![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
United Kingdom Employment Appeal Tribunal |
||
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> ASDA Stores Ltd v Brierley & Ors (Equal Pay Act) [2017] UKEAT 0011_17_3108 (31 August 2017) URL: http://www.bailii.org/uk/cases/UKEAT/2017/0011_17_3108.html Cite as: [2018] ICR 384, [2017] UKEAT 0011_17_3108, [2017] IRLR 1058, [2017] WLR(D) 646 |
[New search]
[Context]
[View without highlighting]
[Printable RTF version]
[View ICLR summary: [2017] WLR(D) 646]
[Buy ICLR report: [2018] ICR 384]
[Help]
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
Judgment handed down on 31 August 2017
Before
THE HONOURABLE MR JUSTICE KERR
(SITTING ALONE)
MS
S BRIERLEY
AND OTHERS RESPONDENTS
Transcript of Proceedings
JUDGMENT
APPEARANCES
(One of Her Majesty’s Counsel) and MR PATRICK HALLIDAY (of Counsel) Instructed by: Gibson Dunn & Crutcher LLP Telephone House 2-4 Temple Avenue London EC4Y 0HB
|
|
(One of Her Majesty’s Counsel) and MS NAOMI CUNNINGHAM (of Counsel) and MS KEIRA GORE (of Counsel) Instructed by: Leigh Day Solicitors Priory House 25 St John’s Lane London EC1M 4LB
|
SUMMARY
EQUAL PAY ACT - Article 141/European law
EQUAL PAY ACT - Equal value
EQUAL PAY ACT - Other establishments
1.
Although the point is not acte clair, the better view
is that
article 157 of the Treaty on the Functioning of the European Union is
directly effective in a claim founded on equal pay for work of equal
value.
The Appeal Tribunal declines to make a reference to the Court of Justice of the
European Union seeking a determination of this (or any) point.
2. Where there is a “single source” of pay and conditions for both claimant and comparator, a comparison between them is permitted independently of whether unequal treatment arises from legislation or collective agreements and whether or not the employment is in the same establishment or service.
3.
Where no comparator works at the establishment where the claimant is
employed, comparison is permitted applying the North hypothetical
test. The better view
is that the North hypothetical test
remains good law and has survived the replacement of section 1(6) of the Equal
Pay Act 1970 by section 79 of the Equality Act 2010.
4. The Employment Judge did not err in law in deciding that the law is as stated above. He did not misapply the law. Nor were any of his findings of fact perverse. He reached conclusions that were open to him on the facts. There is no basis for interfering with his decision that the Claimants can compare themselves with their chosen comparators.
THE HONOURABLE MR JUSTICE KERR
Introduction: the appeal
1.
This appeal arises from about 7,000 equal pay claims brought by
supermarket employees of the Appellant (Asda),
nearly all women. The appeal is
against a Reserved Decision of Employment Judge Tom Ryan sitting in Manchester,
dated 13 October 2016. The claims are founded on equal
value.
The issue in
the appeal is whether the Claimants can compare their work with that of
distribution workers based at depots, who are nearly all men and are paid
more. The Judge held that they can, a decision
Asda
says is wrong and should
be reversed.
2.
Most of the claims were brought in 2014 and 2015 and relate back to a
period before the Equality Act 2010 (“EqA”) came into force on 1 October
2010; in respect of which the old law in the Equal Pay Act 1970 (“EqPA”)
applies. To decide whether comparability with the distribution workers is
permissible, the Judge ruled in the Claimants’ favour on issues formulated
variously
in the grounds of appeal.
Very
broadly, they require resolution of
the following issues:
(1) whether article 157 of the Treaty
on the Functioning of the European Union (“TFEU”) is directly effective in
equal value
claims such as these;
(2) whether the Judge correctly applied EU law on the existence of a “single source” of pay and conditions of employment for both claimants and comparators; and
(3) whether the Judge properly applied domestic law (old and new) on comparison of terms between claimants and comparators, or the classes of employee to which they belong.
3.
The Judge heard evidence and submissions over six days in June 2016. He
made detailed findings of fact about the history and practice of Asda
in
setting terms for, respectively, the Claimants (retail staff) and the
comparators (distribution staff). He then set out the relevant law at length
before considering the parties’ submissions and ruling on them, in each case in
the Claimants’ favour, and giving his reasons for preferring the Claimants’
arguments.
4.
In Asda’s
stores,
the Judge found, the predominantly female retail
workforce is not heavily unionised and terms are not set through collective
bargaining, though there are differential rates based on cost of living
differentials in three separate geographical areas. Pay and terms are imposed
from the top down. In the separately located distribution depots, the
predominantly male distribution workforce at each site now works on terms
collectively bargained through the GMB, following national recognition
agreements in 2012 and 2014.
5. The appeal concerns the proper limits of comparison for the purposes of equal pay claims. In ascertaining where those limits lie, the parties placed emphasis on different EU law principles of general importance to their respective cases. Some of the issues raised could well be appropriately resolved by a reference to the Court of Justice of the European Union. In my judgment, at least one of the grounds of appeal raises an EU law issue that is not acte clair in favour of either party. Neither party strongly submitted that I should make such a reference; nor did either positively object to one.
6.
I have a power but not a duty to make a reference. After reflection, I
have decided not to do so. To borrow from Stanley Burnton LJ (R (Risk
Management Partners Ltd) v
Brent LBC [2008] EWHC 692 (Admin), paragraph
47), my function is probably no more than juge rapporteur for the Court
of Appeal. That court will be better placed to decide whether a reference is
appropriate. The parties are prepared to tolerate the additional delay that
will cause, and the uncertainty about the future jurisdiction of the Court of
Justice.
7. The debate before me was wide-ranging, sophisticated, subtle and presented with the utmost skill both orally and in writing. Credit and my gratitude are due to juniors and solicitors as well as the silks who presented the oral argument. To clarify the issues in my own mind, I have found it necessary to summarise the parties’ submissions, sometimes in my own words. I have not attempted to cover all the nuances of every argument advanced. I hope I will do at least rough justice to the parties’ arguments. There is a transcript of the oral hearing, and extensive written skeletons, should I fail to do so.
8.
For Asda,
Mr Jeans QC emphasised the centrality of the individual
employment relationship and, in particular, of the business unit to which the
employee is assigned. Comparison is not of like with like, he said, where claimant
and comparator work in different industries under different employment
regimes. He described as “a basic tenet of EU law” the proposition that “[a]n
employment relationship is essentially characterised by the link existing
between the employee and the part of the business to which he is assigned to
carry out his duties” (Rockfon A/S
v
Specialarbejderforbundet i Danmark
C-449/93, [1996] IRLR 168, paragraph 31; USDAW
v
WW Realisation 1 Ltd
Case C-80/14 (heard with other cases), [2015] IRLR 577, paragraph 44).
9.
For the Claimants, Mr Short QC emphasised the policy of EU law of
eliminating sex discrimination in the workplace. Without the ability to
compare groups of workers at different workplaces, the policy would be
undermined by employers able to perpetuate “occupational segregation” and pay
less for undervalued jobs predominantly done by women such as “caring,
cashiering, catering, cleaning and clerical”: see paragraph 15 in the February
2006 report of the Women & Work Commission chaired by Baroness Prosser and
entitled Shaping a Fairer Future; and Cox J in Ministry of Defence
v
Armstrong [2004] IRLR 672 at paragraph 34:
“… pay discrimination is frequently systemic in character, arising as a result of gender job segregation or from discrimination in pay structures and grading systems, rather than from the terms of individuals’ contracts of employment. …”
Is article 157 of the TFEU directly effective in an
equal value
claim?
10.
The first ground of appeal is that the Judge was wrong to hold that
article 157 of the TFEU (formerly, article 141 of the Treaty
Establishing the European Community (“TEC”) and, before that, article 119
of the Treaty of Rome which did not explicitly refer to equal value)
is
directly effective and may be relied upon directly by the Claimants in the
present equal
value
claims.
Asda
contends, and contended below, that article
157 is not directly effective where a claim is founded on work of equal
value
rather than like work.
11.
Asda’s
unsuccessful argument below was that, to borrow the language of
the Court of Justice (“ECJ”) in Defrenne
v
SABENA [1976] ICR 547,
paragraph 21 and Worringham
v
Lloyds Bank Ltd [1981] ICR 558,
paragraph 23, in an equal
value
claim the discrimination cannot be “judicially
identified” on the basis of “a purely legal analysis of the situation” and
“solely with the aid of the criteria based on equal work and equal pay referred
to by the article”. A complex evaluation of the jobs using “expert
methodology” is required.
12.
The Judge heard submissions from the parties which, to Judge from his
decision, were similar to those made to me. He preferred the argument of the
Claimants that Worringham v
Lloyds Bank had determined the issue
in their favour. It did not establish only that article 119 (now 157) is
directly effective in an equal
value
claim where equal
value
has already been
established by internal job evaluation. Direct effect was not excluded by the
need for expert evaluation in order to determine whether the jobs were of equal
value,
he decided.
13. In challenging the proposition that article 157 is directly effective here, Mr Jeans relied on the following main points:
(1) The
ECJ in Defrenne v
SABENA (paragraphs 18-22) had distinguished
direct and overt discrimination (as in the facts in that case) from “indirect
and disguised” discrimination only discernible “by reference to more explicit
implementing measures”, community or national.
(2) The
latter type of discrimination included equal value
claims; while the former,
identifiable “solely by reference to the criteria laid down in article 119”,
included those founded on legislation or collective agreements and “which may
be detected on the basis of a purely legal analysis …” or where unequal pay is
paid to workers in the “same establishment or service”.
(3) This
approach reflected the concept of direct effect articulated in earlier ECJ
jurisprudence requiring the measure in question to be unconditional and
sufficiently precise, starting with Van
Gend en Loos [1963] CMLR 105.
(4) In
Worringham v
Lloyds Bank Ltd [1981] ICR 558 (paragraph 23), the
ECJ explained that the cases where discrimination may be “judicially
identified” without community or national implementing measures were cases
where “the court is in a position to establish all the facts enabling it to
decide whether a woman receives less pay than a man engaged in the same work or
work of equal
value”.
(5) For
the court to “establish all the facts”, it must not be required to engage in a
complex fact-finding exercise or in evaluation of expert opinion evidence; it
must be established, without such an exercise being necessary, that the work is
of equal value;
for example, by internal job evaluation, as in Worringham,
or by a concession from the employer.
(6) That
analysis was supported by obiter dicta from three distinguished Judges
in domestic courts, all opining against direct effect in an equal value
claim:
Lord Oliver in Pickstone
v
Freemans [1989] AC 66 HL, at 124B-F;
Balcombe LJ in Leverton
v
Clwyd County Council [1989] AC 706, at
723H-724D; and Lord Eassie in City of Edinburgh
v
Wilkinson
[2012] IRLR 202, paragraphs 41-42.
