias P. under rule 3 (7) of the Employment Appeal Tribunal Rules 1993 ; but at a hearing under rule 3 (10) HHJ Clark allowed it to proceed in relation to the decisions on questions (B) and (C) only.

[2]The Trust has been represented before us by Mr Michael Supperstone QC and Mr Andrew Blake and the Claimants by Mr Antony White QC and Ms Melanie Tether.

[3]The history of appeals in this case accounts to some extent for the fact that some nine years after the proceedings commenced there has still been no outcome. But the delays have been added to both by the unusually long interval between the argument in the Court of Appeal and the delivery of judgment (explained at para. 96 of that judgment) and by a decision taken to stay the present appeal pending the expected decision in the Bainbridge appeals (

[2009] ICR 133

). We regret having added further to the delay by the time taken to produce this judgment: this has been the result partly simply of the pressure of work but also of the real difficulty of some of the points which we have had to consider. THE FACTS

[4]The primary facts were mostly found in the 2003 decision, though they were to a limited extent supplemented in the 2007 decision. So far as material to this appeal, they can be summarised as follows.

[5]Prior to April 1992 the RVI was maintained by the Newcastle District Health Authority ("the Authority"). As a result of the re-organisation effected by the National Health Service and Community Care Act 1990 it passed to the RVI and Associated Hospitals NHS Trust ("the old Trust") and in 1998 to the current Trust, which has inherited the liabilities of its predecessors as regards employees at the RVI.

[6]The Claimants were employed under contracts of employment which incorporated the Whitley Council agreements applicable to ancillary staff. Those agreements covered staff doing a wide variety of jobs, including domestics, laundry staff, catering assistants and the porters who were their comparators. Domestics were by far the largest single group. Overall, there was no marked predominance of either gender among ancillary staff; but some particular groups were almost exclusively of one sex or the other. Domestics, catering and laundry staff were overwhelmingly female and porters were overwhelmingly male.

[7]From at least the 1970s ancillary staff at the RVI had been entitled to receive what were described as "incentive bonuses". These were paid under schemes originally introduced in order to reward increased productivity. But they gradually lost that character, and the Tribunal found that from 1988 at latest they represented simply an additional element in pay. It is common ground that there was nothing discriminatory in the introduction of the original bonus schemes or their operation: they were available to all ancillary staff.

[8]In the mid-1980s Compulsory Competitive Tendering was introduced to the NHS as a result of Department of Health circular HC83/18. The circular was effectively mandatory in relation to domestic, laundry and catering services, but health authorities were also encouraged to consider "market testing" in other areas; and the Authority in fact considered the introduction of CCT across the whole range of ancillary services.

[9]The CCT exercise in relation to domestics at the RVI was carried out in 1985. With a view to ensuring that it was as competitive as possible, the in-house bid was made on the basis that the staff concerned would no longer be entitled to payment of incentive bonus. The bid was successful. In order to implement the terms on which it had been made it was necessary to alter the terms of domestic staff to exclude their entitlement to bonus. Employees were offered the choice between accepting the new terms and "taking redundancy". The majority left but many stayed. The episode was very contentious. The contract was for five years, but it was renewed in 1991.

[10]The catering and laundry departments at the RVI also had to go through a CCT exercise. The choice was made in their cases to submit tenders which preserved their entitlement to bonus. They were successful.

[11]The portering services at the RVI were never put out to tender. It was not mandatory to do so, and although the Authority considered the question it chose not to proceed for, as the Tribunal found, several reasons – that the budget was limited and the scope for savings small; that the Authority was unaware of private contractors offering equivalent services; and that, for those reasons, opposition to any such exercise was expected to be "more voluble".

[12]The result was that from 1985 onwards domestics were (almost) the only ancillary staff not receiving bonus. The difference made to their remuneration by the removal of bonus was of the order of £80 per month, in the context of basic pay of the order of £700 per month [3] . Since the domestics were almost all women there was thenceforward a marked disproportion in the gender break-down of the ancillary staff at the RVI respectively entitled and not entitled to bonus: in view of the dismissal of the appeal on question (A) – disparate impact - we need not give the detailed figures. No consideration was given by the Authority or either of the Trusts, either at the time or subsequently, to this disparity, nor to any potential equal pay implications.

[13]In 1991 the Department of Health (by letter ASC 1/91) authorised the introduction within the NHS of performance agreements which could provide enhanced remuneration in return for improved performance and replace the old incentive bonus schemes: it was expressly provided that such agreements "could be dovetailed into the competitive tendering process". No such arrangements were introduced for domestics at the RVI.

[14]On the creation of the current Trust on 1 April 1998 the decision was taken, for reasons of financial stringency, to discontinue the bonus schemes for new employees (or transferees) in the jobs where it still applied – i.e. almost all ancillary jobs apart from domestics. This was referred to by the Tribunal as the "new policy". As a result, the numbers of ancillary staff receiving bonus began to diminish, and the disproportion in the gender break-down between recipients and non-recipients also gradually diminished; but it remained substantial for the remainder of the period with which we are concerned.

[15]With effect from 1 October 2004 – i.e. subsequent to the start of proceedings, and indeed to the 2003 decision – the bonus schemes were abolished altogether as part of the "Agenda for Change" renegotiation of pay structures in the NHS. It follows that the claims brought in the present proceedings are now historic only. OVERVIEW OF THE APPLICABLE LAW

[16]It is necessary before proceeding further to attempt a brief overview of the relevant law and of the issues which arise in the present appeal by reference to it.

[17]The starting-point must be s. 1 (3) of the 1970 Act. This reads:

"(3) An equality clause falling within subsection (2)(a), (b) or (c) above shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor— (a) in the case of an equality clause falling within subsection (2)(a) or (b) above, must be a material difference between the woman's case and the man's; and (b) in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference."

[18]That formulation pre-dates the development of the modern law of sex discrimination and it has had to be glossed in order to bring it into line both with the Sex Discrimination Act 1975 and with the EU jurisprudence. In Strathclyde Regional Council v Wallace

[1998] ICR 204

Lord Browne-Wilkinson (delivering the only speech in the House of Lords) said this (at pp. 211-2):

"To establish a subsection (3) defence, the employer has to prove that the disparity in pay is due to a factor 'which is not the difference of sex', i.e. is not sexually discriminatory. The question then arises, 'What is sexually discriminatory?' Both the Sex Discrimination Act 1975 and Article 119 of the European Treaty recognise two types of sex discrimination. First, there is direct discrimination, i.e. a detriment suffered by women which they would not have suffered but for being women. Second, there is indirect discrimination, i.e. a detriment suffered by a class of individuals, men and women alike, but the class is such that a substantially larger number of women than men suffer the detriment. The classic example of indirect discrimination is a policy under which part-time workers, whether male or female, are paid less than full-time workers. There are many more women than men who are part-time workers. Accordingly such a policy applied to part-time workers is indirectly discriminatory against women. Under the Sex Discrimination Act 1975, direct sexual discrimination is always unlawful. But, both under the Sex Discrimination Act 1975 and under Article 119, indirect discrimination is not unlawful if it is 'justified:' Sex Discrimination Act 1975 s. 1 (1) (b) (ii); Bilka-Kaufhaus GmbH v Weber von Hartz (case 170/84) [1987] ICR 110 . Indirect discrimination can be 'justified' if it is shown that the measures adopted by the employers which cause the adverse impact on women 'correspond to a real need on the part of the [employers], are appropriate with a view to achieving the objectives pursued and are necessary to that end': Rainey v Greater Glasgow Health Board [1987] ICR 129 . The cases establish that the Equal Pay Act 1970 has to be construed so far as possible to work harmoniously both with the Sex Discrimination Act 1975 and Article 119. All three sources of law are part of a code dealing with unlawful sex discrimination: see Shields v E Coomes (Holdings) Ltd [1978] ICR 1159 and Garland v British Rail Engineering Ltd [1982] ICR 420 . It follows that the words 'not the difference of sex' where they appear in s.1(3) of the Equal Pay Act 1970 must be construed so as to accord with the Sex Discrimination Act 1975 and Article 119, i.e. an employer will not be able to demonstrate that a factor is 'not the difference of sex' if the factor relied upon is sexually discriminatory whether directly or indirectly. Further a sexually discriminatory practice will not be fatal to a subsection (3) defence if the employer can 'justify' it applying the test in the Bilka-Kaufhaus case."

In Glasgow City Council v Marshall

[2000] ICR 196

, which raised very similar issues to Wallace and in which Lord Browne-Wilkinson's speech was approved and applied, Lord Nicholls (again, delivering the only speech) gave what has been generally regarded as the most authoritative exposition of the correct approach to the application of s. 1 (3). He said, at pp. 202-3:

"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 s. 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 s. 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."

[19]The overall message of Wallace and Marshall is clear. In considering a defence under s. 1 (3) it is necessary for a tribunal first to identify the employer's "explanation" for the differential complained of (a preferable phrase to the conventional but clumsy terminology of a "material factor" to which the differential is "due") and then to consider whether that explanation involves sex discrimination, applying the well-known principles which underlie both the relevant UK legislation and the jurisprudence of the European Court of Justice.

