Secretary of State for Justice (Sued as National Offenders Management Service) v Bowling (Equal Pay Act : Material factor defence and justification) [2011] UKEAT 0279_11_2911

EAT
Secretary of State for Justice (Sued as National Offenders Management Service) v Bowling (Equal Pay Act : Material factor defence and justification)
[2011] UKEAT 0279_11_2911 · 2011-11-29
[1]This is an appeal against the decision of an Employment Tribunal sitting at Cardiff, chaired by Employment Judge Philip Davies, upholding in part a claim by the Claimant, the Respondent before us, under the Equal Pay Act 1970 . The Judgment and Reasons were sent to the parties on 24 March 2011. The Appellant, the Secretary of State for Justice, has been represented before us by Mr James Purnell, and the Claimant by Ms Schona Jolly, both of counsel. Neither appeared in the Tribunal.[2]The relevant facts can be sufficiently summarised as follows:(1) The Claimant started employment in a Shared Service Centre operated by the Prison Service in Newport on 18 August 2008. She had the somewhat unwieldy job title of Service Desk User Support Team Customer Service Adviser – Tier 1.(2) The terms and conditions applicable to that post involve, as is standard in the public service, a salary scale comprising a number of spinal points – in this case seven – up which employees may be expected to progress on an annual basis, subject to satisfactory performance. The policy governing the point on the scale at which new recruits started was set out in a document entitled “Guide to the Operation of the Local Pay Allowance Scheme” (“the Guide”). Subject to the special provisions considered below, a new entrant would start at the bottom of the scale – spinal point 1 – and the Claimant did so. Her starting salary was £14,762 p.a.(3) About a month later a Mr Paul Thomas was recruited to the same role. He, however, started at spinal point 3, which attracted a salary of £15,567 p.a. The reason for that difference, as the Secretary of State argued in the Tribunal and as the Tribunal accepted (Reasons paragraphs 27-29), was that Mr Thomas had specially relevant “background and experience”: specifically, unlike the Claimant, he had “ten years’ experience in IT support, analysis, testing and implementing change in customer service” (Reasons paragraph 13). The Guide provided, at paragraphs 17-19, that a manager was entitled to recruit a new entrant at a spinal point above the bottom of the scale if there were recruitment difficulties. The default rule was that if that happened his or her colleagues would have to have their pay “lifted” to match, this being described as “the anti-leapfrog mechanism” (see paragraph 20 of the Guide). However, that mechanism would not apply “where a new entrant clearly possesses a stronger background/experience in the relevant line of work” (in which case the additional pay attributable to him or her starting higher up the scale was described as an “additional market value”): see paragraph 21 of the Guide. Those provisions were judged to apply in the case of Mr Thomas, and accordingly the pay of his colleagues, including the Claimant, was not lifted.(4) Pay is reviewed in the Prison Service with effect from April of each year. In the year to April 2009 the Claimant and Mr Thomas both gained “achieved” assessments and accordingly progressed one point up the relevant scale – in her case to spinal point 2 and in his to spinal point 4. The same happened in April 2010 (though in fact both in that year were assessed as having “exceeded” the expected performance).[3]The Claimant’s claim in these proceedings, which were commenced on 4 August 2010, was that she had at all times been doing “like work” with Mr Thomas within the meaning of section 1 (2) (a) of the 1970 Act and that she should accordingly have been paid the same as him by virtue of the statutory equality clause. The Secretary of State in his response accepted that the Claimant and Mr Thomas were doing like work but relied on the defence under section 1 (3) of the Act. Particulars of the defence are pleaded at paragraphs 17-24 of the Grounds. Paragraphs 18-23 set out the terms of the Guide to which we have already referred, together with details of Mr Thomas’s “significant IT skills and experience” and aver that he had accordingly been “place[d] … above the minimum point of the pay scale due to his background and experience” (see paragraph 23). Paragraph 24 pleads that both the Claimant and Mr Thomas moved up one spinal point in the following year.[4]There was no issue before us as to the relevant background law. By virtue of section 1 (2) of the 1970 Act the mere fact of a man and a woman doing the same job but on different pay places a burden on the employer to prove an explanation for the difference. If he does not do so, discrimination is presumed. But in the usual case the employer will prove an explanation, and the real question will be whether the explanation is “tainted by sex”. If it is not tainted by sex it does not have to be “justified”. All this is now well-established following the decisions of the House of Lords in Strathclyde Regional Council v Wallace [1998] ICR 205 and Glasgow City Council v Marshall [2000] ICR 196 : see also the more recent exposition in the judgment of this Tribunal in Bury Metropolitan Borough Council v Hamilton [2011] ICR 655 , at paras. 13-15 (pp. 662-3).[5]In respect of the period up to April 2009 the Tribunal accepted the Secretary of State’s defence under section 1 (3). After reviewing the respective arguments, it said, at paragraph 29 of the Reasons:
“In short, we accept the submission of the Respondents that they had discharged the burden on them of showing that the reason Mr Paul Thomas was paid more was a genuine reason based upon skills and experience, and was a significant and relevant factor, and that was not the difference of sex.”