(7) Those
views
were based on the need for the operation of a detailed procedural regime
set out in the tribunal’s rules, in order to determine whether the jobs being
compared are of equal
value
or not. The same is true in this case, where equal
value
is not established; and whether or not the fact-finding exercise is done
in the tribunal, using its procedures, or in the High Court, using the Civil Procedure
Rules.
(8) Other
cases relied on by the Claimants (Commission v
UK [1982] ICR 578 ECJ; Murphy
v
Bord Telecom [1988] ICR 445 ECJ; Royal
Copenhagen (Specialarbejderfor-bundet
i Danmark
v
Dansk Industri) Case C-400/93, [1996] IRLR 51 ECJ; and Walton
Centre for Neurosurgery NHS Trust
v
Bewley [2008] ICR 1047 EAT) are not
authority that article 157 is directly effective here. In none of those cases
did the issue arise for decision. Indeed, those cases are against direct
effect.
(9) The
infraction proceedings in Commission v
UK would have been
pointless if national measures to deal with equal
value
claims were rendered
unnecessary by the direct effect of article 119, even though (see EC
v
Belgium Case C-102/79, [1981] CMLR 282, paragraph 12) direct effect is
not a defence in such proceedings.
(10) In
Commission v
UK, A-G
van
Themaat had indicated (at 582H-584C)
that direct effect of article 119 does not cover situations where
“discrimination on grounds of sex cannot be directly determined by the court”;
that this includes cases where job evaluation is required to determine whether
jobs are of equal
value;
and that member states had discretion as to what implementing
measures to enact, as long as the result is achieved.
(11) The
evaluation of jobs to determine whether jobs are of equal value
is not an
ordinary fact-finding exercise for the tribunal. It is a system of classifying
components of the different jobs, involving a methodology i.e. the system of
methods and principles used in the particular discipline (per HHJ McMullen QC
in Middlesbrough BC
v
Surtees (No 2) [2008] ICR 349, paragraph
8).
14. In support of the Judge’s decision on direct effect, the following were Mr Short’s principal counter-arguments:
(1) The evolution of European case law shows that the concept of direct effect in the context of workplace sex discrimination has broadened. While Defrenne was a case of direct and overt discrimination, the subsequent cases showed that direct effect is not confined to such cases. The later cases showed that the paradigm of overt direct discrimination embodied in Defrenne - unequal pay for equal work carried out in the same establishment or service - was only one example in a broader range of situations in which direct effect occurs.
(2) Thus, Macarthys Ltd v
Smith [1980] ICR 672 had established that comparison with a predecessor
colleague was permissible; Jenkins
v
Kingsgate (Clothing Productions) Ltd
[1981] ICR 592, that the direct effect of article 119 could cover cases of
indirect discrimination (paying less to predominantly female part timers); and Worringham,
at paragraph 23, that cases where discrimination may be “judicially identified”
include cases of equal
value
among those where (emphasis added):
“the court is in a position to
establish all the facts enabling it to decide whether a woman receives less pay
than a man engaged in the same work or work of equal value.”
(3) A case of the type mentioned in Defrenne at paragraph 21, where the judicial analysis is purely legal because the facts are clear and uncontroverted, is but an example of a case where direct effect occurs; it is not the only such situation. The language used by the ECJ at paragraph 10 in Macarthys Ltd demonstrates that the ECJ did not in Defrenne set limits to the scope of direct effect in article 119 cases.
(4) The clarification provided by
the ECJ in Worringham at paragraph 23, stating that direct effect
can extend to equal value
cases, followed an invitation from A-G Warner in Worringham
(see at 566C-E) and in Jenkins (see 601G-602E) to clarify the
scope of the direct effect of article 119 as expounded in Defrenne,
some dicta in which the A-G found puzzling. It is thus clear that equal
value
cases where no concession of equal
value
is made and no job evaluation has been
carried out, are not as such within the class of cases where national
implementing measures are necessary to prohibit sex discrimination.
(5) Further support for this view
can be found in Murphy
v
Bord Telecom, where the ECJ, rejecting
an argument that article 119 could not be directly relied on in a case where
the applicant’s job was, as the employer admitted and asserted, of higher
value
than the comparator’s, referred to “a consistent line of decisions of the
court, in the case of work of equal
value,
and not in the case of work of
unequal
value”
(paragraph 9).
(6) The distinguished ECJ Judge who had sat on five of the major cases in the field, Judge Pierre Pescatore, writing in the European Law Review (Doctrine of Direct Effect; an Infant Disease of Community Law [1982] 8 ELRev 155, 158), referred to the line of cases in which article 119 had been held directly effective, as cases belonging to an “inner circle” at the “core” rather than the “fringe” of the provision, where “evaluation of the factual elements did not go beyond the normal powers of investigation and application of any court”.
(7) The conclusion that Worringham
decided the point at issue in the claimant’s favour, is supported by the
analysis of Elias J (P) in Walton Centre for Neurology and Neurosurgery
NHS Trust v
Bewley [2008] ICR 1047. While the decision was to reject,
as outside article 141, a comparison with a successor employee, the comparison
therefore necessarily being hypothetical, Elias J’s exposition of the law (at
paragraph 15ff) treated the ECJ decisions as including equal
value
claims
within the scope of direct effect.
(8) The cases in which article 119 and its successors are not directly effective must be those in which the comparators are hypothetical not actual, since hypothetical comparators are excluded from the scope of article 119 (as explained by Elias J in Walton at paragraphs 24-29) and their use must therefore depend on national implementing legislation. This is because the ECJ treated hypothetical comparisons as implying “comparative studies of entire branches of industry” (Macarthys Ltd, paragraph 15, cited in Walton, paragraph 24).
(9) The ECJ had rejected, in Commission
v
UK [1982] ICR 578, the submission of the UK that “the criterion of
work of equal
value
is too abstract to be applied by the courts” (paragraph 12)
and had emphasised (at paragraph 42) that in the context of a defence of
objective justification unrelated to discrimination, the national court must
find the facts.
(10) There was nothing special about
a court or tribunal making factual determinations about whether jobs are of
equal value,
whether using the specialised employment tribunal rules providing
for expert evaluation, or in the High Court where an equal
value
claim may also
be tried (Abdulla
v
Birmingham City Council [2012] ICR 1419 SC).
The task of the court was not conceptually different from that of determining,
for example, a factual defence of objective justification in an indirect
discrimination claim, in which article 157 would beyond doubt be directly
effective.
15.
I have carefully considered these rival
arguments. The Judge (at paragraph 167 of his Decision) was unimpressed by the
argument that measuring the value
of jobs that are being compared was beyond
the scope of ordinary fact finding. He pointed out that an employment tribunal
does not have to admit expert evidence measuring the
value
of jobs, though it
would normally do so. He preferred the arguments of the Claimants.
16.
In my judgment, the arguments on both
sides are strong enough to rule out the view
that the point is acte clair.
In the earlier European jurisprudence on direct effect, in particular the
Van
Gend en Loos case, the court asked the question whether the measure in
question was unconditional and sufficiently precise. Article 157 confers the
right to equal pay for equal work, including equal pay for work of equal
value.
The right, in an equal
value
claim as in a like work claim, is
unconditional.
17.
The question is whether it is
sufficiently precise. There is judicial support for the view
that it is, and
also for the
view
that it is not. I accept that in the 1982 infraction
proceedings, Commission
v
UK, A-G
van
Themaat (at 582H-584C) was against direct
effect of article 119 where “discrimination on grounds of sex cannot be
directly determined by the court” and that, for his part, he treated that as
including cases where job evaluation is required. He based his
view
on the
variety
of methods available for comparing jobs, reasoning that member states should
have discretion on which method or methods to adopt.
18.
I accept also that the domestic dicta
relied on by Asda
are against direct effect in a case such as the present where
equal
value
is undetermined on the facts. The history was that in Pickstone
v
Freemans, the Court of Appeal Judges’ judgments support the claimant’s
position (see per Nicholls LJ at 81C-E, Purchas LJ at 95H-96C, and Sir Roualeyn
Cumming-Bruce at 96H-97C). But while an appeal to the House of Lords was
pending in Pickstone
v
Freemans, in Leverton
v
Clwyd County
Council, a different Court of Appeal took a different
view.
19.
Balcombe LJ (at 724B-D), supported by
Stocker LJ, agreeing at 729A, expressed the contrary view
for five reasons, the
first four of which have largely been overtaken by the “single source”
jurisprudence further considered below. The fifth was that in an equal
value
claim “detailed procedures are usually requisite to enable the industrial tribunal
to determine the question before it”.
20.
Lord Oliver in the House of Lords in Pickstone,
at 124B-F confessed to “some doubt” whether article 119 “is directly
enforceable in the circumstances of the instant case”. The House decided the
case by statutory construction of the then wording of section 1 of the EqPA,
so that it was unnecessary (per Lord Keith at 112E) to decide whether the Court
of Appeal had been correct in its view
that article 119 was directly effective
in the case before it, in which the applicant relied on equal
value.
Lord
Oliver’s doubt was such that he would have been minded to refer the issue to
the ECJ, had it been necessary to do so.
21.
His obiter reasoning was that,
while the limits of direct effect were not clear from the European case law,
the cases indicated that article 119 may not be directly effective in an equal
value
claim, “at any rate where there is no machinery in the domestic law by
which the criterion of what is work of equal
value
can be readily
ascertained”. He was concerned that the procedural machinery for determining
equal
value
(then in 1985 Regulations) could not be operated in a manner
that went outside the statutory instrument creating it.
22.
More than 20 years later, Balcombe LJ’s
doubts were shared, on an obiter basis and without expressing a
concluded view,
by Lord Eassie, in the
Inner House of the Court of Session, in City of Edinburgh
v
Wilkinson
[2012] IRLR 202, paragraphs 41-42, on the ground that where a claim is founded
not on like work or work rated as equivalent it is “difficult …. to say that
discrimination on grounds of sex in the field of equal pay can be detected on a
purely legal analysis” (paragraph 42).
23.
On the other side of the argument, set
against those dicta is the reference in paragraph 23 in Worringham
to “work of equal value”
which comes from the ECJ itself, in the context of an
actual discussion about the width of direct effect of article 119; which
followed an invitation from another distinguished Advocate-General, A-G Warner,
to clarify the extent of what had been decided in Defrenne and Macarthys Ltd
v
Smith.
24.
In my judgment, that pronouncement
carries more weight than the dicta from domestic Judges relied on by Asda
and
the
view
of A-G Themaat, which did not receive the express endorsement of the
ECJ in Commission
v
UK and has not been endorsed since by that
court or its renamed successor, the Court of Justice of the European
Communities (“CJEU”).