[20]The principles of discrimination law which are thus to be applied conventionally distinguish between "direct" and "indirect" discrimination. At the risk of spelling out unnecessarily what is now reasonably well-established: - Direct discrimination occurs where the treatment complained of is done on the ground of the complainant's gender. It has been clear ever since the decision of the House of Lords in Nagarajan v London Regional Transport

[1999] ICR 877

(see esp. per Lord Nicholls at pp. 884-5) that – except in a case where an explicitly discriminatory criterion is applied - it is necessary to examine the "motivation" (not motive) or "mental processes" (conscious or unconscious) of the decision-taker: see Amnesty International v Ahmed

[2009] ICR 1450

, at paras. 31-38 (pp. 1469-72) [4] . - As for indirect discrimination, it is now recognised that this label in fact covers two distinct phenomena. The difference between the two is fully explained and analysed by Elias P. in the illuminating judgment of this Tribunal in Villalba v Merrill Lynch & Co Inc

[2007] ICR 494

, at paras. 104-117 (pp. 500-503), as amplified (and in one respect modified) in Middlesbrough Borough Council v Surtees

[2007] ICR 1644

, at paras. 45-55 (pp. 1658-60). We respectfully adopt that analysis; and we can accordingly state the position fairly summarily. The first kind of indirect discrimination occurs where the employer "applies" a "provision criterion or practice" (or "PCP" in the jargon) which puts or would put women at a particular disadvantage when compared with men – or, as it is more commonly put, has a "disparate adverse impact": that is the formulation adopted in the relevant EU legislation and now incorporated also in the UK statutes. The second kind of indirect discrimination was first recognised in the decision of the European Court of Justice in Enderby v Frenchay Health Authority

[1994] ICR 112

. In cases of the Enderby type indirect discrimination is found where two groups of employees doing work of equal value receive different pay and there is a sufficiently substantial disparity in the gender break-down of the two groups. The essential difference between the two kinds of discrimination is that in the first the employer has demonstrably done something (i.e. applied a PCP) to produce the disparity complained of, whereas in the second no act on the part of the employer is identified but the nature and extent of the disparity is such as to justify the inference that it must nevertheless be the result of past discrimination (direct or indirect). It follows that this kind of indirect discrimination is essentially evidential in character - see Villalba at para. 113. In the case of both types, once the disparate impact has been established, the differential will – subject to the point we consider below - be treated as unlawfully discriminatory unless the employer can show that it is "objectively justified".

[21]That much is reasonably well-established, even if the application of the distinctions involved will sometimes be problematic; but two points of potential difficulty will have to be considered in due course and should be noted at this stage.

[22]First, in his speech in Ratcliffe v North Yorkshire County Council

[1995] ICR 833

, which we shall have to consider more fully below, Lord Slynn said, at p. 839 G-H:

"In my opinion the Act of 1970 must be interpreted … without bringing in the distinction between so-called "direct" and "indirect" discrimination."

Lord Browne-Wilkinson in Wallace pointed out that that observation was obiter and observed that it "must not be carried too far" (p. 212 E-G); and it appears hard to reconcile with the approach set out in Marshall (in which Ratcliffe was cited, though not referred to by Lord Nicholls).

[23]Secondly, in both Wallace and Marshall the House of Lords held in terms that in the case of a defence under s. 1 (3) of the 1970 Act there was no requirement of objective justification if the differential in question could be shown not to be "tainted with sex" (i.e. not to be the product of either direct or indirect sex discrimination): however unjustifiable the differential might be, the employee could have no complaint if it were not sexually discriminatory. That was indeed the principal ratio of both cases. In Wallace Lord Browne-Wilkinson said, at p. 213 B-D:

"From what I have said, it is apparent that in considering s. 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."

And the same point is made in clear terms in the second of the paragraphs from the speech of Lord Nicholls in Marshall which we have set out at para. 18 above. On that basis Arden LJ in her judgment in the Court of Appeal in the present case said this, at paras. 32-33 of her judgment (p. 131):

"32. I have set out the well-known passage from the speech of Lord Nicholls in the Marshall case. (The remainder of the House agreed with his speech.) That passage sets out a step by step guide to proving a genuine material factor defence. For the purposes of this appeal, the steps can be summarised as follows: (1) The complainant must produce a gender-based comparison showing that women doing like work, or work rated as equivalent or work of equal value to that of men, are being paid or treated less favourably than men. If the complainant can produce a gender-based comparison of this kind, a rebuttable presumption of sex discrimination arises. (2) The employer must then show that the variation between the woman's contract and the man's contract is not tainted with sex, that is, that it is genuinely due to a material factor which is not the difference of sex. To do this, the employer must show each of the following matters: (a) that the explanation for the variation is genuine, (b) that the more favourable treatment of the man is due to that reason, and (c) that the reason is not the difference of sex. (3) If, but only if, the employer cannot show that the reason was not due to the difference of sex, he must show objective justification for the disparity between the woman's contract and the man's contract. 33. It follows from the Marshall case that there is no need for an employer to provide justification for a disparity unless the disparity is due to sex discrimination … ."

Although Arden LJ was in the minority on the particular issues raised by the appeal (at least so far as relevant for present purposes), at para. 110 of his judgment (p. 139) Buxton LJ expressly adopted what she said in that passage and added:

"Once disparate adverse impact has been established, the burden passes to the employer in respect of two issues. First, that the difference between the man's and the woman's contract is not discriminatory, in the sense of being attributable to a difference of gender. Second, if the employer cannot show that the difference in treatment was not attributable to a difference in gender he must then demonstrate that there was nonetheless an objective justification for the difference between the woman's and the man's contract."

The three questions which were remitted to the Tribunal – see para. 1 (5) above - are structured by reference to that analysis. [5] That approach is said by the Claimants to be wrong. They say that it is a fundamental principle of discrimination law that if a claimant shows either a "PCP" having a disparate impact as between men and women or an " Enderby " situation a presumption of sex discrimination is raised which can only be rebutted by proof of objective justification: that is, they say, clear from the EU jurisprudence and is also reflected in the definitions of indirect discrimination in domestic legislation – most relevantly, ss. 1 (1) (b) and 1 (2) (b) of the Sex Discrimination Act 1975 . To introduce a separate enquiry into whether the PCP or Enderby situation is "tainted by sex" is heterodox, and Arden LJ's "step (2)" has no place in the exercise. However, even if we were persuaded by that argument, we do not believe that it would be open to us to proceed on that basis. It would be remarkable if in considering the Tribunal's answers to the questions remitted to it by the Court of Appeal we sought to depart from the legal analysis on the basis of which those questions were formulated. We return briefly to this argument by way of a postscript to this judgment (see paras. 66-73 below); but for the purpose of deciding this appeal we are satisfied that we must proceed on the basis that Arden LJ's analysis is correct. THE ISSUES UNDER S. 1 (3) GENERALLY AND ON THIS APPEAL

[24]We turn to apply that analysis of the law to the issues in the present case and more particularly on the present appeal.

[25]The starting-point must be to identify the explanation advanced by the Trust for the differential complained of. As already noted, its essential case is that the variation between the Claimants' terms and the porters' – i.e. the fact that the porters received bonus whereas they did not - was genuinely due to the consequences of the CCT exercise in 1985 and the difficulties in restoring the position subsequently. As regards the initial withdrawal of bonus, that "factor" comprised:(a) the related facts (i) that the Authority had been obliged to conduct such an exercise; (ii) that it had been judged necessary to frame the in-house bid on the basis of the withdrawal of bonus entitlement in order to compete with the anticipated competitors – in other words, to match market rates; and (iii) that it was accordingly necessary, when the bid was successful, to implement its terms by withdrawing bonus entitlement; and

(b) the fact that no such exercise had been undertaken in relation to the porters. [6] As regards the subsequent maintenance of the differential, this appears to have been treated in the Tribunal below (and consequently in the Court of Appeal) as falling to be dealt with as part of the objective justification issue rather than as a distinct aspect of the explanation: as to this, see para. 27 below.

[26]Accordingly the issues that should have been considered by the Tribunal in its original decision – the s. 1 (2) comparison being assumed for the purpose of the preliminary issue - can be summarised as follows [7] :(1) Has the Trust established that that was the true explanation and that it was material ? (This question wraps up the first two and the fourth of the matters which Lord Nicholls specifies that the employer has to prove; but there is no need to distinguish them in the circumstances of this case.)

(2) If so, has the Trust established that that explanation is not "tainted by sex" – i.e. that it does not involve either direct or indirect sex discrimination ? (This is Lord Nicholls' third question.) Since the case has always been characterised as one of indirect discrimination, that question resolves - on the Court of Appeal's analysis (see in particular the passage quoted from para. 110 of Buxton LJ's judgment) – into two distinct questions: (a) Have the Claimants established – the burden being on them (see Nelson v Carillion Services Ltd

[2003] ICR 1256

) - that the explanation has a disparate adverse impact as between men and women ? If so: (b) Has the Trust established – the burden being on it – that the explanation is nevertheless not tainted by sex ?

(3) If the Trust has not established that the explanation is not tainted by sex, is it nevertheless objectively justifiable ? We consider in turn how those issues were dealt with by the Tribunal and in the Court of Appeal.

