Middlesbrough Borough Council v Surtees and others

EAT: Elias J (President), Mr T Motture and Mr D Welch: 17 July 2007

Three of the claimants were female care workers, whose employment by the appellant council was governed by a national collective agreement known as the White Book, and whose work had been rated in 1987 as equivalent with male workers with whom they claimed equality of pay. The other two claimants were female community support workers governed by a different agreement, the Purple Book, whose work had not been rated under an evaluation study, but who claimed equality of pay with the same comparators. The comparators received bonus payments not available to the women, which the claimants contended no longer represented genuine productivity arrangements but were part of the comparators' basic salary. The claimants' also sought the benefit of protected pay arrangements, introduced pursuant to a job evaluation scheme in 2005 covering all employees, on the basis that, had they been receiving the higher equal pay at that time, they would have had the benefit of the protection arrangements if their pay was reduced in the evaluation exercise. The tribunal found that the council's genuine material factor defence under section 1(3) of the Equal Pay Act 1970 failed with respect to those comparators whose bonuses no longer represented genuine productivity arrangements and that, accordingly, the White Book claimants were entitled to receive the same pay as those comparators, as were the Purple Book claimants provided they established work of equal value. In relation to the protected pay claims, the tribunal found that, while there was no disparate impact on the women in the operation of the pay protection itself, so that the council did not need to show that the difference in treatment was justified, the reason for the difference in treatment was so closely related to the sex of the claimants that the presumption of sex discrimination was not discharged. The tribunal also rejected the council's contention that, in any event, the difference in pay between the Purple Book claimants and their male comparators was the result of historic collective bargaining agreements and was not sex-tainted.

The council appealed on the issues of the protected pay claims and the historic bargaining arrangements.

The Employment Appeal Tribunal held:
(1) In the context of the Equal Pay Act 1970, indirect discrimination occurred where a pay practice in some way had a disparate impact on women or subjected them as a group to a particular disadvantage when compared with men and when, prima facie, shown to exist it had to be objectively justified by the employer, but, in principle, an employer could rebut the presumption of sex discrimination, and avoid the need to establish justification, by showing that, even though his pay arrangements had a disparate impact, they were not in any way tainted by sex.
(2) Given that the council must have realised that some of the outstanding pay claims were likely to succeed and that the claimants were overwhelmingly female, its decision to limit the pay protection scheme to those in receipt of higher pay when the scheme was introduced, and not to apply it retrospectively to those persons, predominately female, who subsequently established their right to receive equal pay, had a disparate impact on the women such that the council was required to demonstrate an objective justification for the difference in pay. The council's failure to provide equal pay when it ought to have done did not of itself prevent the council from establishing justification, and, since the purpose of the scheme was to cushion employees from a reduction in pay and it would have undermined the council's ability to introduce the scheme if it had had to make allowance for a wholly unknown potential liability, the council had been entitled to take the view that it should limit the benefit to those actually in that group at the time and exclude all others. Accordingly, the council was justified in not extending pay protection to the claimants.
(3) While in an appropriate case the fact that pay had been determined by different collective bargaining arrangements, not themselves operated in a sexually discriminatory way, could constitute a genuine reason other than sex which explained a difference in pay, the council was not able to show that there was no sex discrimination in the operation of the bargaining arrangements considered separately, since there had been unlawful sex discrimination in the payment of bonuses to predominantly male groups which were not payable to female groups. Accordingly, the tribunal was right to reject the council's contention that the difference in pay of the Purple Book employees was justified by different collective bargaining arrangements.

The appeal was allowed in part.

Appearances: Christopher Jeans QC and Jane Woodwark (Legal Services, Middlesborough Borough Council) for the council; Robin Allen QC and Claire McCann (Stefan Cross, Newcastle upon Tyne) for the claimants.