25.
It is established by Commission v
UK that the concept of equal
value
is not too abstract to permit of
national implementing measures. The question then becomes whether measuring
the
value
of one job against another would be left by the CJEU to those
implementing measures, or whether the measuring of jobs against each other is
part of the exercise of judicially identifying sex discrimination.
26.
That seems to me to depend, to borrow the
words of Judge Pescatore in his article in the European Law Review, on whether “evaluation of the factual elements” is “beyond the
normal powers of investigation and application of any court”. I think the
better view
is that CJEU would say it is not. The Luxembourg court has
historically been prepared to take an expansive
view
of direct effect when it
is necessary to ensure the efficacy of a Treaty right.
27.
I do not accept the validity
of the
supposed distinction between, on the one hand, making a finding of fact on an
issue where expert evidence is deployed to assist the court; and, on the other
hand, making a finding on whether particular jobs done by particular claimants
and their comparators are or are not of equal
value.
The enquiry may permit of
more than one methodology and may be quite complex, though not necessarily so
in every case.
28. But that is often the case where factual issues are resolved with the assistance of expert evidence. It may be a simpler exercise for a court or tribunal than adjudicating on a defence of objective justification in an indirect discrimination case, where article 157 is, admittedly, directly effective. I accept Mr Short’s submission that there is nothing inherently special about job evaluation. It may be an art as well as a science, and it is not an exact science, but it is not alchemy. It is opinion evidence on the basis of which a tribunal makes a finding of fact.
29.
The Claimants are right to say that Lord
Templeman’s procedural concerns and those of Balcombe LJ, have been shown not
to be well-founded. An equal value
claim may be brought in the High Court (Abdulla
v
Birmingham City Council, cited above) where the court may itself
determine the issue of equal
value
as one of fact, with or without the
assistance of expert evidence. In a case where the claimant’s job was
obviously of equal (or superior)
value
to the comparator’s, expert evidence
might be unnecessary.
30.
Usually it would be needed but the High
Court is well versed
in the art of determining factual issues with assistance
from experts. The employment tribunal is also suitably equipped for the task,
with experienced lay members and procedural rules for receiving the evidence.
The wording of the domestic legislation does not inhibit this but, in any case,
the scope of direct effect should not
vary
from EU member state to member
state, depending on the content of its domestic legislation.
31. On balance, I consider that absent national implementing measures, the CJEU now would be inclined to hold that direct effect can supply the omission where specific jobs are being compared with specific other jobs being done by actual not hypothetical workers, but not where the comparison is between a claimant and a hypothetical comparator.
32.
As Elias J (P) noted in the Walton
Centre for Neurology case (see paragraphs 24 and 25), the ECJ in Macarthys Ltd v
Smith identified the case of a hypothetical male comparator
as one of covert or disguised discrimination which, as had been explained in Defrenne,
“implies comparative studies of entire branches of industry and therefore
requires, as a prerequisite, the elaboration by the Community and national
legislative bodies of criteria of assessment” (Macarthys Ltd,
at paragraph 15).
33. A-G Capotorti in Macarthys Ltd (see at 677B-D) referred to what the ECJ in Defrenne had called “discrimination which can only be identified by reference to more explicit implementing provisions of a community or national character”; and described discrimination of that type in the following terms:
“… what led the court to make that distinction and to hold that
article 119 had no direct effect in regard to the second type of discrimination
was, above all, the existence of cases in which it is impossible to compare the
work of men and women, as occurs, for example, when discrimination takes place
not simply within the same establishment but in relation to whole sectors of
industry which are characterized by exclusively or predominantly female
employment, not to speak of the disguised discrimination which arises by virtue
of restrictions on access by women to certain posts or levels of employment.”
34. And he drew a contrast in the next sentence between that type of discrimination and the other type that was amenable to direct effect:
“Direct comparability between the functions performed by employees of both sexes for the same undertaking is not, on the other hand, prevented by the fact that the services are rendered at different times; and detailed legislation is surely not necessary to enable a court to establish whether work is “equal” within the meaning of the first paragraph of article 119.”
35.
As Elias J commented, while it is not
apparent why the court took the view
that hypothetical comparisons would
necessarily involve comparisons across branches of industry, the rejection of
hypothetical comparisons is “clear and unambiguous”. As explained by A-G
Capotorti in the passages just quoted, I think it is such hypothetical
comparisons that are regarded as beyond the normal powers of judicial
investigation and application, and thus beyond the scope of direct effect,
rather than concrete comparisons between actual jobs done by real people.
36.
For those reasons I respectfully agree,
on balance, with the Employment Judge. The better view
is that article 157 of
the TFEU is directly effective in this case, and the Claimants can rely
on it. The analysis is not perfect, because it could be said that since
hypothetical comparisons are outside article 157 altogether, the question of
direct effect in such a case does not arise. I would willingly have referred
the point to the CJEU if the parties had enthusiastically invited me to do so.
37.
As they do not and the decision falls to
me, I base it on the judgment of the ECJ in Worringham; my
preference for the approach of A-G Capororti to that of A-G van
Themaat; and
the proposition that determining whether jobs are of equal
value
on the facts
is well within the ordinary capability of an English court or employment
tribunal. I see no good reason for treating equal
value
as incapable of
judicial identification so as to allow the applicability of article 157 to be
determined by a legal analysis. The first ground of appeal therefore fails.
The “single source” grounds of appeal
38.
I come next to the “single source” issues in the appeal. The second
ground of appeal is that the presence of a single source of pay and conditions
of work as between claimant and comparator is not sufficient to permit
comparability. The third ground is that the Judge misdirected himself in
various
ways when considering the single source issue. The fourth ground is
that his finding of fact that the pay and conditions of the retail staff
Claimants and the distribution staff comparators emanated from a single source,
was perverse.
39.
In support of those grounds, Asda’s
main submissions were as follows:
(1)
When the concept of a “single source” of pay and conditions was
introduced by the ECJ in 2002 (see Lawrence v
Regent Office Care Ltd
[2003] ICR 1092), it did not alter the restrictions on permissible
comparability established in Defrenne; rather, it added the need
for a single source as a further restriction, over and above those derived from
Defrenne.
(2) The law now is, therefore, that article 157 applies where there is sex discrimination arising from legislation, collective agreement or employment in the same establishment or service; and there is, in addition, not as an alternative, a single source of pay and conditions of employment.
(3)
Domestic case law to the contrary effect, supporting the proposition
that a single source is a freestanding gateway to comparability, is wrong and
should not be followed, for it is based on a misreading of Lawrence
and of Allonby v
Accrington & Rossdale College [2004] ICR 1328, in both of which comparability was not permitted. The Judge below was
wrong to reject
Asda’s
submission to that effect.
(4) Furthermore, the additional requirement to point to a single source of pay and conditions as between claimant and comparator comprises two separate tests, each of which must be satisfied: there must be a single body, not necessarily a legal person, responsible for the inequality in pay; and that body must be one that could restore equality of treatment.
(5)
It is insufficient to show that claimant and comparator work for the
same employer; or that a body exercises budgetary control over a different body
which actually sets the pay in question. It is also insufficient to show that
a body which, legally speaking, could restore equality, is responsible for the
inequality in pay unless the body actually exercises its power to determine pay
and conditions (DEFRA v
Robertson [2005] ICR 750, per Mummery LJ
at paragraphs 13 and 41).
(6)
The present case is not distinguishable from DEFRA in
which, while the Crown was the employer of both claimants and comparators, it
did not set the pay of both in practice. Similarly here, neither Asda’s
executive board nor that of its parent company, Wal-Mart, exercised a power to
set pay and conditions for both groups of employees; their pay and conditions
were determined by separate bodies and mechanisms.
(7)
Accordingly, the Judge below was bound to find that this was a case
falling on the same side of the line as DEFRA, and also Armstrong
v
Newcastle-upon-Tyne NHS Hospital Trust [2006] IRLR 124. The case was
factually different from North Cumbria NHS Trust
v
Potter [2009] IRLR 176, because in that case, although the claimants and comparators worked
at different NHS establishments, the EAT upheld the finding of the Tribunal
that there had been a real exercise of the centralised power to set pay at the
different establishments.
(8)
The reasoning in two non-binding Scottish decisions, that of the EAT
sitting in Scotland under the presidency of Langstaff J (P) in Fox Cross
Claimants v
Glasgow City Council [2013] ICR 954 and, on appeal in the
same case, of the Court of Session Inner House in Glasgow City Council
v
UNISON Claimants [2014] IRLR 532, was unsound in that a single source
for pay and conditions was found where a local authority owned and had a power
to control two limited liability partnerships, which it did not in practice
exercise.
(9) The Judge had been wrong to treat as exceptional a situation in which a single employer did not constitute a single source and to place an “evidential burden” on the employer to displace the proposition that there is a single source where there is a common employer. There was no basis for that approach to the factual appraisal.
(10) The Judge
had been wrong to treat the oversight exercised by Asda’s
executive board, and
that of Wal-Mart, as different in quality from the oversight exercised by the
Treasury over the pay of civil servants in the DEFRA case. He
should have found that here, as in the DEFRA case, the power of
the common employer to set pay and conditions was legal only and unexercised in
practice. Furthermore, the Judge had found that there were two single sources,
Asda
and Wal-Mart, which is a contradiction in terms.
(11) On the facts, the only conclusion open to the Judge was that there was no single source of the pay and conditions of, respectively, the retail staff Claimants and the distribution staff comparators and the contrary conclusion the Judge reached was perverse.
40. The main points made in answer by Mr Short, for the Claimants, were as follows:
(1)
Where there is a single source of pay and conditions, comparability is
without more permissible. Lawrence and Allonby did
not restrict the scope of comparability; that would undermine the policy of
article 157 and is inconsistent with subsequent domestic law authority up to
and including the Supreme Court’s decision in Dumfries and Galloway
Council v
North [2013] ICR 993.
(2) There, Lady Hale JSC’s analysis at paragraphs 37-40 led to the conclusion that “for the principle of equal pay to have direct effect, the difference in treatment must be attributable to a single source which is capable of putting it right”. On the facts in the Dumfries and Galloway case, the Supreme Court found a single source even though the claimants and their comparators worked at different workplaces and even though their pay and that of their comparators were fixed under different national agreements.
(3) The Judge was right to distinguish the present case from the factual position in Lawrence, Allonby, DEFRA and Armstrong. He correctly applied the test identified from the European jurisprudence by Mummery LJ in DEFRA, at paragraph 13:
“… the focus of this rather imprecise approach [of the ECJ in Lawrence] is on the location of the body responsible for making decisions on levels of pay in the relevant employment or establishment rather than on the identification of the relevant legal source of that decision-making power.”