[27]As to question(1) , the Tribunal appears to have proceeded on the basis that the Trust's explanation was genuine and material so far as it went. It is of course well-established that a GMF defence based on "market forces" is admissible in principle: see, e.g., Rainey v Greater Glasgow Health Board

[1987] ICR 129

. The real issues in the case thus concern questions

(2) and (3). (We should qualify that statement in one respect. It was always part of the Claimants' case before the Tribunal that circumstances changed after 1985, and that it was no longer possible to rely on the CCT exercise as a defence to the differential as it existed in the period covered by the claims in these proceedings, i.e. from 1994/5 onwards. One way of putting that argument would be to say that the state of affairs from 1994/5 was no longer "due to" – or explained by – the events of ten years earlier; and that seems to have been the approach taken in the leading case of Benveniste v. University of Southampton

[1989] ICR 617

(see per Neill LJ at p. 628 A-B). The formulation of the questions remitted by the Court of Appeal does not, however, appear to leave room for the point to be raised in this form: question (B) proceeds on the basis that the only relevant question is what happened in 1985. But the point arises in another way as part of the argument on objective justification - as to which, see paras. 55 ff. below – and the distinction between the two ways of putting it may be one of form rather than substance.)

[28]As to question (2) (a) , the Tribunal's finding in the 2003 decision on the question of disparate adverse impact was held by the Court of Appeal to be unsatisfactory; and it was for that reason that Buxton LJ's "question (A)" was remitted (see para. 1 (5) above). In its 2007 decision the Tribunal clearly found for the Claimants on this question, and, as already noted, there is no live appeal from that finding (see para. 1 (9) above).

[29]As to question 2 (b) , although the burden on this issue was on the Trust, its case was essentially that the explanation advanced above self-evidently had nothing to do with the gender of the Claimants or their comparators. As Buxton LJ observed (at the beginning of para. 112 of his judgment), the Tribunal's findings "... set out a detailed and thought-out policy in relation to the adoption of CCT, and of the handling of the bonus scheme in those cases where services were put out to tender, which on its face has nothing at all to do with the gender of those employees affected by it." Accordingly, it was for the Claimants to show some reason to believe otherwise. Buxton LJ identified two distinct strands to the Claimants' case, and the Tribunal's decision, in this regard, namely:(i) that at least part of the reason why the porters' jobs were never put through a CCT exercise was that they were men;

(ii) that "to require the domestics to compete in the market as it then stood was in itself necessarily discriminatory", because the market was itself "gender-unbalanced" (see para. 114 of his judgment) – this was referred to as "the Ratcliffe point" because it derives from the decision of the House of Lords in Ratcliffe v North Yorkshire County Council , to which we have already referred. (It was debatable to what extent the Ratcliffe point had in truth been relied on by the Employment Tribunal, but it was central to the decision of the Appeal Tribunal to uphold its decision, and Buxton LJ held that on balance it did form part of the Employment Tribunal's reasoning.) As to the first issue – that is to say, the treatment of the porters – Buxton LJ held (at paras. 115-119) that there was no arguable basis for the Tribunal's decision: since that issue has thus been authoritatively determined, we need say no more about it. As to the Ratcliffe issue, he held that the Tribunal's reasoning was inadequate and that the issue had to be remitted to the Tribunal: see para. 126 of his judgment, which gives rise to issue (B).

[30]As to question (3) , at para. 128 of his judgment, under the heading "The Genuine Material Factor Defence", Buxton LJ said this:

"Having found that the difference between the men's contracts and the women's was discriminatory, the employment tribunal then needed to go on and consider the Trust's material factor defence, as summarised in paragraphs 11–13 of the Trust's closing submissions before it. I would say quite shortly that the employment tribunal entirely failed to address that issue. The EAT, in its paragraphs 35–36, accepted a submission by Miss Tether that the employment tribunal had at least had those matters in mind, as witness its recitation of some of the relevant facts in the statement of facts in its paragraph 8. I cannot agree that that was in any way adequate. The defence needed a careful assessment and judgement, which it did not receive."

That gives rise to issue (C). We note that Buxton LJ refers to the remitted issue as relating to "the genuine material factor". That is no doubt broadly correct, but the actual dispositive issue is whether that factor can be objectively justified notwithstanding that it is "sex-tainted". Since that issue had simply not been addressed by the Tribunal the Court of Appeal did not have to, and did not, itself consider any of the issues relating to objective justification.

[31]It has been necessary to engage in this lengthy analysis in order to place the issues before us in the correct legal context. But the upshot is that we are concerned only with the two issues raised by Buxton LJ's questions (B) and (C), to which we will refer as the " Ratcliffe " and "objective justification" issues. We take them in turn. THE RATCLIFFE ISSUE THE DECISION IN RATCLIFFE

[32]The facts of Ratcliffe are on their face very similar to those of the present case. The applicants were catering assistants employed by the respondent Council: almost all the catering assistants were women. In order to comply with the terms of the CCT tender by an in-house direct service organisation ("DSO"), the manager of the DSO, a Mr Tillbrook, reduced the applicants' wages to what he considered to be the market rate for such work, by reference in particular to the rates paid by a commercial contractor called CCG (which itself only employed women).

[33]The applicants brought proceedings under the 1970 Act claiming equal pay with men employed by the Council whose work had previously been rated as equivalent to theirs. The Council relied under s. 1 (3) on the need to reduce the applicants' pay in order to be able to submit a competitive tender. The industrial tribunal (by a majority) held that that explanation involved sex discrimination. Its core reasoning appears in the following passage from its reasons, quoted by Lord Slynn at p. 837 A-D:

"(1) The reason that the applicants and other school dinner ladies are on less favourable terms and conditions is because Mr. Tillbrook chose to reduce those terms from the N.J.C. terms and conditions for manual workers because he perceived that it was necessary to do so in order to be able to compete in the open market, that is to say due to his perception of market forces in a market which is virtually exclusively female doing work which is convenient to that female workforce and which, but for the particular hours and times of work, that workforce would not be able to do … It was clear to Mr. Tillbrook that it was a workforce that would, by and large, continue to do the work, even at a reduced rate of pay, when the alternative was no work or ceasing to have the advantages of remaining a county council employee and becoming an employee of a commercial catering organisation doing the same work for less favourable terms in any event. (2) It is clear that both the D.S.O. and the employees were over the proverbial 'barrel' due to the fact that competitors only employed women and, because of that, employed them on less favourable terms than the council did previously under the N.J.C. agreement. That may well have been a material factor but it was certainly a material factor due to the difference of sex arising out of the general perception in the United Kingdom, and certainly in North Yorkshire, that a woman should stay at home to look after the children and if she wants to work it must fit in with that domestic duty and a lack of facilities to enable her, easily, to do otherwise."

[34]The House of Lords held that the tribunal had been entitled to conclude that the Council had not shown that the factor on which it relied was not a factor "other than the difference of sex" between the applicants and their comparators. Lord Slynn, delivering the only speech, said this, at pp. 840-1:

"By a majority [the tribunal] were satisfied that the council had failed to show that the variation between the applicants' contracts and those of their male comparators was due to a material factor which was not the difference of sex. In my opinion it is impossible to say that they were not entitled on the evidence to come to that conclusion. It is obvious that the council reduced the applicants' wages in order to obtain the area contracts and that to obtain the area contracts it had to compete with C.C.G. who, the tribunal found, employed only women and "because of that, employed them on less favourable terms than the council did previously under the N.J.C. agreement" (majority conclusion, paragraph 2). The fact, if it be a fact, that C.C.G. discriminated against women in respect of pay and that the D.S.O. had to pay no more than C.C.G. in order to be competitive does not however conclude the issue. The basic question is whether the D.S.O. paid women less than men for work rated as equivalent. The reason they did so is certainly that they had to compete with C.C.G. The fact, however, is that they did pay women less than men engaged on work rated as equivalent. The industrial tribunal found and was entitled to find that the council had not shown that this was genuinely due to a material factor other than the difference of sex. The women could not have found other suitable work and were obliged to take the wages offered if they were to continue with this work. The fact that two men were employed on the same work at the same rate of pay does not detract from the conclusion that there was discrimination between the women involved and their male comparators. It means no more than that the two men were underpaid compared with other men doing jobs rated as equivalent. The council contends that there was no evidence upon which the industrial tribunal could find that their competitors employed only women. I am not satisfied that this is correct, but even if their competitors did employ men it is clear that they paid women employees less than the N.J.C. scale. Even if, contrary to the view expressed previously, it is right or helpful to introduce the distinction between direct and indirect discrimination into section 1 of the Act of 1970 that does not seem to me to help the council in the present case. The fact that it paid women less than their male comparators because they were women constitutes direct discrimination and ex hypothesi cannot be shown to be justified on grounds "irrespective of the sex of the person" concerned (section 1 (1) (b) (ii) of the Act of 1975). The difficulties of this case are underlined by the fact that both the industrial tribunal and the Employment Appeal Tribunal were divided in their conclusions. Once it had to compete with others the council was in a very difficult position. On the other hand it is inescapable that when the evaluation had shown that women were being paid less than men for work rated as equivalent then it is impossible to say that the difference in pay was genuinely due to a material factor other than the difference of sex. Unlike the Employment Appeal Tribunal I do not find it necessary to remit this case for further findings; nor do I consider that the industrial tribunal so misdirected itself that its findings cannot stand. The fact is that the council re-engaged the women at rates of pay less than those received by their male comparators and no material difference other than the difference of sex has been found to exist between the case of the women and their male comparators. It is accordingly not necessary to review the many cases decided under these two Acts, nor is it necessary to consider article 119 of the E.E.C. Treaty (Cmnd. 5179-II) and the decisions of the European Court of Justice on that article, it not being suggested that the Act of 1970 is in this respect in conflict with article 119. Though conscious of the difficult problem facing the council in seeking to compete with a rival tenderer, I am satisfied that to reduce the women's wages below that of their male comparators was the very kind of discrimination in relation to pay which the Act sought to remove. I would accordingly allow the appeal and restore the decision of the majority members of the industrial tribunal."

