Court of Appeal
The appellants (X), who were female domestic ancillary workers employed at a number of hospitals within the respondent hospital trust (N), appealed against a decision of the Employment Appeal Tribunal that they could not properly compare themselves, for the purposes of an equal pay claim, with male staff employed at another of N's hospitals. N cross-appealed against the EAT's rejection of its defence that there were genuine material factors other than sex justifying discrimination between the male and female workers. X, together with porters who were employed at a different hospital within N, had been entitled to bonus payments. However, following a process of compulsory competitive tendering, domestic services had been contracted out, with the result that X lost their right to bonuses. Portering services had not been put out to tender and the porters, who were predominantly male, had retained their right to bonuses. At the time of the compulsory competitive tendering process X and the porters had all been employed by N, which at that time had clearly been responsible for the difference in the payment of bonuses. For a number of years thereafter two different trusts had controlled the hospitals in which X and the porters worked. In 1998 the trusts merged and the hospitals returned to N's control. X's claim, based on their contention that their work was of equal value to that of the porters, related to the period following their return to N's employment in 1998. X submitted that there was a single source of employment for both themselves and the porters within the meaning of the EC Treaty Art.141 after 1998, and it was not necessary for that single source to have created the disparity. They argued that there was some evidence that N had assumed responsibility for harmonising some aspects of its employees' terms and conditions, and that was sufficient to create a single source for the purposes of Art.141 of the Treaty. N submitted that the EAT had erred in its conclusion that there had been a disparate adverse effect on X and that the EAT's finding, that the decision not to put the portering services out to tender was tainted by sex discrimination, was wrong in law.
HELD: (Arden L.J. dissenting in part on the issue of the genuine material factor), (1) The question was whether N had been responsible for setting the terms of employment of employees whose employment had begun before 1998. Simply because there was some evidence of N's involvement in the harmonisation of terms and conditions falling short of an incentive bonus scheme, it could not be said that the only proper conclusion was that N had assumed responsibility for the terms and conditions of all the employees for the purposes of the test set out in Robertson v Department for the Environment, Food and Rural Affairs  EWCA Civ 138,  I.C.R. 750 , Robertson considered. (2) The EAT had not demonstrated that adequate grounds existed for its conclusion that there had been a disparate adverse impact on X. There had been nothing in the employment tribunal's reasons to suggest that its finding on disparate adverse impact had been reached as a matter of judgment rather than as a matter of fact and, in upholding the tribunal's decision, the EAT had not addressed that issue. The EAT had taken the statistical analysis employed in R. v Secretary of State for Employment Ex p. Seymour-Smith (C-167/97)  2 A.C. 554 and applied it as a guideline without respecting the need to assess disparate adverse impact separately from case to case, Seymour-Smith referred to, Rutherford v Secretary of State for Trade and Industry  EWCA Civ 1186,  3 C.M.L.R. 53 followed. (3) On the material before the tribunal it was not possible for it to hold that the decision not to put the portering services out to tender was discriminatory, nor was it possible for the EAT to uphold that finding. The tribunal had relied on Ratcliffe v North Yorkshire CC  3 All E.R. 597 because the facts were similar and it had not considered how the law expounded in that case related to the instant case. Although the EAT had considered the legal relevance of Ratcliffe , it should have confined itself to the basis on which the case had been approached by the tribunal. The tribunal had not been entitled to reach the conclusion it did because it had failed to reason out the application of Ratcliffe to the facts before it, Ratcliffe considered. The matter was remitted to the EAT for it to consider whether the bonus arrangements had a disparate adverse impact on X, whether the decision to put the domestic services out to tender involved an act of discrimination on the ground of gender, and whether N had established a genuine material factor defence.
 IRLR 124, EWCA 1608
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