(4) In DEFRA in the EAT ([2004] ICR 1289), the then President, Burton J, at paragraph 18 had advanced the proposition that while common employment between claimant and comparator is insufficient, in asking whether the two-pronged single source test articulated by the ECJ is satisfied, “[t]his is almost invariably the case where there is a common employer: the best example of such a single source of such a body is a common employer”.
(5) In the same judgment at paragraph 21 (in a passage cited with approval by Mummery LJ in the Court of Appeal, at paragraph 28) Burton J stated that Lawrence is authority “that what underlines the applicability of article 141 is that which is ordinarily exemplified by common employment, namely the existence of a common source, the existence of a central responsibility for terms and conditions”.
(6)
Burton J was therefore correct to identify at paragraph 22 “an
evidential burden on an employer to displace the ordinary conclusion” and there
was nothing wrong with the Judge here doing the same. Another past President,
Underhill J (as he then was) in Beddoes v
Birmingham City Council
[2011] 3 CMLR 42, at paragraph 52 had also described as “certain highly unusual
cases” those where there is a common employer but not a single source.
(7)
The Claimants reserved the right to argue in a higher court that the
domestic decisions in DEFRA and Armstrong were
wrong. The correctness of the former was left open by Lady Hale in Dumfries
and Galloway Council v
North (at paragraph 41). For present purposes,
they argue that the Judge was right to distinguish them on the facts, essentially
for the reasons he gave.
(8) The Judge had been right to avoid the mistake made by the Employment Tribunal in Fox Cross Claimants, in which the then EAT President, Langstaff J, having reversed the decision on other grounds, correctly concluded (in obiter observations at paragraph 84) that the notion of “responsibility” to correct unequal treatment referred to ongoing rather than causative responsibility; and (at paragraph 87) that strategic management and powers in the context of a large organisation is sufficient without day to day intervention.
(9) The Inner House of the Court of Session on appeal in the same case, whose opinion was delivered by Lord Brodie, was likewise correct to observe in its obiter remarks at paragraph 49, that the focus should be on the ability of the single body to restore equal treatment and that in the DEFRA case, the authority to negotiate and set most aspects of the pay of civil servants employed by DEFRA was “specifically delegated by the Minister for the Civil Service by statutory instrument”, and the instrument would have to be revoked for the delegated power to be removed.
(10) As to the allegation of perversity in the fourth ground of appeal, the single source issue was for the Judge of fact and must stand unless perverse (per Nelson J in North Cumbria Acute Hospitals NHS Trust, paragraph 108); and the Judge had ample factual material before him, which he assessed without error, enabling him to distinguish cases such as DEFRA and Armstrong. His decision that this case fell on the other side of the line was eminently defensible and disclosed no error of law or impermissible finding of fact.
41.
I come to my reasoning and conclusions on this issue. I note, first,
that the Judge below (at paragraphs 180-182 of his Decision) rejected Asda’s
argument that the presence of a single source of pay and conditions for both claimant
and comparator is insufficient and that there must in addition be a single
establishment, collective agreement or statutory framework.
42. He was right to do so. Mr Jeans accepts that recent case law assumes that the single source concept is a freestanding gateway to comparability, while contending that the assumption is wrong and should be corrected. I do not see any good reason for supposing the assumption is wrong. I think the reason Mr Jeans’ argument has been only implicitly rather than explicitly rejected is probably that until now, either no one thought of the point or no one thought it worth arguing.
43. That may be because in most cases the issue is unlikely to be decisive. But there is no good reason why article 157 (then 141) should be construed more narrowly after Lawrence than before it was decided. The ECJ in Lawrence did not say it was restricting the scope of article 141. The concept of a single source can be traced, as far as I am aware, back to the opinion of A-G Geelhoed in Lawrence at paragraphs 49-53. The ECJ adopted his single source concept.
44. The Advocate-General explained that the three situations in which comparison beyond the actual establishment where the claimant works - statutory rules for more than one undertaking, a collective agreement or regulations covering more than one undertaking and cases where employment terms are laid down centrally for more than one organisation within a conglomerate - all share the feature that employment terms are traceable back to one source.
45. He went on to say that since article 141 is aimed at the body responsible for unequal treatment, the relevant body - the legislature, parties to a collective works agreement or management of a corporate group, as the case may be - can be “held accountable in that regard”. The reason for identifying the single source of unequal treatment is because that source is the body with the power to cure the unequal treatment and therefore the body which should bear responsibility for it.
46. A-G Geelhoed’s analysis identified three separate categories of case where comparability is permitted outside a single establishment and identified what would ordinarily be their common feature. His account places responsibility where it properly lies and may obviate the need to enquire into issues of comparability across establishments that may otherwise arise. But I can see no basis in the case law and no policy reason why it should be treated as narrowing the scope of comparability, if the traditional Defrenne categories of comparability are still needed.
47.
I do not find any misdirection of law in the Judge’s treatment of the
single source jurisprudence. I conclude that the second ground of appeal
fails. I consider next whether the findings of fact he made, and the
conclusions to be drawn from them, were open to him. The findings of fact
range from paragraphs 18-127 of the Decision. He traced the history of Asda
and its acquisition in 1999 by Wal-Mart. He described the absence of
co-location of
stores
and distribution centres or depots.
48.
He went on to describe terms and conditions in stores
and how they are
set, in particular regarding pay, which is done without negotiation and without
the involvement of any recognised union. Put simply, pay rates are signed off
by a subcommittee of
Asda’s
executive board, including Ms Hayley Tatum who is
responsible for pay in
stores
and consults with members of Wal-Mart’s
international compensation team when formulating proposals. The “Total
Remuneration Strategy” (“TRS”) is the name given to this process.
49.
The Judge then did the same exercise for distribution staff terms and
conditions, noting the growth of collective bargaining through the increasing
influence of the GMB union which started to achieve recognition at some depots
and eventually, after a period of difficult relations and difficult pay
negotiations, entered into a national recognition agreement with Asda
in May
2012.
50.
The Judge described the establishment from about January 2010 of Asda’s
“Industrial Relations Board” (“IRB”), its membership, including members of the
executive board and the chief executive officer (“CEO”), the head of the
employment law team, the general counsel and others including Mr Ian
Stansfield, who regularly updated the IRB during the negotiations he was
conducting with the GMB in 2010-2012. The Judge noted that pay rates were
specific to individual depots.
51.
The Judge then undertook a comparison of the terms of retail staff and
distribution staff, to which I will return. He then considered “[f]acts
material to the North hypothetical”, to which I will also return. Both Mr
Stansfield and Ms Tatum were asked, and answered, questions about what pay
rates and what terms would be if, hypothetically, a distribution worker should
do his job at a store
location, or a retail staff worker should do hers at a
depot. The Judge rejected any suggestion that
Asda
had deliberately engineered
the separation of retail staff terms from distribution staff terms in order to
protect itself against equal pay claims.
52.
The Judge set out his factual reasoning and conclusions on the single
source issue at paragraphs 183-190. These paragraphs were subjected to intense
criticism by Mr Jeans. The Judge started by saying that since there was a
single employer an “evidential burden” rested on Asda
to displace the
proposition that there was a single source of pay. Despite Mr Jeans’
objection, I see no error there; the Judge’s observation was in line with that
of Burton J in the DEFRA case.
53.
The Judge reasoned that a single employer had “allocated responsibility
to different internal structures for the purpose of setting terms and
conditions”. The persons operating those internal structures do so under the authority
of, and are accountable to, the common employer, personified by the Asda
executive board. He reasoned that the position was not the same as in the DEFRA
case. There, the delegation of power was not by a commercial undertaking but
an arm of government. The delegation was embodied in statutory and
constitutional arrangements between the Crown and the public service.
54.
The Judge found at paragraph 185 that those charged with the decisions
to set terms and conditions were “subject to a degree of oversight so that
there was control in practice as well as in theory of those matters by the
respondent’s [Asda’s]
Executive Board”. That was in turn subject to the power
of
Asda’s
sole shareholder, Wal-Mart, to “direct”
Asda’s
executive board “in
the way that it chose” (paragraph 186).
55. There was “an absence of true autonomy” in the setting of both retail and distribution terms (paragraphs 187-188), said the Judge, referring back to his findings of fact on the way in which terms were set. He noted at paragraph 189 that the Respondent did not challenge the proposition that it could restore equal treatment, if there was unlawful equality of treatment. He concluded, at paragraph 190:
“… The Executive Board of Asda
and the members of subcomittees
of that Board had and exercised budgetary control and oversight over both
Distribution and Retail at all material times. The Executive Board was
responsible for the differences in pay and could, or could subject to the
overarching control of Wal-Mart, have introduced equality.”
56.
For all the intensity of Asda’s
attack on the Judge’s reasoning and
conclusions, far from considering them perverse I find them unassailable. This
was an ordinary case of a large organisation delegating the setting of pay to
separate internal organs. The Judge avoided the mistake made by the Tribunal
in the Glasgow City Council case (see, in particular, paragraph
69 in Lord Brodie’s opinion) of treating the DEFRA decision as
creating a category of dual source cases where power to set pay is delegated
and then not interfered with on a regular basis.
57. In my judgment, the DEFRA case, if as I assume it is correctly decided, was wholly exceptional and turned on the unique position within the civil service, where the setting of pay and most other terms of civil servants on a departmental not national basis, was enshrined in statutory and other instruments that would have to be expressly revoked if the power was to be reclaimed by the Treasury and exercised centrally.
58.
Here, by contrast, Asda
or Wal-Mart could interfere at the stroke of a
pen or, more likely, the click of a mouse. The Industrial Relations Board
(“IRB”) included senior employees including the
Asda’s
CEO, with an interest in
pay across both retail and distribution staff. Moreover, the IRB received
regular updates on distribution staff pay negotiations, while retail pay was
signed off by the executive board.
59.
It would be unjust and little short of absurd if the presence of a
single source turned on whether Asda’s
or Wal-Mart’s board happened to have
overruled Mr Stansfield, or the CEO or the board happened to have overruled Ms
Tatum. It was quite enough to justify the Judge’s conclusion that the evidence
showed that they regularly scrutinised the work done to set pay in,
respectively, retail and distribution, and could overrule their decisions at
any time.
60.
In reply, Mr Jeans submitted that the Judge should have found the
position analogous to that in the DEFRA case because there was a
parallel here between the oversight and budgetary control exercised by Asda’s
board, or Wal-Mart’s, and that exercised by the Treasury in the DEFRA
case, as demonstrated by the finding highlighted in the EAT’s decision (at
paragraphs 23 and 24 of Burton J’s judgment).
61.