[35]We have to say that we do not find it easy to identify the ratio in that passage. Lord Slynn, consistently with the observation quoted at para. 22 above, eschewed any sophisticated analysis of the nature of the discrimination involved. Since, however, the reasoning was the subject of exposition in the Court of Appeal it will be better to defer any attempt at analysis at this stage. THE DECISION OF THE COURT OF APPEAL

[36]Although the Court of Appeal found, with some hesitation, that the Employment Tribunal in the 2003 decision relied on Ratcliffe , it is important to appreciate just how limited the reasoning of the Tribunal was. At para. 29 it recorded a submission by Ms Tether, who appeared for the Claimants unled at all stages until the hearing before us, that:

"... the facts of the present case [were] in important respects similar to those which form the backdrop to [ Ratcliffe ]. The domestics of the RVI were exclusively, or almost exclusively, female and the labour market for domestics in the north east was almost exclusively female."

But it did not go on to make any further findings, and the very short section containing its reasons for rejecting the s. 1 (3) defence made no further reference to Ratcliffe or Ms Tether's submission. The conclusion that it had, apparently, adopted that submission was a matter of inference.

[37]At para. 121 of his judgment in the Court of Appeal Buxton LJ said this about the reasoning of the Employment Tribunal (and of this Tribunal):

"… [T]he tribunal merely stated that the facts of Ratcliffe were similar to those in our case, and never considered how, if at all, the law expounded in that case related to the issue of discrimination on the facts of our case. The EAT by contrast did accept the relevance of Ratcliffe, as already noted. The EAT does not reason out that conclusion, but it appears that it rests on the fact that the labour market for domestics was almost exclusively female, read in the light of what was said by the House of Lords in Ratcliffe. Those two matters, taken alone, would however only be dispositive if the House of Lords had held in Ratcliffe that to adjust wages or conditions in order to compete in a predominantly female labour market was necessarily discriminatory either as a matter of fact or as a matter of law. But the House of Lords did not so hold."

He went on to quote (most of) the passage from the speech of Lord Slynn which we have already set out and proceeded to the following conclusions:

"123. First, Lord Slynn's emphasis on the primacy of the decision of the Employment Tribunal suggests that the EAT in our case should have confined itself to the basis on which the case was approached by the Employment Tribunal. If the question is posed in terms of whether on that basis the Employment Tribunal was entitled to come to the conclusion that it did, the answer is in the negative, because the Employment Tribunal failed to reason out the application of Ratcliffe to the facts of the case before it. 124. Second, Lord Slynn saw the employers as having shown no material difference between the applicants in Ratcliffe and their comparators other than the difference of sex. That is not so in our case. The complex history and effect of the introduction of CCT, fully set out by the Employment Tribunal, indicates that the different decisions or outcomes in relation to bonus payments were the result of a very wide range of factors. That is no doubt why the case originally concentrated on the decisions as to whether the various services should be put out to tender at all, with the resulting claim that it was the treatment of the men rather than of the women that was influenced by gender. 125. Third, we have already noted that Lord Slynn did not regard as conclusive that the employers had to tender in a market staffed largely by women, and against a competitor who discriminated against women. That was despite the Employment Tribunal in that case having received detailed evidence as to the employer's motivation during the tendering process, and having found (as cited by Lord Slynn, [1995] ICR at p 837D) that wage differentials between the sexes arose from : "the general perception in the United Kingdom, and certainly in North Yorkshire, that a woman should stay at home to look after the children and if she wants to work it must fit in with domestic duty and a lack of facilities to enable her, easily, to do otherwise."

By contrast, the Employment Tribunal and the EAT in our case knew little or nothing about the detailed tendering process or about the market that it was addressing. I appreciate that there were difficulties in recovering what exactly had happened some fifteen years before the hearings, but the employers, as respondents, can hardly be blamed for the delay in bringing the proceedings. And if that history had been explored, by either tribunal, it would have been necessary to reconcile findings of discrimination with the fact that bonuses were retained by the Catering and Laundry departments, found by the Employment Tribunal to have the same dominant characteristic as the domestic service, that they were predominantly staffed by women. 126. Given the assumption (which it will have been seen that I accept with some reluctance) that the Ratcliffe argument was on the agenda of the Employment Tribunal, and thus is on the agenda of this court, I am driven to conclude that it was not properly addressed by either tribunal below. I see no alternative to remitting this part of the case to the Employment Tribunal, for it to consider, in the light of the observations of this court, whether on the facts found in the present case the decision to put the domestic services out to tender was, or involved, an act of discrimination on grounds of gender. That consideration will need to bear carefully in mind that, in view of the court's finding as to the decision in respect of the porters not being discriminatory, the decision as to the domestics must be assessed without any reference to the fact that the porters are men." Latham LJ's short judgment (paras. 89-93) does not deal expressly with this point, but it is clear from the terms of the order eventually made that he agreed with Buxton LJ's reasoning. Arden LJ did deal with Ratcliffe in some detail (see at paras. 60-69). She too found the Tribunal's decision to be unsustainable, and at some points her analysis coincides with Buxton LJ's; but it certainly does not do so in its entirety, and to the extent that it differs she is clearly in the minority. THE RATIO OF RATCLIFFE AS INTERPRETED BY THE COURT OF APPEAL

[38]Buxton LJ makes clear at para. 121 of his judgment that Ratcliffe is not to be regarded as establishing that "to adjust wages or conditions in order to compete in a predominantly female labour market [is] necessarily discriminatory " , as a matter either of fact or of law. Something more is required. The question is what that additional element is. [8]

[39]Mr Supperstone submitted to us that the necessary additional element was "that the market forces were themselves sexually discriminatory": in other words, it was necessary that the low rates paid for the jobs in question were the result (at least to a substantial extent) of their being regarded as "women's work". On that basis, the crucial element in Ratcliffe was the tribunal's finding that the rates for catering assistants in the North East were depressed by the kind of social/economic factors peculiar to women described at para. (2) in the passage which we set out at para. 33 above.

[40]We do not believe that that submission is consistent with the majority ratio in the Court of Appeal. At para. 125 of his judgment Buxton LJ appears to say that, on his reading of Lord Slynn's speech, even the "discriminatory market forces" finding by the tribunal in Ratcliffe was not sufficient to rebut the Council's s. 1 (3) defence. What then is the element which Buxton LJ believed had been present in Ratcliffe but had not been considered by the Tribunal in the 2003 decision ? As we read it, the key to Buxton LJ's analysis is given by the phrasing of the remitted question, namely whether in taking the decisions in question the Authority had discriminated "on grounds of gender". That is the language of direct discrimination; and what we understand Buxton LJ to be saying is that it was necessary for the Tribunal not simply to establish that the rates in question were "women's rates" but to consider whether the decision-takers on the part of the Authority appreciated that fact and were willing to take advantage of it. [9] Using Lord Nicholls' phrase from Nagarajan , it was necessary to examine their "mental processes". That appears to be why in para. 124 he attached importance to the "complex history ... of the introduction of CCT" by the Authority and the numerous factors which were involved; and why in para. 125 he emphasised the need to "explore" that history, and in particular to consider the significance of the fact that other predominantly female groups – in catering and laundry – retained their bonus. The relevance of those points can only be that they might negate any inference of gender prejudice operating on the minds of the decision-takers in their treatment of the domestics. By contrast, we cannot see how they would have had any relevance if Mr Supperstone's interpretation of Ratcliffe were correct: on that basis, the focus is purely on the characteristics of the market for domestics and not on the Council's own attitude.

[41]It could be said that if that reading of Buxton LJ's interpretation of Ratcliffe is correct it gives rise to an anomaly. If the essence of the discrimination in such a case is in the mental processes of the person(s) responsible for the initial differential, should the case not be regarded as one of direct discrimination ? And if so, why did Buxton LJ contemplate that the Trust might have a defence of justification ? This is a serious point, but there may be an answer to it. It was never part of the Claimants' case that those responsible for the decisions what to pay them during the relevant period acted on the ground of their sex: the case has always been put as one of indirect discrimination [10] , apparently of the Enderby type. If there was direct discrimination of the kind contemplated by Buxton LJ, it was in the (fairly distant) past. Elias P in his analysis of Enderby discrimination in Villalba and Surtees (see para. 20 above) acknowledged that the presumed underlying discrimination might be direct or indirect; but, even if it is direct, the point is that it is not the immediate ground of the employer's action, and we can see good reason why in such a case it would be appropriate to permit a defence of objective justification. The truth is that, whether the correct reading of Ratcliffe is Mr Supperstone's or what we understand to have been Buxton LJ's, " Ratcliffe discrimination" does not fit neatly into the established categories – which is no doubt why Lord Slynn, rightly or wrongly, was reluctant to undertake the exercise (see para. 22 above).

