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Coventry City Council v. M Nicholls & Others


Employment Appeal Tribunal

Whilst it was not impossible for an employer to establish that what might appear to be prima facie unlawful discrimination in breach of the Equal Pay Act 1970 could in fact be explained by non-discriminatory factors, it was no easy task, particularly where the pay differential was significant and long-lasting.
The appellant local authority employer appealed against an employment tribunal's finding that it had breached the Equal Pay Act 1970 in respect of the respondent employees (N), while N cross-appealed against its finding that the local authority had been justified in not extending a protected pay arrangement to them.
Local authorities and trade unions had nationally agreed to implement a unified pay and conditions structure for local government employees. Negotiations resulted in the pay protection arrangement for those whose pay would be reduced under the new structure. The local authority in the instant case failed to reach an agreement with the unions on the new structure, but unilaterally imposed it. N, who were all employed in jobs where the great majority of employees were women, brought their equal pay claims on the basis that their jobs were rated as equivalent or of equal value to those done by refuse collectors, who were all men, save for one. The local authority argued that there were three genuine material factors, other than sex, which explained and justified the difference in pay which existed between N and those comparators: first, it contended that even if the difference in pay had originally been on grounds of sex, that had been overtaken by a supervening cause, namely the unions' intransigence, which had delayed the introduction of the unified structure; second, it maintained that a productivity agreement for the refuse collectors was wholly unrelated to the sex of those collectors and, in any event, was objectively justified; and, third, it argued that the protected pay arrangement was justified. The tribunal found that the alleged supervening cause was not capable in law of constituting a genuine material factor defence; the productivity agreement was tainted by sex discrimination and there was no objective justification; but whilst the protected pay arrangement also adversely impacted on women, the local authority was justified in extending those payments only to employees who would otherwise actually suffer a loss of income as a result of the implementation of the new structure.
On the appeal, the local authority submitted that the supervening cause rendered any sex discrimination no longer material as an explanation for the difference in pay; and since the productivity agreement was a result of the need to improve the refuse collection service, there was no indirect or sex-tainted discrimination, but if there were, then the tribunal had erred in law in finding it was not justified. On the cross-appeal, N submitted that the local authority had not been justified in limiting the pay protection arrangement to those who actually suffered a reduction in pay as a result of the new structure, and it should have extended the arrangement to those who did not do so but would have done had they received equal pay when they ought to have done.
HELD: (1) The issue in equal pay cases was whether sex was a cause of the difference in pay. It could not in any sensible way be said that, assuming the unions had adopted a hostile stance, that had negated sex as a cause of the difference in pay. The unions' stance might be said to explain why the discrimination was not removed earlier than it was, but it did not supersede, in the sense of replacing, the original discriminatory explanation for the difference in pay. (2)(a) Whilst it was not impossible for an employer to establish that what might appear to be prima facie unlawful discrimination could in fact be explained by non-discriminatory factors, it was no easy task, particularly where the pay differential was significant and long-lasting. There was a striking disparate impact in the instant case. As the nature and amount of the productivity payments could not be divorced from the historical context, and on the assumption that the jobs were of equal value, that strongly suggested that the likelihood was that historically the difference in pay was not unrelated to sex. Once a difference in pay was to some extent related to the sex of the job-holder, then the employer was obliged to justify the difference. (b) Justification would not be established if the same objective could be achieved by less discriminatory means, Kutz-Bauer v Freie und Hansestadt Hamburg (C-187/00) [2003] E.C.R. I-2741 applied. The overall evidence in the instant case clearly demonstrated that the local authority had given no consideration to the potentially discriminatory effects of the productivity bonus scheme. Whilst that did not defeat a justification claim, it did oblige the tribunal to look with some care at arguments relied upon by way of ex post facto justifications, R. (on the application of Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 W.L.R. 3213 applied. The tribunal had been entitled to find that the objective of improving the refuse collection service could have been achieved by less discriminatory means. (3) The tribunal had misdirected itself by relying on the principle enunciated in Middlesbrough BC v Surtees [2007] I.C.R. 1644 that it was unhelpful to treat multiple equal pay claims as truly fact-sensitive issues, Redcar and Cleveland BC v Bainbridge [2008] EWCA Civ 885, [2009] I.C.R. 133 and Surtees considered.

Appeal dismissed, cross-appeal allowed.

[2009] IRLR 345

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