Burton J there related that each department had to submit an “annual
remit”, and a “remit” before each negotiating round, to the Treasury showing
how proposed changes to terms and conditions were to be funded. The Treasury
then exercises a monitoring role by vetting
the remits against “certain general
principles” and in one case going beyond this, though it is not clear how.
There is also a “management code” containing statements such as that bonuses
should be linked to achievement, and the like. And pensions are reserved for
central control.
62.
I was shown some of the documentary evidence that was before the Judge.
It included the following. There was an email exchange between Mr Stansfield
and Asda’s
CEO in 2008 answering a request for an update on recent distribution
pay negotiations relating to particular depots, answered by a “steer” from the
CEO, including a reference to 3 per cent in distribution being “dangerous
vs
[
versus]
retail”.
63.
I was shown the slides for a presentation by the President and CEO of
Wal-Mart to an “IR [Industrial Relations] Strategy Discussion” in September
2009, which included his “IR Vision”,
embracing both retail and distribution
staff. In January 2010 Mr Kuchinad,
Asda’s
executive people director, received
the emailed thoughts of Mr Gooddie, an industrial relations expert member of
the IRB, on industrial relations issues in both retail and distribution, in
advance of a discussion to be held the following Friday.
64.
In March 2010, Mr Gooddie was again emailing Mr Kuchinad, with a “back
of an envelope” strategy for developing distribution pay and indicating that
they should also discuss “the various
links with retail”. In November 2010,
something called the “Pay Strategy Working Group” received a tabulated overview
of “Retail Pay” and “Distribution Pay”. It included a section containing some
bullet points on “Culture and Communication across retail & depots”, and a
comparative “Performance” table comparing retail staff against distribution
staff.
65.
I was also shown notes of a meeting held on 14 December 2010 of the
executive committee of Asda’s
executive board (referred to at paragraph 66 of
the Judge’s Decision). It records that Mr Kuchinad updated the board on
progress with the “3 year reward strategy” and “how this fitted into the
overall people plan”. Mr Gooddie and Mr Stansfield then “gave an update on the
ongoing work being done with the distribution pay strategy - this had been
covered at the IR board”. The meeting decided that the “Distribution strategy
should go back to the IR Board for discussion and approval”.
66.
That evidence shows how far removed the facts were in this case from
those in the DEFRA case, on which Asda
relied so heavily. They
also demonstrate that there was ample material before the Judge to justify the
conclusion he reached. I conclude without difficulty that the third and fourth
grounds of the appeal are not well founded.
67.
I would add for completeness that there is nothing in the point that a
“dual” source of pay and terms of employment, namely Asda
and Wal-Mart, rules
out the presence of a single source. If that submission were correct, equal
pay law could be avoided at will. Mr Short is right that a single source means
a common source and the “
vertical”
presence of a parent company sitting above
its subsidiary does not make the source of pay and conditions other than common
to both claimant and comparator.
The scope of comparability in domestic law
68.
The fifth ground of appeal challenges the Judge’s approach to the
interpretation of domestic law. The point is put in various
ways but boils down
to the complaint that the Judge was too much influenced by the policy of EU law
rather than the meaning of domestic statute law. The Claimants say the Judge’s
approach to interpretation of domestic law was impeccable and rightly
influenced by the content of EU law; and they pointed to the obligation of an
English tribunal to disapply domestic law where it conflicts with directly
effective EU law.
69.
I was referred to authority on how EU law, as it is now called, should
or should not influence domestic law and its interpretation: on the Claimants’
side, Halsey v
Fair Employment Agency [1989] IRLR 106 NICA, per
Lord Lowry CJ at paragraph 16; Scullard
v
Knowles [1996] ICR 399,
per Mummery J at 403G-405C; and the Dumfries and Galloway case,
per Lady Hale JSC at paragraph 45; and on
Asda’s
side, the traditional approach
embodied in the speech of Lord Templeman in Duke
v
GEC Reliance
[1988] IRLR 118, citing from that of Lord Diplock in Garland
v
British
Rail Engineering Ltd [1982] IRLR 257, at 259.
70.
This ground of appeal adds nothing of substance, for it can only succeed
if the appeal is otherwise well founded. In its skeleton argument, Asda
says
the Judge’s conclusions on the application of domestic law are “unsafe”, as if
they were a criminal conviction. If they are unsafe, they may be unsafe yet
correct or unsafe and also wrong. If it is the latter, one or more other
grounds of appeal will succeed and the fifth ground will not be needed. But
if, though unsafe, they are nonetheless correct, the fifth ground cannot save
the appeal from failure.
71. I will therefore pass on to more substantial matters. The sixth and seventh grounds, taken together, assert misdirection (the sixth ground) and perversity (the seventh) in relation to the Judge’s treatment of the issue of common terms and conditions of work observed, or applying, generally as between claimants and comparators, for the purposes of section 1(6) of the EqPA and, from 1 October 2010, section 79 of the EqA.
72. Until 30 September 2010, section 1(6) of the EqPA provided that men shall be treated as in the same employment with a woman (where they do not work at the same establishment) if both work at establishments in Great Britain “and common terms and conditions of employment are observed either generally or for employees of the relevant classes”.
73. From 1 October 2010 onwards, section 79 of the EqA defines who may be a comparator. Where the comparator works at a different “establishment”, the case must be one where “common terms apply at the establishments (either generally or as between A [the claimant] and B [the comparator]” (section 79(4)(c)). The reference in section 1(6) to “employees of the relevant classes” was not repeated (a point relevant to the tenth and last ground of appeal, addressed later).
74.
In support of the sixth and seventh grounds, Mr Jeans for Asda
made the
following main points (the quotes are from his skeleton argument, save where
indicated otherwise):
(1)
The terms of the distribution staff and the retail staff are set by
reference to the physical location of the staff concerned: “the set of terms
which applies depends on where you work”. Therefore, there are no common terms
across stores
and depots. Further, each individual depot has its own pay
rates.
(2)
Comparing the content of the respective sets of terms is the wrong
approach. The test is whether the claimants and comparators work under
“essentially different employment regimes” (per Lord Bridge in Leverton v
Clwyd County Council [1989] 1 AC 706 HL, at 746C-E, whether for
geographical or historical reasons, or a combination of both.
(3)
Even if it were legitimate to compare the content of the two sets of
terms, they constitute different packages of terms with different terms
relating to matters such as working hours, sickness absence, productivity
targets, breaks, probationary periods, increased pay after an initial period of
employment, different forms of pay (basic, overtime, night pay and bank holiday
pay) and Asda’s
right to
vary
terms.
(4) The Judge should have found that the facts here are “remarkably similar” to Lord Bridge’s second example in Leverton (at 746E-G) of a case falling outside section 1(6): that of an employer who takes over a company which has a pre-existing collective agreement with a union covering one set of employees, which the employer continues to operate; such that at a different factory, a different collective agreement has produced different structures governing pay and other terms of work.
(5) The Judge wrongly failed to take account of the employment history and genesis of the two distinct sets of terms and conditions. He also erred by taking account of non-contractual terms and conditions; under the wording of section 1 of the EqPA, and by section 80(2) of the EqA, these are irrelevant to the “common terms” issue. Any discrimination outside contractual terms of employment is remediable under the (former) Sex Discrimination Act 1975, not under the equal pay legislation.
(6) By asking himself whether it was “easy” or “straightforward” to undertake a “broad comparison” between the content of the two sets of terms, the Judge applied the wrong test. He should have asked himself whether the two sets of terms were common and should have regarded differences between them, e.g. in hourly rates of pay, night working, sick leave and holidays, as indicating non-commonality, not (as he did) commonality.
(7) The Judge erred by treating as material to the “common terms” issue the point that both sets of terms emanated from the same employer. By definition, in an equal pay claim such as this the claimant and comparator must be employed by, at least, “associated” employers, if not the same employer. The fact that both sets of terms are set by the same employer is therefore a neutral factor, not a pointer in the direction of the terms being common.
(8)
As to the seventh ground (perversity), Mr Jeans explained that Asda
did
not submit that the Judge’s findings of fact were perverse and should be
overturned but, rather, that the conclusion the Judge drew from them was
perverse. Although this was
Asda’s
general position, it does complain that the
Judge wrongly treated the distribution workers’ productivity targets as
non-contractual and in the nature of a mere aspiration.
(9)
On the facts found, and treating the productivity term as contractual,
the only conclusion open to him was that the terms were not common. The two
sets of terms were geographically, historically, and qualitatively distinct.
The retail staff terms apply at stores
only and are set by
Asda’s
board or a
subcommittee thereof without reference to productivity. The distribution staff
terms are set mainly by collective bargaining.
75. In defence of the Judge’s reasoning and conclusions, Mr Short countered with the following main arguments:
(1)
The “common terms and conditions” requirement is a low threshold to
cross because it operates at the preliminary stage, where the employer still
has the opportunity to defend against claims either on the basis that jobs are
not of equal value
or by asserting objective justification for unequal treatment.
The threshold requirement must not allow the employer to invoke “differences
which may themselves be discriminatory in creating a barrier to an appropriate
comparison” (Decision below, paragraph 210).
(2)
Accordingly, a broad comparison of terms is appropriate and broad
similarity between the two sets of terms suffices (per Lord Bridge in Leverton
at 745F-746C; per Lord Slynn in British Coal Corporation v
Smith
[1996] ICR 515, at 526H-528B, 530D-E). And it is clear from Leverton,
British Coal
v
Smith and Dumfries and Galloway Council
v
North (per Lady Hale JSC at paragraphs 12-13, and 33-41) that a
difference in workplace location as between claimant and comparator does not
preclude a finding of common terms.
(3)
Asda’s
erroneous approach is to try to fit the facts here into the
straitjacket of Lord Bridge’s second example in Leverton (at
746E-G) and to demand the same factual result here, when each case is different
on its facts and it is for the tribunal to find the primary facts and draw its
conclusion from them, applying the statutory test, as the Judge did here. It
is not the law that, because terms are negotiated separately over different
periods for different groups, they cannot be common.
(4)
The Judge did not misdirect himself by finding that the differences in
the history and genesis of the two sets of terms were not determinative. Nor
is there any bar to a comparison which looks at the content of the two sets of
terms, as distinct from, or in addition to, the source of the respective sets
of terms. The issue is one for the ordinary factual judgment of the tribunal (South
Tyneside MBC v
Anderson [2007] ICR 1581 CA, per Sedley LJ at paragraph
21).
(5)
The Tribunal did not err by including in the comparison terms that were
not contractual. The Judge agreed that the relevant terms were contractual
ones and correctly looked at those terms in the proper context of the overall
employment relationship. The word “observed” in section 1(6) of the EqPA,
and the word “apply” in section 79(4) of the EqA, indicate that the Tribunal
should focus on what happens in practice; cf. Holyland v
Asda
Stores
Ltd
[2006] IRLR 468 Court of Session, Inner House, deciding that discretionary
bonuses are outside the scope of the (former) Sex Discrimination Act 1975.