[42]Having come to the conclusion that that was Buxton LJ's interpretation of Ratcliffe , we feel bound respectfully to observe that we are not ourselves sure that he was right. Lord Slynn's core reasoning seems to be in the second paragraph of the passage from his speech which we have set out: the remaining paragraphs are by way of amplification or qualification. What in that paragraph he apparently regarded as the key point is the tribunal's finding, which he directly quotes, that CCG only employed women and that " because of that [our emphasis]" the Council reduced the applicants' rates. It is not clear to us that that entails a finding that the mental processes of Mr Tillbrook, being the relevant decision-maker, were affected by the fact that the CCG employed only women: it could be said that his only motivation was to match the market, and that indeed is how the Council's "reason" for reducing the applicants' rates is elsewhere expressed. We can see a case for treating Ratcliffe as recognising a form of "market discrimination" that does not depend on the mental processes of individual decision-takers: that may be difficult to fit into the conventional categories, but it has more than once been said that tribunals should be wary of an over-formulaic approach (see, e.g., per Elias P. in Surtees (above), at para. 50 (p. 1659), adopting an observation of Cox J. in Ministry of Defence v Armstrong

[2004] IRLR 672

). In the Court of Appeal in the present case Arden LJ said, at para. 61:

"It is important not to read the decision too narrowly. It was not necessary for the applicants to show that the reason why competitors paid dinner ladies less than the applicants' comparators was because they consciously discriminated against women. As Lord Slynn observed, in the passage I have already cited, to permit employers to rely on market forces as the reason for reducing women's pay below that of their male comparators would be to permit the very kind of discrimination the 1970 Act sought to redress. In equal pay cases, it is necessary at all times to keep in mind the overarching social and economic purposes of the legislation."

Mr White also referred us to dicta from Elias P in Surtees (above) (at paras. 49-50, p. 1659) and Coventry City Council v Nicholls

[2009] IRLR 345

(para. 52, at p. 350) emphasising that it is a fundamental objective of equal pay law to eradicate pay differentials attributable to previous stereotyping and job segregation.

[43]Having said all that, we acknowledge that the reasoning in Ratcliffe is far from explicit, and it is fruitless to debate further how it is to be interpreted since we are bound by the Court of Appeal's analysis of it. THE REASONING OF THE TRIBUNAL

[44]The first 22 paragraphs of the 2007 decision simply recite the procedural history and set out the background law (without any consideration of Ratcliffe ). Paras. 23-33 are headed "The Facts", but only one paragraph appears relevant to the Ratcliffe issue. This reads:

"26. The domestics at the RVI were exclusively or almost exclusively female. In her evidence Jacqueline Thompson agreed that the labour market for domestics in the North East is almost exclusively female. It was obvious to management at the relevant time that competitive tendering was likely to exert a downward pressure on the domestic's terms and conditions of employment. The only possible reason for such downward pressure was that the market rate of pay in this economically vulnerably group of workers was lower than the remuneration being paid to them by the Trust. There may have been a degree of over caution in formulating the tender because it was not known how long the private sector tenders might actually be, but it was clear from this evidence that management expected the private sector tenders to be low. ..."

At paras. 34-39 the Tribunal considers the disparate impact question. The entirety of its treatment of the Ratcliffe issue is as follows:

"40. In North Yorkshire County Council v Ratcliffe and Others [1995] ICR 833 the claimants were school catering assistants whose work had been rated as equivalent to that carried out by men employed by the council at various establishments. Following the introduction of compulsory competitive tendering, the respondent council decided that in order to secure the catering contracts for certain areas and to maintain the viability of the direct service organisation, catering assistants in those areas should be made redundant and reemployed at rates of pay which were below joint council rates. 41. The Tribunal found that although the council's reasons for paying the claimants less than men for work rated as equivalent was to enable it to compete with a commercial company, the council had not shown that the difference in pay was genuinely due to a material factor other than the difference of sex because they chose to reduce the terms of the female catering assistants because they perceived that it was necessary to do so in order to compete on the open market due to their perception of market forces in a market that was exclusively female. Mr Supperstone for the respondent argued that the Ratcliffe case arose out of the general perception in the United Kingdom, and certainly in North Yorkshire, that a woman should stay at home to look after the children and if she wants to work it must fit in with that domestic duty; and a lack of facilities to enable her, easily, to do otherwise and seeks to distinguish the facts of the present case on the basis that the evidence suggests that the market in which the domestics at the RVI had to tender was not discriminatory and there was no evidence that the management at the RVI based its decision to remove bonus on discriminatory perceptions that the domestics, as a predominantly female group, would simply accept the changes. 42. The domestics at the RVI were exclusively or almost exclusively female. And there was evidence from Jacqueline Thompson that the labour market for domestics in the North East was almost exclusively female. It was obvious to management at the relevant time that competitive tendering was likely to exert a downward pressure on the domestics terms and conditions of employment and we accept that the only possible reason for that downward pressure was that the market rate of pay in this economically vulnerable group of workers was lower than the remuneration being paid to them by the Authority. 43. In reaching the above conclusion we would make it clear that we do so on the basis of the evidence that we heard, but that evidence was all the more readily credible because it sits well with what the Tribunal knows to have been the market conditions certainly in this area of the North East of England at the time. 44. Accordingly, although we entirely accept the criticism of the court for our failure to spell this out appropriately in our original decision on the matter, the EAT was correct in its assumption that it was based on the principles in Ratcliffe that we found that the decision to discontinue the domestic service bonus scheme when putting domestic services out to tender was gender tainted. Accordingly in seeking to reduce the wages of the claimants to compete with a rival to wages below those being received by their male comparators was the very kind of discrimination in relation to pay which the Equal Pay Act seeks to remove. We can only regret that this was not made clear in our original decision which was a decision based upon a very long case and in respect of which this was a very small part of the whole."

[45]The Tribunal thus states explicitly what it had failed to say in the 2003 decision, namely that it did indeed form the view, on the basis of Ratcliffe , that the withdrawal of bonus from the domestics in 1985 was "gender-tainted" (para. 44). But we should make two general observations about the passage.

[46]First , much of it is reproduced almost verbatim from Ms Tether's written opening submissions. In particular, para. 42 – which, as noted below, contains the core of the Tribunal's reasoning – is virtually identical to para. 43 of those submissions; likewise, para. 26 is taken substantially as it stands from Ms Tether's para. 44. As a matter of strict logic, it could be said that this course is unobjectionable: if a tribunal regards one party's submissions as clearly right and well-expressed, why should it not simply adopt them ? Nevertheless, we do not regard it as generally desirable for a tribunal to take its entire reasoning on a decisive issue word-for-word from one party's written submissions (still less if it does so without attribution), since to do so is bound to raise the suspicion – however ill-founded – that it has abdicated its responsibility to think matters through for itself. It is of course a different matter if the tribunal sets out both sides' contentions and indicates, with such further explanation as may be necessary, why it prefers one to the other; but that was not the course taken here.

[47]Secondly , we have to say that in view of the history of the matter the Tribunal's analysis is remarkably brief. Paras. 40 and 41 simply set the scene, and paras. 43 and 44 are by way of clarification and summary. The actual reasoning appears only in para. 42. It is particularly striking that the Tribunal does not – either here or in its account of the facts – take up Buxton LJ's invitation to explore the history of what factors had operated on the minds of the decision-takers in 1985 or the relevance of the different treatment of ancillary workers employed in the catering and laundry departments: when an appellate court indicates what factors are likely to be material to the tribunal's task on a remittal it is at least prudent explicitly to address those factors, even if in the end they may not be found to be of assistance. CONSIDERATION OF THE TRUST'S GROUNDS OF APPEAL

[48]The Trust's grounds of appeal are based on the proposition that it was necessary for the Claimants to show – or, more accurately (since the burden is on the employer), raise a prima facie case – that the market was "sexually discriminatory", in accordance with Mr Supperstone's submission set out at para. 39 above. It contends:(a) that the Tribunal proceeded on the very basis disapproved by Buxton LJ, namely that it was sufficient to show that the rates to which the Claimants' pay was reduced were for jobs done almost exclusively by women, and failed to consider whether the market was "sexually discriminatory"; alternatively

(b) that even if it applied the right test its decision was unsupported by any substantial evidence and was perverse.

[49]For the reasons given at para. 40 above, we do not accept the premise on which those grounds are based. We should nevertheless address them in case we are wrong about that.

[50]As to (a), we do not believe that this was the Tribunal's approach. Unsatisfactory as we have to say that the drafting is, it would be remarkable if it had again committed the very error which had caused the case, as regards this issue, to be remitted to it. In our view the Tribunal did evidently mean to find that the market was sexually discriminatory. The factors that led to that conclusion in Ratcliffe are expressly recited in para. 41 of the Reasons; and it seems clear that para. 42 (reinforced by para. 43) was intended to demonstrate that similar factors were at work in the present case. The message of para. 44 is plainly:

"We have always regarded this case as on all fours with Ratcliffe [sc. as the Court of Appeal has now interpreted it] and we are sorry that we did not make that clear first time round"

. It is a pity that the Tribunal uses only the gender-neutral phrase "economically vulnerable group of workers"; but it is sufficiently clear that in its context that means "vulnerable because of the kinds of factor peculiar to women identified by the tribunal in Ratcliffe ".

[51]As to (b), the Tribunal had clear evidence, to which it referred,(a) that the domestics themselves were almost all women and

(b) that "the labour market for domestics in the North East was almost exclusively female". It also had its own knowledge as an expert tribunal, as referred to at para. 44. [11] The rates perceived by the Authority to be paid by the market were markedly below those paid by it for jobs of equal value done by men. That is, essentially, all the evidence that the tribunal had in Ratcliffe . (It is true that in that case some reliance was placed on the fact that CCG employed only women; but that seems to us to do no more than demonstrate that the market, which CCG represented, was almost exclusively female; and in any event Lord Slynn made clear that he did not regard this particular factor as decisive – see the fourth paragraph in the passage quoted above.) We accept Mr. White's submission that:

"Where there is undisputed evidence that the relevant labour market is almost exclusively female, it cannot be an error of law for a tribunal to draw an inference of sex tainting, especially where that inference resonates with the Tribunal's own knowledge of labour market conditions in its region."