However, it rejected the defence in respect of the period from April 2009 onwards, i.e. from the start of the new pay year. It gave its reasons at paragraphs 31-34 of the Reasons as follows:
“31. Therefore, moving on in chronological terms to April 2009, which was the pay review time, we note that by then the Claimant had undertaken training in the way set out above, which matched the training undertaken by her comparator Mr Paul Thomas, certainly in ways which were not significant or of particular relevance. The Claimant had successfully mastered the operation of the Respondents business, such that she and her comparator achieved the same appraisal rating of “achieved”
. What is the position when what was at one time a significant and relevant factor ceases to be a significant and relevant factor. 32. We find that by April 2009, the original reasons for the differential in pay did cease to be a material factor. As the Claimant has said in her evidence, she and her comparator were doing identical jobs, and were being sent on exactly the same Training Courses. They achieved the same rating by way of performance review. Whatever may have been the initial view that the Claimant would have needed more supervision or input into getting used to the system there is no evidence that that continued from April 2009.[33]As already referred to, we had before put before us the case of Glasgow City Council v Marshall [2000] IRLR 272 which involves an employer pointing to an historical basis of the disparity, namely two different nationally negotiated scales and that in the circumstances the employer had done enough to make out a genuine material factor defence under Section 1(3) of the Equal Pay Act. We understand the point made by Lord Nicholls regarding the interplay between historic explanations and absence of sex discrimination regarding justification, and, the fact it was held that the Tribunal had applied a wrong test. However, whilst the events in Summer 2008 caused the differential in pay between the Claimant and her comparator, and can and were genuine and material, we do not consider that this historical explanation can be considered to be material at the time the Equal Pay complaint was made to the Tribunal. That is always a question of fact for the Tribunal and on the facts we consider that it has not been proven that there is anything to be significant and relevant from April 2009. In particular the argument regarding the “ability” to increase spine positions we do not find to be a genuine material factor. A self imposed internal rule cannot, in our opinion be relied upon in the way contended for by the Respondents. In these circumstances we consider that the claim for Equal Pay from April 2009 succeeds. 34. We should add that if this date of April 2009 is incorrect, then the results of the further Annual Performance Reviews in June 2010 were the Claimant and her comparator achieved “exceeded” demonstrates even more emphatically that the original reason for the differential in pay had evaporated.” (There are a number of minor oddities in the wording of that passage, which we have not sought to correct: the overall meaning is clear enough.)[6]Mr Purnell submitted that that reasoning was wrong. The Tribunal had accepted that Mr Thomas had been started at spinal point 3 for reasons which had nothing to do with his sex. But that decision, and the reasons for it, were not only operative in the first year of his employment. It is in the nature of an incremental scale that where an employee starts on the scale will impact on his pay, relative to his colleagues’, in each subsequent year until they reach the top. Once Mr Thomas had started two points above the Claimant a differential was built in (subject to adequate performance) in each of the following six years. If the original differential had nothing to do with sex, then nor did the differential in those later years. Even if (which seems to us debatable) the facts that the Claimant had learnt the job over the first year and achieved the same performance rating as Mr Thomas meant that the additional value of his many years’ experience had wholly disappeared, the fact remained that that that factor fully explained why he had started, and stayed, two points ahead of her on the scale.