(6) The Judge did not err by taking into account that the terms of both claimants and comparators were set by the same employer; they could have been set by associated employers but were not in this case; nor, as in Lord Bridge’s second example in Leverton, by a prior employer whose business and workforce had transferred wholesale to the current employer. The Tribunal did not treat the point as determinative but as part of the explanation for the similarities in the two sets of terms.
(7)
On the seventh ground of appeal (perversity): the Judge was entitled to
reach the conclusion that he did on the facts despite Asda’s
two bases for
criticising as perverse his finding that there were common terms as between claimants
and comparators; namely first, that each set of terms had a “distinct genesis”
and, secondly, that their “shape and content was fundamentally different”.
(8)
As to the first of those (distinct genesis), the Judge was alive to the
point but entitled to find that it was not determinative. As to the second
(shape and content of the respective terms) the Judge was entitled to place
little weight on differences between terms that were the very
subject of the
complaints (rates of pay, night and bank holiday premiums); and to disagree
with
Asda’s
factual assessment by deciding that, analysing the differences and
the similarities, the latter were sufficient. His finding to that effect is
unassailable, not perverse.
76.
The Judge’s account of the relevant law is at paragraphs 145-156 of his
Decision. Asda
does not criticise it. This is not surprising since it is
mostly quotation from statute and case law. As to the facts, his findings
concerning the source of the respective terms of retail and distribution staff
have already been mentioned when considering the third and fourth grounds of
appeal. He also compared the contents of the respective sets of terms, at
paragraphs 88-110.
77.
He noted that the processes for setting terms for retail and
distribution staff were separate, because Asda
had chosen to make them so.
There was no prior TUPE transfer of sites en bloc creating
inherited terms for either class of employee. He looked at
Asda’s
“handbooks”
containing terms at different times. I was also shown some of these. He then
examined tabulated comparisons of terms and analyses produced by the parties.
These used different methodologies and naturally sought to influence the Judge
towards opposing conclusions. I was also shown this material.
78. He then commented in detail on the similarities, and the differences, between the terms of retail staff and distribution staff, on a term by term basis. These comments are found at paragraphs 95-110 of his Decision. He noted that the Claimants’ table acknowledged that some terms are “not contractual or are derived from statute” (paragraph 99). In paragraph 100, he introduced his comments on specific terms, saying it appeared to him that:
“… subject to such weight as I attach to the respondent’s
arguments to the contrary, there could be said to be a greater degree of
variation
in respect of the following: …”
79.
He must, in my judgment, have meant to refer to a greater degree of
similarity, or a lesser degree of variation,
rather than to a greater degree of
variation.
Neither party contended otherwise. The narrative that follows is
directed more to similarities than differences, under the following headings:
pay cycle, paid holiday entitlement, holiday pay, breaks, paternity pay,
mobility, working hours,
variation
clause, notice periods, probation,
references and working for other employers.
80.
That commentary is followed by comments on the “remaining areas of the
analysis” which “show more substantial differences”, including principally that
of pay, which he considered not relevant since the differences in pay were the
very
subject of complaint. The other areas were also at least in part pay
related: shift pay, bank holidays, overtime and sick pay. He noted the areas
of similarity and the differences under those headings.
81.
He returned to the issue of common terms at paragraphs 192-217, in the
part of his Decision setting out his reasoning and conclusions. He recorded
the arguments of the parties, which were similar to those before me. He noted
(paragraph 208) that Asda
placed particular reliance on the productivity clause
which was added to distribution staff terms when the national recognition
agreement with the GMB was entered into.
82.
At paragraphs 210-217, he gave his reasons for preferring the Claimants’
arguments. Essentially, he accepted the argument that the terms were broadly
similar and rejected Asda’s
arguments based on terms being tied to a specific
location. In effect, he found that they created a danger of legitimised
discrimination by job segregation. He found, on a factual comparison, “a
significant correlation … in a broad way between the terms …” (paragraph 212).
83. The setting of terms by the same employer was not determinative but “is reflected in the strong similarities in the Handbooks and is for that reason a material factor” (paragraph 212). Such differences as he found were not “so extensive as to undermine the broad comparison which has to be made” (paragraph 213). He rejected the suggested technique of considering whether the facts fitted into Lord Bridge’s second example in Leverton of an impermissible comparison.
84.
As to the productivity term for distribution staff relied on by Asda,
at
paragraph 216 the Judge referred back to its wording (at paragraph 78), set out
in a “Memorandum of Understanding” and in a statement of distribution staff
terms and conditions annexed to the national recognition agreement. It
referred to the common goal of increased productivity. It said that “there may
be a need to apply professionally measured work standards to the planning of
work and methods” and that “colleagues will be required to perform in line with
these set work standards and demonstrate the flexibility and collaboration
required”.
85. As the Judge pointed out at paragraph 79, there was no specific link to pay, such as a provision that failure to meet productivity targets set by management would result in a loss of pay, bonus or other financial or other benefit. This was not a performance related pay term. Retail staff also had “productivity targets” but these were, on the evidence, not used to measure individual performance but, rather, for budgeting purposes.
86.
At paragraph 216, the Judge said that he did not accept Asda’s
argument
that the productivity term represented “a significant difference between the
group of Distribution employees as a whole and the Retail employees”. He said
the term was “as much a statement of aspiration or intent than creating a
contractual obligation”; so that if an employee were alleged to be in breach of
the term, it would be an issue of capability or conduct rather than a breach of
any specific obligation to meet a target.
87.
The comparison of terms required under section 1(6) of the EqPA
and, subsequently, under section 79 of the EqA, is an ordinary matter of
factual judgment for the tribunal of first instance, subject to the normal
constraints of law, as Sedley LJ pointed out in South Tyneside MBC v
Anderson at paragraph 21. Aside from the Judge’s treatment of the
productivity term, Mr Jeans did not criticise the Judge’s findings, only the
conclusion he drew from them, which he said was perverse.
88.
I reject Mr Jeans’ submission that the Judge was bound to find that the
terms could not be common because they were tied to particular locations. That
submission confuses the question with the answer to it. A comparison is being
made of terms observed at different establishments. There are no comparators
working at the Claimants’ establishment, and vice
versa.
So the starting point
is that the terms that are being compared are observed at different
establishments. You then look at whether they are “common” in the statutory
sense, even though they are observed at different establishments. You cannot
answer that question merely by repeating the point that they are observed at
different establishments.
89.
The submission that the terms cannot be common because their genesis and
history are different is also wrong. Terms which have a different genesis and
history could be identical in content. An example would be an employer who
applies men’s terms to women at a different establishment, to avoid
discrimination, recognising that the women’s work is of equal value.
90. Nor is there any bar to comparing the content of the respective sets of terms. To decide whether terms are common or not, it is useful to know what the terms are. The Judge was right to ascertain them and the parties were right to put them in evidence before him. I find his approach in line with that held to be correct by May LJ in his dissenting judgment in Leverton (approved in the House of Lords) and the approach of Lord Bridge in Leverton, of Lord Slynn in British Coal and of Lady Hale JSC in Dumfries and Galloway, at paragraph 12.
91. I do not accept that the Judge wrongly attached weight to the fact that the terms emanated from the same employer. That they did was “reflected” in their similarities, as he found; it was not a “determinative” point and it was not treated as itself establishing or contributing to the similarities he found.
92.
The Judge did not err in attaching weight to non-contractual terms; he
recognised them as such and as merely contextual. Nor did he err in
attributing no weight to pay differences that were the very
subject of
complaint. Nor is it right to say that terms mandated by statute must be
disregarded. Compulsory statutory terms can be and usually are also contract
terms. There is no warrant for excluding them from the comparison exercise.
93.
The sixth ground of appeal therefore fails. There was no misdirection.
The seventh ground is an ordinary perversity challenge. It depends, first, on
impugning the Judge’s treatment of the productivity term for distribution
workers and, secondly, on his overall conclusion that the terms had sufficient
broad commonality to satisfy the statutory tests. I find no lack of
rationality or perversity in the Judge’s reasoning on either count and therefore
no flaw in the conclusion he drew from it, strongly though Asda
disagrees with
it.
94. The productivity term may or may not be correctly described as contractual but, even if it was contractual, the Judge was entitled to find that it did not have “teeth” over and above the applicability of ordinary capability and conduct procedures. It was not suggested that it was a performance related pay term in the usual sense of that term or that it created a specific disciplinary offence of failing to meet a target.
95.
Thus, an unproductive store
worker could be dismissed for being
unproductive, albeit without the benchmark of specific targets. An
unproductive distribution worker’s lack of productivity is easier to measure if
you have targets to measure against, but it was for the Judge to evaluate that
difference and set it against other similarities, and alongside other
differences, when applying the test.
96. The Judge’s overall conclusion that the terms were common in the statutory sense is not impeachable. He weighed the differences and the similarities, evaluated the arguments for and against commonality, and came down on the side of commonality on the facts and arguments presented to him. He was entitled to do so. The seventh ground of appeal also fails.
The “North hypothetical” grounds of appeal
97.
That brings me to the remaining three grounds of appeal. They all
concern what is called the “North hypothetical”, in the jargon of
the equal pay legal community. This refers to a hypothetical comparator as
discussed by Lord Slynn in British Coal Corporation v
Smith and
by Lady Hale JSC in Dumfries and Galloway
v
North. The issue it
addresses is that raised by section 1(6) of the EqPA: whether common
terms “are observed … for employees of the relevant classes”, i.e. the retail
staff and the distribution staff.
98.
As no retail staff work at distribution depots and no distribution staff
work in stores,
the Tribunal considered the hypothetical question (the “North
hypothetical”) whether, if distribution staff did their jobs at
store
locations, broadly similar terms would apply, such that it can be said that
common terms are observed at both types of establishment. The Judge answered
yes to that question.
99.
The eighth ground of this appeal is that that the Judge misdirected
himself when applying the North hypothetical test, and that he
misapplied the test. The ninth is that the conclusion he reached having
applied it - that common terms and conditions of employment were observed at
the stores
and depots for employees of the relevant classes, namely retail
staff and distribution staff - was perverse and not open to him on the
evidence.
100.
The further issue arising under section 79 of the EqA (i.e. from
1 October 2010 onwards) is whether that issue is still open, or whether as Asda
contends, comparison by reference to “classes” of employees is no longer
available to claimants from that date. The tenth and final ground of appeal is
that the Judge misinterpreted section 79 of the EqA by deciding that it
continued to permit comparison of terms by reference to the North
hypothetical test despite the absence of any reference to “classes” of
employees.
101.