Mr Supperstone set out in some detail in his written submissions facts tending to show how difficult the CCT exercise was for the Authority, but none of those facts bear on the essential point that the rates to which the Claimants were reduced were – as the Tribunal found – "women's rates".

[52]It follows that we do not accept the grounds of appeal advanced. We have nevertheless thought it right to consider whether the Tribunal's decision is sustainable on our own, different, understanding of the remitted question. We have not found this easy. It does seem that the Tribunal addressed the essential question, namely the motivation (conscious or unconscious) of the unidentified decision-taker(s) within the Authority: the phrases in paras 26 and 42 "it was obvious to management" indicate that it was considering what was "management's" thinking. The problem is that its findings about what that thinking was are so brief and inexplicit. However, with considerable hesitation, we think that it is reasonable to infer that the Tribunal meant to find that the Authority appreciated that the market rates to which it intended to move the domestics were as low as they were because they were depressed by social and economic factors peculiar to women, and that it intended to pay those rates in that knowledge. If that is so, the case is indeed on all fours with Ratcliffe (as interpreted by Buxton LJ).

[53]It remains unsatisfactory that the Tribunal did not choose expressly to address the particular factors identified by Buxton LJ as potentially significant to its task. But while we see why those factors were regarded by him as relevant, we do not believe that it was necessary as a matter of law that they be explicitly considered. The fact, for example, that the tender for the catering and laundry staff was on a "bonus-inclusive" basis does not seem to us necessarily to undermine the conclusion that there was sexual discrimination in the different treatment of the domestics: the circumstances of each exercise will have been different, and there would have been nothing surprising in it being judged necessary to match the (discriminatory) market rates in the one case but not the others. Further, the extent to which any point needs to be dealt with depends on how the case is being argued. It appears from the Trust's opening submissions before the Tribunal that it relied on the treatment of the laundry and catering staff as demonstrating that "... there is no evidence to suggest that, in general, the wages offered by the private sector to female employees in the Newcastle area were affected by discriminatory market forces" (para. 107 (x)). This seems to us a non sequitur , since it is hard to see how a judgment that the laundry and catering bids might be won without removing bonus entitlement negates the separate evidence of a discriminatory market for domestics; and in any event it is directed at what Mr Supperstone submits is the issue – namely was the market discriminatory ? – rather than the question of the Authority's own thinking. It is in these circumstances rather less surprising that the Tribunal did not address the issue. CONCLUSION ON THE RATCLIFFE ISSUE

[54]In his initial decision to dismiss the appeal under rule 3 (7) Elias P said:

"I accept that the Ratcliffe point is still not put as clearly as it might have been in the light of Buxton LJ's decision. However, in my judgment it is clear that the Tribunal is saying that Management appreciated that the market for domestics was one in which women's rates were paid because domestics are predominantly female, and in the knowledge of that they removed bonuses from the group in order to ensure that the rates were competitive. This must potentially infringe the Equal Pay Act."

While there may be an element of delicate under-statement in his criticisms of the Tribunal's expressed reasoning, we respectfully agree with that assessment. We dismiss the appeal on this issue. THE OBJECTIVE JUSTIFICATION ISSUE THE TRUST'S CASE ON OBJECTIVE JUSTIFICATION

[55]At paras. 11-13 of its closing submissions in the 2003 hearing the Trust set out its case on objective justification as follows:

"11. The pattern of bonus payments is the result of two genuine material factors which are unrelated to gender and which are significant differences between the circumstances of the Applicants and their chosen comparators. These are: a. The policies, guidance and factual circumstances surrounding both the introduction and phasing out of individual bonus schemes: and b. The compulsory competitive tendering of domestic services at the RVI. 12. In relation to the introduction and phasing out of bonus payments: a. The bonuses were adopted on the basis of Whitley Council guidance but were negotiated on a "localised" and often departmental basis. They were required to be self-financing in that the cost of paying bonuses had to be recouped through improvements in productivity (in practice, this was normally through reductions in staff numbers) ... . b. Whether a bonus would be introduced would depend on the prior efficiency of the department(s) in question. Efficiency is plainly unrelated to gender. Therefore, the procedure for the introduction of bonus payments was not discriminatory on the grounds of sex. This is illustrates by the fact that no ancillary staff at the Freeman received bonus whereas nearly all staff at the RVI did, irrespective of gender ... . c. The pattern of bonus payments is neither directly nor indirectly discriminatory. As this is a non-discriminatory but genuine reason, there is no need for the Trust to justify the pattern of bonus payments ... . d. In any event, the pattern of bonus payments can be justified by the requirement that schemes be self-funding and the Trust's efforts to phase out bonuses in order to minimize any disparate impact under the New Policy described below. No more dramatic action could be taken because financial constraints prevented the payment of bonuses to all ancillary staff, while the risk of legal or industrial action prevented the redistribution of bonus from the few ancillary staff who received it to all ancillary staff ... e. As a result of the New Policy less than 10% of ancillary staff now receive bonus. Mr Blackburn admitted in cross examination that the intention of the Union in bringing this action was to raise the pay of the remaining 90% of staff so that it is equal to that of the small minority who receive bonus for historical (but still relevant) reasons ... . 13. In relation to the domestics at RVI who lost their bonus as a result of CCT, market forces can provide a material factor defence: a. In the present case there is no evidence that the market forces which affected the in-house bid for the domestic services contract were discriminatory. Rather, the fact that catering and laundry services were retained in-house at the RVI without the loss of bonus suggests that pay in the private sector in Newcastle was not tainted by the same discriminatory market forces identified by an Employment Tribunal in Ratcliffe v North Yorkshire CC . b. Further, the Trust could not justify the tendering of the domestic services by reference to the obligation to do so under the Government Guidance in HC 83/13 and the procedures adopted by the NHA during the tendering process. Both the NHA's consideration of the impact of the government's policy and also the detail with which the specification and in-house tender were prepared were clearly a reasonable and proportionate response to the legitimate need to comply with HC 83/18."

[56]It is those paragraphs which at para. 128 of his judgment Buxton LJ held that the Tribunal had failed to consider and which he had accordingly remitted: see para. 30 above. It is common ground, however, that for present purposes the relevant paragraph is para. 12 (and, within that, sub-paras. (a)-(d)). Para. 11 is purely introductory; and as to para. 13 the Claimants did not seek to argue that the non-payment of bonus contravened the 1970 Act until 1988, being the date as from which the Tribunal held that bonus had ceased to reflect any genuine productivity considerations. The real dispute was thus whether the Trust could justify the retention after that date – and in particular in the period after 1994/5 to which the claims related - of a sexually discriminatory differential. As to that, the essence of the Trust's case was that it was justifiable to retain the differential for a time notwithstanding the disappearance of its original rationale and thereafter to adopt a policy of gradual phasing out, as begun with the "new policy" in 1998 and consummated with the introduction of Agenda for Change. THE DECISION OF THE TRIBUNAL

[57]The Tribunal's reasoning on this issue is at paras. 45-60 of the Reasons. Paras. 45-47 are purely introductory. Paras. 48-52 set out Ms Tether's submissions on the general law relating to objective justification. At the beginning of para. 52 the Tribunal appears to indicate that it accepts those submissions. No point is taken by Mr Supperstone in relation to this part of the Reasons. Paras. 53-60 read as follows: 53. The respondent in this case suggests that the question for the Tribunal is simple: were domestic services put out to tender because they were predominantly female? The Trust's response is equally simple: domestic services were put out to tender because the NHA was directed to market test certain services, including domestics. The respondent goes on to submit that gender played no part in the Trust's decision and it was not, therefore, discriminatory. 54. It has [never] been [part] of the claimants' case that the procedure for the introduction of bonus payments was discriminatory on the grounds of sex. As to whether the pattern of bonus payments were directly or indirectly discriminatory, this was addressed in the context of the disparate impact and Ratcliffe issues and in the way in which we have [indicated] it is for the respondent then to justify the pattern of bonus payments from 1988 onwards. 55. In considering this issue and the factors put forward by the respondent [we] were not satisfied they corresponded to a real business need, were necessary to achieve that objective or conform to the principle of proportionality. 56. The four factors put forward by the respondent were:56.1 the requirement for schemes to be self funding;

56.2 the Trust's efforts to justify any disparate impact under what was referred to as "the new policy" under which the bonus schemes were closed to new recruits and to employees who were promoted or changed jobs;

56.3 financial constraints which were alleged to prevent the payment of bonuses to all ancillary staff;

