On 6 December 2012, the Court of Appeal handed down Judgment in Haq v Audit Commission.

 

Jane McNeill QC and Helen Gower represented the Claimants, instructed by Emma Hawksworth of Russell Jones and Walker, Slater and Gordon. The Claimants’ claims were supported by their Trade Union, Prospect.

 

The Claimants (Appellants) had succeeded in their equal pay claims before the Employment Tribunal (ET) but the EAT (Underhill P presiding) had overturned the ET’s judgment.

 

The Claimants’ claims arose out of a reorganisation in 2007, as a result of which the Audit Commission reduced the number of administrative support jobs in its Housing Inspectorate. Prior to the re-organisation there were two jobs; the Inspection and Information Officer (IIO) and the Senior Inspection and Information Officer (SIIO). The SIIO job had a higher level of responsibility. The key date for the re-organisation was 1st October 2007 and from this date a new role was created, the Inspection Support Officer (ISO). This new job of ISO was substantially closer to the IIO job to the extent that 90% of the job was the same as the job of the IIO. The job also included some duties previously carried out by the SIIOs (10% of the ISO job).

 

Prior to 1st October 2007 the nine female Claimants were IIOs and the two male comparators were SIIOs. The role of IIO had historically always been carried out by women. Immediately prior to 1st October 2007 there were five SIIOs: three men working full time and two women in a job share.

 

The IIO job and the SIIO job fell within the Audit Commission’s FL4 pay band. This was a wide pay band covering incremental points from 22-45. Prior to 1st October 2007 the Claimants and the comparators were at different incremental points. The salary of the Claimants ranged from £26,332 to £31,577 and the salary of the comparators ranged from £36,663 to £37,506. The nine Claimants and the two male comparators were successful in competitive interviews for the eleven new ISO jobs. The Audit Commission had a policy that provided there was no difference in pay band, staff in a re-organisation transferred on their existing pay points.

 

The Claimants anticipated that the Audit Commission’s plans would or could create an equal pay issue. They raised this point in consultation meetings and they argued that the Audit Commission should take a different approach and that the IIOs should be assimilated to the role of ISO because the new job was so similar to their IIO job. Ms Poyntz, a Human Resources advisor also alerted the Audit Commission that the plan might lead to an equal pay issue.

 

The Audit Commission rejected the assimilation option and decided to proceed with competitive interviews. Under the policy of appointing on existing pay points the Claimants and comparators transferred to the new ISO role at their existing rate of pay. An exception to the application of the policy was that the four lowest paid Claimants had a salary increase to a minimum incremental pay point of 32.

 

It was agreed that from 1st October 2007 the Claimants and the comparators were employed on “like work”. The issue was whether the Audit Commission had established a genuine material factor defence under s 1(3) of the Equal Pay Act 1970 (the GMF defence). The explanation for the difference in pay between the Claimants and their comparators was the amalgamation of two jobs at different seniority levels together with the application of the practice of the Audit Commission of maintaining the existing pay point provided the new role is within the same pay grade.

 

The ET concluded that there was indirect discrimination and that the Audit Commission had not established objective justification. The EAT overturned the decision of the ET holding that there was no indirect discrimination and that the Audit Commission had established objective justification.

 

 

The Court of Appeal (Mummery LJ, Lewison LJ and Sir Mark Waller) were unanimous in overturning the judgment of the EAT on indirect discrimination and in reinstating the decision of the ET on this issue.

 

Mummery LJ, in the lead judgment, helpfully summarised the law on the GMF defence in nine points which are set out in detail at paragraph 42-50.

 

The agreed pool for comparison consisted of the Claimants and the comparators. Even though there were only 11 in the pool, the ET was entitled to find that the statistics were stark and not fortuitous or short term. It was fair to describe the work undertaken by the Claimants as “women’s work” and the ET was entitled to find that it was “women’s work”. It did not matter that the Claimants benefitted from the Audit Commission’s policy of protecting pay. The ET had correctly asked itself whether the policy of maintain existing pay points disproportionately impacted on the women when compared to the men. The absence of historic discrimination prior to 1st October 2007 was irrelevant because the Claimants’ claim was only for the period after 1st October 2007.

 

The application of the legal principles to the facts is eloquently summarised by Mummery LJ in paragraph 124 of his judgment:

 

“The decisive point for me on the indirect indiscrimination issue is in appreciating the significance of the changes made on 1 October 2007. Before then there were differences in pay, but there was no discrimination, because the IIOs and the SIIOs were not employed on like work. If that had continued the Claimants would not have had an equal pay claim. But it did not continue. After that date the Claimants and the comparators were all doing like work as ISOs, but for significantly disparate pay. The application of the pay protection policy to all the employees in that changed situation ensured that that difference in pay situation continued and even increased. There was, in those circumstances a rebuttable presumption of discrimination, which the Commission was unable to rebut by reliance on the GMF defence, because the presence of disparate adverse impact on women doing like work was itself evidence of sex taint”

 

 

All members of the Court of Appeal agreed that the ET had made an error of law on the issue of objective justification. However, they disagreed on whether the decision of the EAT on objective justification should stand, or whether the case should be remitted to the ET on the issue of objective justification. Mummery LJ considered that the case should be remitted because the EAT had not assessed objective justification in a proper structured way because it proceeded, erroneously, on the basis that there was no indirect discrimination.

 

 

The majority determined that the case should not be remitted in judgments which are not easy to follow. In the judgment of Lewison LJ the Audit Commission’s policy of protecting pay was or was analogous to the implementation of a “grandfather clause” and he held that Lady Hale in Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15 had “given a steer about the acceptability of a “grandfather clause”. The comments of Lady Hale reinforced his view that the decision of the EAT on objective justification was established. The EAT was entitled to substitute its own view on objective justification because all the facts had been found.

 

Sir Mark Waller agreed with Lewison LJ. He acknowledged that the criticisms of the EAT’s approach identified by Mummery LJ had some validity but that they did not go to “certain critical matters on which they were entitled to substitute their own views for those of the EAT”. Sir Mark Waller does not spell out in his judgment what the critical matters were or why they were so important that they outweighed the criticisms of the EAT’s approach.

 

 

This case illustrates that prima facie indirect discrimination can be established even where the pool is very small, in particular where a job has been dominated by or carried out exclusively by women because of its compatibility with childcare commitments. It also establishes that prima facie indirect discrimination may be made out even in the absence of historic discrimination.

 

The case is also a useful illustration of the important point that it is not necessary in order to demonstrate disparate impact to show that there is a high proportion of women in the disadvantaged group and a high proportion of men in the advantaged group. Either may be sufficient to demonstrate indirect impact. In this case it was sufficient that the job of IIO was “women’s work”. It was not necessary also to show that the job of SIIO was “men’s work”.

 

Objective justification is always a question of fact. The weighing of a legitimate aim against the discriminatory effect of a policy is a balancing exercise to be carried out by the ET and by the EAT if it is to substitute its view for that of the ET. This has recently been reaffirmed in Homer. Although the Claimants will not be pursuing an appeal to the Supreme Court, it is unlikely that the judgments of the majority on objective justification, which contained no analysis of whether the EAT had applied the necessary structured approach, will provide any great assistance to claimants’ or respondents’ representatives in the future.