In British Coal Corporation v
Smith, Lord Slynn said at
526F-G:
“What … has to be shown is that the male comparators at other establishments and at her [the claimant’s] establishment share common terms and conditions. If there are no such men at the claimant’s place of work then it has to be shown that like terms and conditions would apply if men were employed there in the particular jobs concerned.”
102.
In Dumfries and Galloway Council v
North, Lady Hale JSC
said at paragraph 12 that the “common terms and conditions” in section 1(6)
are:
“… on the one hand, the terms and conditions under which the male comparators are employed at different establishments from the women and, on the other hand, the terms and conditions under which those male comparators are or would be employed if they were employed at the same establishment as the women.”
103. And at paragraph 33, she accepted the submission set out earlier, at paragraph 30 (with the italics in the original), that:
“… the tribunal should not speculate about the adjustments to
the comparators’ present terms and conditions which might be made in the
unlikely event that they were transferred to the claimants’ workplace. The
hypothesis is that the comparators are transferred to do their present jobs
in a different location. The question is whether in that event, however
unlikely, they would remain employed on the same or broadly similar terms and conditions
to those applicable in their current place of work. As Lord Slynn had
recognised in British Coal Corpn v
Smith … the object of the legislation
was to allow comparisons to be made between workers who did not and never would
work in the same workplace. An example might be a manufacturing company, where
the (female) clerical workers worked in an office block, whereas the (male)
manufacturers worked in a factory.”
104.
I leave aside for the moment the tenth ground which raises a distinct
point of statutory construction. Mr Jeans, for Asda,
supported the eighth and
ninth grounds of appeal with the following main arguments (the quotes are from
his skeleton argument, with underlining in the original):
(1)
In law, the North hypothetical test can only be satisfied
if the “scope” or “reach” of distribution staff terms and retail
staff terms was such that they are observed at, respectively, stores
and
depots. Whereas in the public sector context, terms are often national and not
geographically grounded, here the anchoring of depot terms to the depot’s
physical location precludes the North hypothetical test being
satisfied.
(2)
While accepting that the question is a hypothetical one, Mr Jeans
nevertheless submitted that the Tribunal must not consider whether distribution
staff terms “might apply in stores
in an alternative reality …”;
instead, the Judge should have asked “do Distribution terms apply to those
doing depot jobs in
stores,
and do Retail terms apply to those doing
store
jobs
in depots?”
(3)
The Judge was also wrong to suppose that a hypothetical distribution
worker working in a store
would not be in physical proximity to retail staff
and customers. When applying the comparison, he should have rejected the
supposition of two separate operations, one retail, one distribution, on a
single site.
(4)
The Judge should have asked the question whether a distribution worker
doing his job at a store
would work on terms broadly similar to “actual depot
terms”; whereas the Judge asked the wrong question: whether “depot terms” would
“apply to depot workers in a hypothetical new depot”.
(5)
The Judge erred in law by finding that distribution workers would be
unwilling to see their terms extended to store
workers and would insist on
retaining their terms despite working at a
store
location and not a depot
location. There was no evidential foundation for the former proposition; as to
the latter one, the likely negotiating position of a group of workers is not
the focus of the test; rather, it is the geographical reach of the contractual
terms concerned.
(6)
As to the ninth ground (perversity): the Judge misunderstood the
evidence of Asda’s
two witnesses, Mr Stansfield who had responsibility for
distribution staff pay and conditions, and Ms Tatum who had that responsibility
in relation to retail staff. The challenge in cross-examination of those two
witnesses was limited to the issue of pay. The Judge had effectively rejected
their evidence and given insufficient reasons for doing so, amounting to
perversity. They were not challenged on the point that as regards terms other
than pay, neither group would have kept their terms on transfer from a depot to
a
store,
or
vice
versa.
(7)
Furthermore, the Judge took account of the irrelevant consideration that
a distribution worker would retain his terms if temporarily seconded to a
store,
e.g. to deal with an emergency such as a flood at nearby competitor
stores
causing a surge in customer demand, as, the Judge found, had occurred in
one particular instance in 2016. That was not challenged but was not relevant
and should have been disregarded.
(8)
On the evidence the Judge heard, the only conclusion open to him was
that the North hypothetical test could not be satisfied. The
terms were not geographically transferrable from a depot to a store
and
vice
versa.
The Judge was bound so to find and no other finding was available to him, such
that his finding was perverse and the EAT should substitute the finding he was
bound to make.
105.
Mr Short defended the Judge’s approach to the law on the North
hypothetical test and his findings of fact supporting his conclusion that the
test was satisfied here. He made the following main points in answer to Asda’s
submissions:
(1) It cannot be the law that both
sets of terms under consideration must actually be observed at both depots and
stores.
That would mean the exercise is not hypothetical at all and the
legislative purpose would be defeasible by the expedient of job segregation and
gender segregation.
(2) The hypothetical question was one of “fact” - i.e. what would have happened - for the Tribunal. The Judge applied his mind to the question correctly and answered it in a manner that was open to him on the facts as found. There was no error of law.
(3) The Judge was right or, at
least entitled, to assume that a depot job would not be done in physical
proximity to retail staff and customers. Ms Tatum had herself observed that a
depot worker would not drive his fork lift truck up and down the aisles of a
store.
To be employed at the “same establishment”, as the hypothesis requires,
is not the same thing as the depot worker actually having to work in a
store
face to face with the public. That is an unwarranted gloss since an
“establishment” can comprise a
store
and a depot at the same geographical
location.
(4) When applying the hypothetical test, the Judge was entitled to make the finding that depot staff would be unwilling to give up their more favourable terms, on the basis of an inherent likelihood rather than direct evidence; it is in the nature of the exercise that there will rarely be such direct evidence. A tribunal is entitled to bring to bear industrial experience and common sense to the issue.
(5) It is thus a misplaced
criticism to accuse the Tribunal of impermissible speculation about the likely
negotiating stance of the depot workers. By the same reasoning, it is
permissible and relevant for the Tribunal when applying the test to ask itself
what would happen if the distribution workers did their jobs at the same
establishment as a store;
and the likely attitude of those workers, applying
industrial common sense, is logically relevant to answering that question.
(6) The Judge did not err in taking
account of the real fact (as distinct from hypotheses) that temporarily
redeployed distribution workers had in the past worked at stores
without losing
their terms of employment. That fact is not in principle irrelevant and it was
for the Judge to give it such weight, if any, as he thought fit. He gave it
limited weight and that was not wrong.
(7) The Tribunal’s finding at
paragraph 117 was that, according to both Mr Stansfield and Ms Tatum,
distribution workers doing their job at a store
would be “paid the rate for the
job they were actually doing”; and that, as regards terms other than pay,
“Retail terms would apply to Distribution employees deployed to work in
stores
and Distribution terms to Retail employees deployed to work in depots”. Those
findings are unassailable and sufficient.
(8) The perversity challenge is a restatement of the same complaint but giving it a different label. It is merely a disagreement with the “factual”, i.e. hypothetical, finding made by the Judge. There is no flaw in the Judge’s treatment of the issue.
106.
In evaluating these arguments, I start by reminding myself what the Judge
said. He made findings relevant to this issue at paragraphs 111-127. He noted
that there was evidence of temporary secondment of distribution workers to
stores,
without any change to their terms. He noted that concern was expressed
within
Asda
about the potential implications for equal pay claims which this
might have, but rejected any suggestion that the separation was artificially
engineered to help provide a defence to any such claims.
107. He noted the difficulty arising from the unreality of supposing that retail jobs could be done alongside distribution jobs without some physical separation. He postulated some degree of separation within what could be called co-location within an establishment, such as “some small section of a Distribution centre being given over to a small retail outlet”.
108. The Judge then recorded the evidence of Mr Stansfield and Ms Tatum on the issue, at paragraph 117:
“Both … were asked in evidence what would be the position in the
event of Distribution employees, however unlikely that might be, performing
Distribution work in stores.
Both clearly answered that if the Distribution
employees were carrying out Distribution work they would be paid the rate for
the job they were actually doing. … Both witnesses also maintained their primary
position that Retail terms would apply to Distribution employees deployed to
work in
stores
and Distribution terms to Retail employees deployed to work in
depots.”
109.
I accept Mr Short’s submission that the last sentence must, to make
sense of the paragraph, be taken to refer to terms other than pay. That
interpretation is also consistent with the fact that his challenge in
cross-examination of Mr Stansfield and Ms Tatum was limited to pay, and did not
extend to other terms and conditions. Mr Jeans referred me to the written
witness statements of Mr Stansfield and Ms Tatum dealing with this point. In
footnote 178 in Asda’s
skeleton, he submitted that the Judge may have
misunderstood their oral evidence. I was not persuaded that the Judge
misunderstood the evidence on that or any other point.
110.
The Judge’s reasoning and conclusion are found at paragraphs 218-242 in
his Decision. After summarising the parties’ submissions, he gave his reasons
for preferring the Claimants’ arguments. He rejected Asda’s
argument that
weight should be attached to the proposition that a worker moving from one
depot to another would take the new depot terms, each depot’s terms being
separate and specific to it. He rejected the suggestion that distribution
workers doing their jobs at a
store
location should be taken to be working face
to face with the public.
111.
He accepted that temporary redeployments from depots to stores,
and the
retention of depot terms during the period of secondment, is “not properly
comparable”, though it “provides some slight support for the claimants’ case”
(paragraph 240). He attached greater weight to what Mr Jeans called the
speculation that distribution staff enjoy more favourable terms and (paragraph
241):
“… it is inherently unlikely that depot workers would be willing
to see those extended to Retail employees if hypothetical relocation of Retail
employees occurred in that direction and equally unlikely that depot workers
would be willing to give up their terms if there were hypothetical relocation
of them into stores.”
112. He also accepted (paragraph 242) that weight could be attached to the point that there is “significant similarity” between parts of the two sets of terms and that these would be “maintained in the hypothetical situation”, whether or not they were sufficient to amount to common terms generally.
113.
I do not accept that the Judge should have adopted Asda’s
proposition
that the North hypothetical test cannot be satisfied unless terms
are actually observed across establishments. That is to deprive the test of
its hypothetical character, as Mr Short pointed out. Once again, it is no
answer for
Asda
without more to show that, as things stand, depot terms are
tied to specific depots. The Judge had to consider whether that would still be
the case if the workers at a particular depot were to move away from their
depot and work at a
store.
114.
I have no difficulty with the Judge’s treatment of the hypothetical
co-located depot and store
premises. Many establishments accommodate more than
one type of activity. They do not have to be all mixed up together. In the
local authority cases, you do not have to apply the test by imagining the
comparator gardener watering plants in the classroom alongside the claimant
teaching assistant. The hypothetical gardener can tend the plants outside
while the children learn inside and the catering staff prepare the lunch in the
kitchens, physically separated from each other and all within the same
establishment.