[7]In our view that submission is correct. We believe that the Tribunal’s finding as to the explanation for the differential in 2008/9 did indeed necessarily, when coupled with the operation of the incremental scale, explain also the differential in 2009/10 (and any continuing differential thereafter). To label that explanation as “historical” is not helpful. All causes are, in one sense, historic in that they occur in the past: the real question is whether they have ceased to operate as an explanation for the differential complained of as at the date under consideration. The “catching up” relied on by the Tribunal may (perhaps) have undermined the justification for the differential but it did not undermine its causative effect. The case is different from that in Bury , where the bonus arrangements which were initially found to be untainted by sex changed in character over the years: here, the operation of the incremental scale perpetuated the differential. Although the Tribunal referred to Marshall , it did not, with respect, give proper effect to its reasoning. The pay difference between the Claimant and Mr Thomas had nothing to do with the difference in gender between them. There is no reason whatever to suppose that the policy would not have applied equally to a woman with Mr Thomas’s skills and experience; and there is also no reason to suppose that men as well as women had not come into the grade at the normal starting-point – there was in fact evidence before the Tribunal of at least one, a Mr Mohammed.[8]The Claimant in her Amended Respondent’s Answer contended that the Tribunal had in its reasoning been following the well-known decision of the Court of Appeal in Benveniste v University of Southampton [1989] ICR 617, albeit that it did not expressly refer to it. Mr Purnell acknowledged that there was in the relevant paragraphs of the Reasons an apparent echo of the reasoning in Benveniste . In our view Benveniste falls to be distinguished. The employee in that case, a university lecturer, had on her appointment been placed in the relevant salary scale at a point which it was acknowledged, both at the time and subsequently, was lower than she deserved, because the university was experiencing a period of extreme financial stringency: it was recognised that when that situation improved she would have to be moved to her proper place in the scale. In due course a point came when the period of financial stringency did come to an end; but the anomaly was not corrected, or at least not completely. As from that point, the financial stringency – which was the explanation, and the only explanation, relied on by the university as giving rise to a defence under section 1 (3) – could no longer explain the differential of which the employee complained: it was limited by reference to specified conditions and had ceased to operate. In those circumstances, the burden of proof being on the employer, the claim was bound to succeed. The present case is different. The explanation was not time-limited: on the contrary, the initial decision to place Mr Thomas two points up the scale necessarily had consequences for the following years.[9]Ms Jolly did not in fact in her oral submissions seek seriously to dispute Mr Purnell’s analysis. Rather, she focused on a submission that the way that he was putting the case was different from how it had been put in the Secretary of State’s Response and in the submissions made to the Tribunal. She contended that the only “GMF” relied on was the difference in Mr Thomas’s “background and experience” at the moment of his appointment and that that factor had, as the Tribunal had found, ceased to apply once the Claimant had had the opportunity to “catch up”. Ms Jolly submitted that it was necessarily implicit in the Secretary of State’s case, as now put, that it was denying that it had any discretion to depart from the practice of employees progressing up the relevant scale one spinal point at a time – in other words, that he could not have advanced the Claimant (and, presumably, all her colleagues) three points up the scale in April 2009. No evidence to that effect had been adduced in the Tribunal, nor had the case been run in that way.[10]We cannot accept that submission. We have already noted (see paragraph 3 above) that the pleaded Response refers not only to the initial decision to start Mr Thomas at spinal point 3 but also to the consequences of that decision in the following year. The point is not made quite so explicitly in the written submissions of counsel (not Mr Purnell) lodged before the Tribunal, but there is nothing in those submissions inconsistent with the pleaded case. In any event, the operation of an incremental scale of this kind, which is standard in the public service, appears to us too obvious to need to be expressly spelt out. As for the suggestion that the Secretary of State should have proved that he could not have departed from the incremental scale, that is not the right way of looking at it. The question was not what he could, in theory, have done (though at the price of wholly disrupting practices agreed with the representative trade unions) but simply what the explanation for the continuing differential was. If it had nothing to do with gender, that is the end of the matter.[11]We accordingly allow the appeal and dismiss the claim.