56.4 the risk of legal or industrial action; which were relied upon as preventing the distribution of bonus from the staff who received it to all ancillary staff. 57. It was not in dispute that when the bonus schemes were first introduced they were required to be self funding, but by 1988 the fixed incentive schemes had ceased to be linked to gains in productivity. They had ceased to be reviewed and had effectively become a part of pay. They therefore ceased to serve any legitimate business need. No thought of any kind was given in the period 1992 to 1998 to monitor difference in pay between men and women. The 1991 advanced letter ACS 1/91 provided opportunity to replace existing incentive bonus schemes and dovetail them into the competitive tendering process. This opportunity was not taken. On the basis of the decisions in Elias and Redcar the evidence to show that the respondent ever focussed on the discriminatory effect of difference in pay or applied its mind to the question of whether the difference was justified is relevant in determining whether the respondent has discharged the burden of proof. We agree with Ms Tether that the equality clause was triggered in 1988 and that the claimants' contracts of employment were modified by section 1 (2) of the Equal Pay Act with effect from that date. 58. The new policy was introduced simply to reduce the financial drain on the Trust and not with the intent of minimising any disparate impact. No consideration had been given as to whether the differences in the payment of incentive bonus were disproportionately disadvantageous to women. The respondent failed to demonstrate that the new policy was a reasonably necessary and proportionate response to the discriminatory difference in bonus payments. Although there was a reduction in disparity to some extent a considerable disparity remained and perhaps would still be with us but for the implementation of Agenda for Change which in itself demonstrates what it was that the respondent could have done to remove the inequality at a much earlier stage. We do not find that by simply closing the group of persons entitled to bonus this was a reasonably necessary and proportionate solution to the problem of discrimination. 59. It is difficult to see that the cost restraints could without more provide objective justification for a discriminatory difference in pay although Ms Tether concedes that they can be put into the balance with other justifications. We accept the contentions made by Ms Tether at paragraphs 93 to 97 of her outline and therefore that the respondent had wholly failed to discharge the burden of showing that considerations of cost justified the decision to continue the existing discriminatory differences in the payment of bonus. 60. The risk of legal or industrial action appears to have been little more than an apprehension and again we accept Ms Tether's contentions at paragraphs 98 to 103 of her outline and her conclusions at paragraphs 104 to 106 in preference to those put forward in the respondent's submissions both at the original hearing and in the submissions made for the remitted Tribunal hearing.

[58]These paragraphs too at many points borrow closely from Ms Tether's written submissions: our observations at para. 46 above apply equally. But the fact that they do so does have the advantage of enabling us to correct one serious typographical error in para. 54: the words which we have inserted in square brackets are taken from para. 74 of Ms Tether's submissions, which the Tribunal was evidently intending to reproduce. We have also inserted in square brackets two further words in paras. 54 and 55 which seemed to us necessary to bring out the intended sense.

[59]Mr Supperstone submitted that para. 53 appeared not to be directed to the question of objective justification and, further, that it mis-stated the Trust's position. That submission appears well-founded, but it does not impact on the reasoning of the paragraphs which follow. The structure of those paragraphs is clear. Para. 54 correctly identifies that the focus is on the period from 1988 onwards and states that, disparate impact and discriminatory impact having been found, the burden is on the Trust to prove objective justification. Para. 55 (as corrected) states the Tribunal's conclusion, and the following paragraphs give the reasons for that conclusion. The Tribunal summarises at para. 56 the four factors on which the Trust relied in para. 12 of its original submissions [12] and then considers each in turn in the four following paragraphs, paras. 57-60. Those paragraphs are short and rather allusive; but Mr Supperstone did not mount any detailed challenge to them, and the broad message is clear. The Tribunal believed that the Trust could and should have been able to take steps, after 1988 and by 1994/5, to restore bonus, or some equivalent payment, to the domestics in order to remove the discriminatory differential introduced in 1985. In particular, it regarded the failure of the Authority, or the old Trust, to take advantage of ASC/91 (see para. 13 above) as a lost opportunity. It did not regard the introduction of the new policy as representing a sufficient response. CONSIDERATION OF THE TRUST'S GROUNDS OF APPEAL

[60]The Trust's grounds of appeal, pleaded at para. 15 of its Notice of Appeal, are twofold. They were summarised in its skeleton argument as follows:(a) that "the Tribunal failed to consider whether there was an explanation for the pattern of bonus payments which showed that there was no indirect sex discrimination";

(b) that "the Tribunal erred in its approach to objective justification".

[61]As to (a), the Trust relied on a passage in its opening submissions to the Tribunal (paras. 111-113) in which it summarised the history of the payment of bonus to, and its eventual withdrawal from, the various different groups of ancillaries and submitted that this was incompatible with there being any "sex taint". The complaint is that the Tribunal simply failed to address this argument at all. We do not understand this ground, and Mr Supperstone did not develop it in his oral submissions. It seems to us that the argument that there was "no sex taint" belongs to "step (2)" and is irrelevant to the question of objective justification. And in any event it had been determined against the Trust by the Tribunal's decision on the Ratcliffe issue.

[62]As to (b), this broad proposition is somewhat particularised at para. 15.2 (2) of the Notice of Appeal, but on analysis the case remains very general, namely that costs constraints and fear of industrial relations consequences continued throughout the period up to the commencement of proceedings to make it impossible to remove the differential between the pay of domestics and other ancillaries. But the Tribunal had held otherwise, and the Trust does not advance any particularised argument as to why that conclusion was not open to it. In their skeleton argument Mr Supperstone and Mr Blake go rather further and submit that the conclusions reached in paras. 58-60 "[fail] to take into account the cumulative effect of the reasons, both in relation to financial considerations and legal and industrial relations which prevented the Trust from equalising bonus payments", which reasons continued up to the implementation of Agenda for Change. We can see no sign that the Trust failed to take these considerations into account: it simply did not regard them as justifying the differential. That conclusion could only be challenged on the basis that it was perverse. Mr Supperstone – plainly rightly - did not feel able to put his case that high. CONCLUSION ON THE OBJECTIVE JUSTIFICATION ISSUE

[63]The appeal on this issue fails. OVERALL CONCLUSION

[64]The appeal is dismissed.

[65]We would wish to add that we have found our task in this case peculiarly difficult (especially as regards the Ratcliffe issue) as a result of a combination of the opacity of the case-law and the unusual procedural history. Our principal task has had to be to construe a series of decisions - the decision of the House of Lords in Ratcliffe , the judgments of the Court of Appeal in this case, and the Tribunal's Reasons - none of which is, with all respect to the tribunals in question, entirely clear; and to do so wearing the straitjacket of the very specific issues arising from the questions remitted by the Court of Appeal and the way in which the case was put both in the early stages and in the Trust's grounds of appeal before us. That has not conduced to our taking a broad view by reference to underlying principle. However, we are prepared to say that we do not regard the outcome of the appeal as surprising. We agree with both Lord Slynn and Arden LJ that the 1970 Act might be expected to give a remedy in cases of this kind; and we see nothing odd in the conclusion that the Trust had failed to justify a differential which had continued for so long after its initial rationale had disappeared. POSTSCRIPT: WAS THE COURT OF APPEAL RIGHT TO PERMIT THE TRUST TO ARGUE THAT THE DIFFERENTIAL WAS NOT SEX-TAINTED ?

[66]As indicated at para. 23 above, it is the Claimants' contention that the Court of Appeal was wrong to introduce Arden LJ's "step (2)". It is their case that, once "disparate adverse impact" has been shown, an employer's only defence is to show that the differential complained of is objectively justified. In so far as Marshall held otherwise it was per incuriam because the House was not referred to the decision of the European Court of Justice in Enderby , which appears to say that once a sufficient gender difference between the two groups is established any differential in their pay will be unlawfully discriminatory unless it is objectively justified: see paras. 18-19 of the judgment of the Court, at pp. 161-2 We heard full argument on this question and were referred to the authorities in which the decision of the Court of Appeal in the present case has been discussed. Specifically, we were referred to passages in Villalba and Surtees (see para. 20 above), in which this Tribunal (Elias P presiding) initially suggested that the Court of Appeal in the present case was wrong (see Villalba , paras. 132-3, at p. 510) but subsequently modified that position (see Surtees , paras. 45-48, at pp. 1658-9); to Cumbria County Council v Dow (no. 1)

[2008] IRLR 91

, where the " Surtees view" was confirmed and applied (see para. 25, at p. 94); and to Redcar & Cleveland Borough Council v Bainbridge

[2009] ICR 133

, where the Court of Appeal expressed the view that the revised view expressed in Surtees was probably correct but did not purport finally to decide the point (see paras. 57-60, at pp. 156-7).

[67]We have already expressed the view that we are bound by the decision of the Court of Appeal. Mr White sought to persuade us that we were not, relying on Dunnachie v Kingston upon Hull City Council

[2005] 1 AC 226

; and Mr Supperstone also, somewhat to our surprise, took the position that Arden LJ's analysis, adopted by Buxton LJ, was obiter [13] . We were unpersuaded: it seemed to us, as we have said, that the Court of Appeal's analysis was necessary to its decision to remit the questions that it did. But even if we are wrong about that it is unnecessary that we should decide the point in view of our conclusion on the Ratcliffe issue

[68]In those circumstances we do not propose to address the issue at any length, and we are still less inclined to do so because we respectfully find the analysis in Surtees (and indeed the broader analysis of which it forms part, beginning at para. 25 (p. 1651)) cogent and convincing and see little point in trying to gild the lily. In deference, however, to the arguments advanced to us, we will very briefly summarise our views, though we are conscious that they are little more than a headline restatement of the reasoning in Surtees .

[69]We start by noting that the issue is specific to indirect discrimination of the Enderby type. Where the employer himself does something – "applies a PCP" - which has a disparate adverse impact as between men and women, it is entirely appropriate that any detriment to a woman which results should be actionable unless he can show that it is objectively justified: it is his act which is responsible for the discriminatory impact. None of the cases to which we have been referred suggests otherwise; and Mr White's attempt to persuade us that the Court of Appeal's approach demonstrated a fundamental departure from the principles of the 1975 Act and the various EU Directives was misconceived. By contrast, the characteristic of Enderby -type cases is that the employer has not – or at any rate cannot be shown to have – done anything with a discriminatory impact. Rather, there exists a state of affairs in which men and women doing work of equal value are paid differently, and it is judged fair to presume past discrimination: see para. 20 above. (Given this distinction, it may be that the phrase "disparate impact " is rather inapt.)