115.
Mr Jeans was unhappy with the Judge taking account both of direct
evidence and indirect evidence on this issue. He criticised the Judge for
taking account of certain direct evidence, namely of temporary redeployment.
It was irrelevant, he argued. I reject that. The evidence of temporary
redeployment was potentially probative but the Judge was careful to attach only
very
limited weight to it. It was not irrelevant in principle.
116.
The criticism that the Judge engaged in speculation when considering the
probabilities of what would have happened, is in my judgment equally
misplaced. The Judge had to decide the hypothetical issue on such evidence,
direct and indirect, as he had. The indirect evidence comprised the entire
edifice of Asda’s
and Wal-Mart’s governance systems and the history of
collective bargaining and the setting of terms. More narrowly, it included the
existence of differentials and the GMB’s success in securing recognition.
Indeed, there was evidence in one of the emails I and the Judge were shown
(dated 20 January 2010), of the shop workers’ union (USDAW) being regarded by
Asda
as a lesser force to contend with than the GMB.
117. I do not think the Judge was required to abjure what he clearly regarded as a sensible assessment of the probabilities, applying industrial common sense. Speculation is merely a pejorative term to describe the task the Judge was required to carry out. Hypothesis would be a more generous term. The Judge’s treatment of the hypothetical comparator exercise was not in my judgment flawed by error of law or perversity. The eighth and ninth grounds therefore do not succeed.
118.
I come to the tenth and final ground, which concerns the period from 1
October 2010 when section 79 of the EqA entered into force. Mr Jeans
submitted that section 79 had repealed the North hypothetical
test; there was no repetition of the reference in section 1(6) to “classes” of
employees. The Judge disagreed with the submission that the law had changed.
In support of this ground of appeal, Asda’s
main points were:
(1) Under section 79(2) and (4)(c), “A” may only compare herself with “B”, where they work at different establishments, if “common terms apply at the establishments (either generally or as between A and B)”. The EqA is a reforming statute as well as a consolidating statute. Parliament must be taken to have deliberately omitted the reference to “classes” of employees which is the foundation for the North hypothetical jurisprudence expounded in the British Coal and Dumfries and Galloway cases.
(2) The comparison is now, therefore, restricted to a comparison between A’s terms and B’s terms. They must now therefore share the same broad package of terms, even if that package does not apply “generally”, i.e. to all or most other workers at those establishments. In the circumstances mentioned by Lord Slynn and Lady Hale JSC, the comparison is no longer permitted.
(3)
That view
is supported by the authors of the Incomes Data Services
(“IDS”) Handbook entitled Equal Pay, published in August 2011, who there
drew attention to the changed wording and commented that “section 79(4) has the
effect that a situation highlighted by the British Coal analysis
is no longer covered by the new law …” and that “the scope for showing ‘same
employment’ where claimant and comparator are employed at different
establishments has been narrowed”.
(4) The government’s explanatory notes accompanying the Equality Bill, do not shed light on the issue one way or the other, contrary to the position of the claimants. A rectifying construction along Inco Europe lines is not possible as the stringent conditions required for such a construction to be adopted are not met.
(5)
The new wording and corresponding new law did cut down the rights of
claimants but has the virtue
of simplicity and avoidance of the need to address
difficult hypothetical questions. It meets complaints that the wording of the
former section 1(6) was opaque and difficult to apply.
119. Mr Short, for the Claimants, supported the Judge’s reasoning and conclusions, offering the following riposte on this ground of appeal:
(1)
A purposive construction of section 79 is needed to avoid licensing sex
discrimination by job segregation, just as its predecessor has repeatedly been
given a purposive construction in cases from O’Brien v
Sim-Chem Ltd
[1980] ICR 573 HL, per Lord Russell at 580F; to Pickstone
v
Freemans plc
[1989] 1 AC 66, per Lord Keith at 111F-112E; to Redcar and Cleveland BC
v
Bainbridge [2007] IRLR 984, per Maurice Kay LJ at paragraph 22; to Dumfries
and Galloway per Lady Hale JSC at paragraph 34.
(2)
Article 141 of the TEC and subsequently article 157 of the TFEU
both contained express reference to equal value
as well as equal work,
clarifying, as explained in case law interpreting article 119 of the Treaty
of Rome, what was already inherent in article 119. The principle of equal
pay “is one of the foundations of the Community and … article 119 creates
rights for individuals which the national courts must safeguard” (Coloroll
Pension Trustees Ltd
v
Russell [1995] ICR 179 ECJ, at paragraph 26).
(3)
EU law is supreme in this country, as Lord Denning MR explained in Macarthys
Ltd v
Smith at 692F-H. In similar
vein,
Lord Lowry CJ in Halsey
v
Fair Employment Agency [1989] IRLR 106, at paragraph 16, emphasised
the corresponding importance of construing, if possible, domestic statutory
provisions consistently with article 119; and the principle that article 119
confers an independent right against the employer where national equal pay
legislation falls short of what article 119 requires.
(4)
If that is not possible, then the statutory provision must be
disapplied: per Lady Hale JSC in Dumfries and Galloway, paragraph
41. While that should be done if necessary, here it is unnecessary because, as
she observed earlier in her judgment, at paragraph 3, the provisions in the EqA
are “intended to be of equivalent effect” to those in the EqPA which
they replaced. It follows that the analysis in British Coal v
Smith
and her own analysis in Dumfries and Galloway still holds good.
(5)
The authors of the IDS Handbook extract relied on by Asda
did not opine
that the change of wording necessarily reflected a change in substantive law;
they merely posited that it could do as a matter of language and left open
“whether it reflects an intention to restrict the circumstances in which
comparison may be made, or if it is merely the result of infelicitous
drafting”.
(6)
No violence
is done to the language of section 79 of the EqA if
Asda’s
retrograde and literalist construction is rejected by reading into
section 79(4)(c) the proposition derived from section 1(6) of the EqPA that
the comparator “B” may be a hypothetical worker rather than an actual person.
(7) Acknowledging in the usual way, in line with high authority, the caution that must be exercised when looking at explanatory notes accompanying a Bill or Act of Parliament, it is striking that in this case the notes commenting on section 79 (at paragraphs 275-281), while not explicitly mentioning preservation of the North hypothetical test, say nothing about changing the substantive law and assert that article 157, “which has direct effect, will ensure that existing case law on the breadth of possible comparisons is carried forward”.
120. I now consider these rival contentions. The Judge below reached the conclusion that the law had not changed, on two alternative bases. The first (paragraph 251) was that there was “no suggestion at the time of the enactment of the EA 2010 that any change in the law was contended for or was intended by Parliament”; and that the elimination of the reference to “classes” of employees was probably to achieve consistency of language throughout the statute where “A” and “B” are used to denote claimant and comparator respectively.
121. He also regarded a narrowing of claimants’ rights of comparison as unlikely in the light of the EU law jurisprudence, which recognised comparisons across establishments and without a common employer. That, he reasoned, also pointed in the direction of a purposive construction of section 79 in harmony with that of the former section 1(6) of the EqPA (paragraph 252).
122.
In the alternative, he held that if Asda’s
construction of section 79
were correct, it would be inconsistent with the directly effective right under
article 157 of the TFEU and to the extent that it narrowed the scope of
the former section 1(6) by excluding the North hypothetical, it
would have to be disapplied (paragraphs 254-256).
123. Care must be exercised in approaching this issue of statutory construction. No reference was made to any Hansard materials, either before me or below. The government’s explanatory notes are not an authoritative source of interpretation. It is undeniable that the plain wording of the statute no longer covers the North hypothetical case and I accept Mr Jeans’ submission that the requirements for an Inco Europe rectifying construction are not met.
124. Nevertheless, on balance I have come to the conclusion that the Judge’s construction of section 79(4)(c) is correct. I think it is unrealistic to attribute to Parliament an intention to reduce the scope of the right to bring a claim for this particular type of sex discrimination. The history of discrimination law generally over the past half century is one of steady expansion into new fields such as age and sexual orientation.
125.
I cannot think of any other legislative initiative to reduce rights in
the field of discrimination law. None was cited to me. It would be surprising
if this were the solitary exception. In reaching this view,
I take comfort
from being in the exalted albeit obiter company of the incoming
President of the Supreme Court, who in Dumfries and Galloway at
paragraph 3 commented that the EqA “has now been repealed and replaced
by provisions in the Equality Act 2010 which are intended to be of
equivalent effect”.
126.
I do not think the interpretation contended for by the Claimants strains
the language of the provision to the point where it would be characterised as a
rectifying construction, which may be adopted only in very
narrow circumstances
where there has been a clear drafting error. I think it is a slightly strained
and strongly purposive construction arising from the need to read section 79 in
its proper historical context and in line with the codifying function of the EqA
and the use of simple language in it.
127. For those reasons, I agree with the Judge. I think the function of section 79 was consolidation rather than reform and I read 79(4)(c) as bearing the meaning that comparison is permitted where “common terms apply or would apply at the establishments (either generally or as between A and B (or B’s hypothetical equivalent))”.
128.
For completeness, I add two further points. The first is that I do not
find the explanatory notes of much assistance either way and I do not base my
view
on them. They do not answer the question of interpretation of section 79
clearly one way or the other. I do note, though, that they are not
inconsistent with what I regard as the better
view
of its meaning.
129.
Secondly and finally, I have doubts about the alternative basis on which
the Judge decided the question of interpretation. I am, as already explained,
unconvinced that article 157 and its predecessors cover cases of hypothetical
comparison at all, at any rate without further community or national
implementing measures. The decision of the ECJ in Macarthys Ltd v Smith
at paragraphs 7, 14 and 15 is authority against the proposition that it does.
130. The Court of Appeal’s question 2(a) was whether the principle of equal pay for equal work in article 119 applies “where a worker can show that she receives less pay … than she would have received if she were a man doing equal work for the employer” (my emphasis). The ECJ answered the question by characterising the case of what it called a “hypothetical male worker” as “indirect and disguised discrimination” requiring “comparative studies of entire branches of industry”. Unless EU law has changed since then, hypothetical comparisons are thus outside, at least, the direct effect of article 119, now article 157.
131. The decision of Elias J (as he then was) in the Walton Centre for Neurology case is additional domestic authority against the proposition that what is now article 157 embraces hypothetical comparisons: see his explanation of Macarthys Ltd at paragraphs 20-25. I therefore do not base my interpretation of section 79 on the Judge’s alternative reasoning. For the reasons already given, and not that reason, the tenth ground of appeal does not succeed.
Conclusion
132. It follows that the appeal must be dismissed and the Decision of the Employment Judge upheld. The Claimants can compare themselves with their chosen comparators for the purposes of their equal pay claims.