[70]That being so, we can see no principled basis for confining the available "defences" to one of "objective justification". In a jurisdiction based squarely on the proscription of sex discrimination, albeit one where the burden of proof is placed firmly on the employer, it must be open to an employer to seek to answer the claim of discrimination by showing that the differential complained of is genuinely the result of factors, "justifiable" or not, which do not involve any form of gender discrimination. If the conceptual basis of Enderby discrimination is that the observed gender disparity is evidence of past discrimination, contrary evidence must be admissible. No doubt in the paradigm case where the disparity is very marked, and there is reason to suppose the operation of past economic and cultural factors tending to depress women's wages, the inference will be in practice irrebuttable [14] ; but in other cases a much more careful analysis may be needed of whether the statistical disparity relied on does indeed demonstrate discrimination. Findings of discrimination should not be made on a purely mechanistic basis.

[71]Given this background of principle, we cannot attach decisive significance to the precise wording of the decision of the Court in Enderby . The present point was not considered, for reasons explained in Surtees at para. 47 (p. 1658-9); and, as Elias P there points out, the Advocate-General adopted a formulation which recognised the possibility of a rebuttal of the inference of discrimination otherwise than by establishing objective justification. Even judgments of the European Court are not to be read like sacred texts; and, as with many cases that break new ground, the precise definition of what was decided in Enderby will need exploration as the case-law develops.

[72]It may be helpful to say a word about Wallace and Marshall , because the circumstances in both were not typical of those encountered in most collective GMF cases. Although they were both cases where the GMF relied on by the employer was collective in character, in neither had the applicants claimed that that GMF was itself discriminatory. The factor relied on in Wallace applied to more men than women (see at p. 210 E-F, where Lord Browne-Wilkinson referred to "an agreed fact of the greatest importance ... [that] the disparity in pay between the appellants and [their comparators] has nothing to do with gender"). In Marshall , although there was a difference in the gender break-down of those to whom the factor applied, that fact had not been relied on below, and when the applicants' hapless counsel sought to advance such a case he was told that it was too late (see at pp. 204-5). Thus both cases were, perforce, argued on the simplistic basis that the mere fact that a single individual woman was able to compare herself with a single individual man was enough to impose an obligation on the employer to justify the differential. This argument was only possible because of the peculiar machinery of the 1970 Act, under which such an individual comparison creates a statutory presumption that the woman is entitled to equal pay (cf. our observations in n. 5 above). It is fair to say, therefore, that the observations of both Lord Browne-Wilkinson and Lord Nicholls were directed at that argument, which is no doubt why they did not refer to Enderby (notwithstanding that it was cited in Wallace ). Nevertheless, the broad points made in both speeches are points of principle going beyond the issues in the particular cases.

[73]Post-postscript. At a stage when this judgment existed in final draft the Court of Appeal handed down its decision in Gibson v Sheffield City Council

[2010] EWCA Civ 63

, in which there was full argument on the question whether the decision of the Court in the present case was correct. The Court was able to decide the case on a basis which rendered that question redundant, but all three members (Pill, Smith and Maurice Kay LJJ) considered it. It was common ground that the analysis by Arden and Buxton LJJ of the steps involved in considering a s. 1 (3) defence was neither obiter nor per incuriam and would accordingly have been binding had it been necessary to decide the issue. But Pill LJ on the one hand and Smith and Maurice Kay LJJ on the other expressed different views as to whether that analysis was in fact correct. We see no advantage in delaying this judgment further by incorporating detailed references to the judgments. We would only note that Smith LJ's approach seems very close to our own (and that she makes the same criticism of Arden LJ's formulation as we do at n. 5 above). Note 1 There were a few stragglers who joined the litigation later and a handful of male Claimants. They can be ignored for present purposes. Note 2 In Buxton LJ’s judgment these sub-paragraphs are in fact numbered (ii)–(iv). But sub-para. (i) does not state any question and simply provides (subject to an immaterial qualification) that the Tribunal should proceed by reference to the evidence that it heard in 2003. We have found it more convenient to identify the questions as (A)-(C). Note 3 It is not in fact clear from the Tribunal’s Reasons to which precise period these figures relate, but they nevertheless sufficiently indicate the scale of the differential. Note 4 This summary is consistent with the analysis adopted by the majority in the decision of the Supreme Court in the JFS case

[2010] IRLR 136

, decided since the argument in this appeal. The judgments of the majority do, however, tend to unsettle the terminology which had gradually, if precariously, become established in the light of Nagarajan. In particular, Lord Kerr at paras. 116-7 (p. 155) uses the term “motivation” as conveying the same sense as “motive” and thus as exemplifying the kind of “mental process” that is irrelevant in considering the grounds on which a person acted. Lord Nicholls had, however, in Nagarajan used it to denote the mental processes that were, consciously or unconsciously, the basis of the putative discriminator’s decision; and Lord Clarke in JFS (see paras. 137-8 and 145 (pp. 135-6)) continues to use it in that sense, as we will also do. The truth is that although the distinctions involved are tolerably clear from the judgments of the majority, finding words which reliably encapsulate them remains problematic. Note 5 We should respectfully say that we see an element of over-compression in Arden LJ’s summary in para. 32. As we understand it, the “rebuttable presumption” referred to by Lord Nicholls arises from the simple fact of an individual woman being paid less than an individual man doing “comparable work” (i.e. work falling under one of the heads of s. 1 (2)). The question of any collective gender-based comparison, as referred to in Arden LJ’s “step (1)”, only arises if and to the extent that the employer seeks – as he often, but far from invariably, does - to rely on a GMF under s. 1 (3) which is collective in character. It is at that stage that it will become necessary to consider whether the factor in question has a disparate impact as between men and women. If it does, then that does indeed give rise to what could also – certainly in an Enderby-type case – be described as a “rebuttable presumption” that the factor relied on is discriminatory and so cannot be relied on under s. 1 (3); but this represents a second stage in the argument. One of the awkwardnesses of the 1970 Act is that every claim must initially be based on an individual comparison, even where it is evident that the nature of the discrimination complained of is collective, i.e. that it applies to jobs as a whole: Prof. Fredman in a recent article in the Industrial Law Journal refers to this as the Act’s “myopic focus on the individual claim” (vol. 37, at p. 208). It may seem over-pedantic to make this point, since it does not affect the substance of Arden LJ’s analysis; but experience shows that tribunals are sometimes confused in this area. (What we think is the same point is made by Elias P in Surtees (above), at para. 29 (p. 1654).) Note 6 We raised the question in the course of argument whether that was in fact the correct explanation for the non-receipt of bonus in the cases of all the Claimants. In view of the fact that bonus entitlement was withdrawn from all ancillary staff recruited on or after 1 April 1998 (see para.14 above), it seemed to us at least arguable that in the cases of Claimants recruited after that date (who are about one third of the total) it was the fact that they were post-April 1998 entrants that accounted for their non-receipt of bonus, rather than the circumstances surrounding the CCT bid in 1985. But the case has not been argued in that way below, and we say no more about it. Note 7 The detailed break-down of these questions does not precisely follow Arden LJ’s, but we think it is clearer for present purposes: we do not intend any difference of substance in the underlying analysis. Note 8 Likewise, in Cumbria County Council v. Dow (no. 1)

[2008] IRLR 91

this Tribunal (Elias P presiding) described Ratcliffe as a case “turning on its own facts” (see para. 159, at p. 107); but the question is “which facts ?”. Note 9 At first sight it might be thought that this interpretation is conclusively confirmed by Lord Slynn’s statement, in the antepenultimate paragraph of the passage quoted, that if, contrary to his view, a categorisation was necessary the case was one of direct discrimination. But it seems clear that he was not there using the terminology in the same way as Lord Nicholls in Marshall. The reason he gives, i.e. that each particular applicant is being paid less than her male comparator for work of equal value, does no more than acknowledge the basic one-on-one comparison which under the scheme of the Act sets up the “statutory presumption”: it says nothing in itself about whether any explanation advanced for that differential under s. 1 (3) is discriminatory. Note 10 It was clearly so regarded by Buxton LJ - see, e.g., the section of his judgment beginning at para. 101 headed “A Taxonomy of Indirect Discrimination”. Note 11 Mr White drew our attention to the fact that the Tribunal also had evidence from two UNISON officials, which set out at some length their views as to why the CCT exercise tended to discriminate against women. But we are cautious about attaching much significance to this evidence, both because the Tribunal itself did not refer to it and because it is not clear that it addressed the particular issue with which we are here concerned. Note 12 They were in fact somewhat reformulated in the Trust’s opening submissions for the 2007 hearing (see para. 122); but the broad points are the same, and the Tribunal cannot be criticised for sticking to the formulation remitted by the Court of Appeal. Note 13 He may have felt honour bound to do so since he had adopted this position when seeking to persuade the House of Lords to refuse leave: see para. 1 (6) above. Note 14 We respectfully endorse Elias P’s observation in Dow that “where there are pay arrangements which on their face appear to reflect historical sexist assumptions about what jobs and rates of pay are appropriate for men and women, it will be a rare case in practice where the employer is able to establish that the pay structure is not sex tainted” (see para. 25, at p. 94).

Cited in 14 later judgments

and 5 more of the most senior