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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Council of the City of Sunderland v Brennan & Ors [2012] EWCA Civ 413 (03 April 2012) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2012/413.html Cite as: [2012] EWCA Civ 413, [2012] IRLR 507, [2012] Eq LR 480, [2012] ICR 1216, [2012] WLR(D) 113 |
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ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
(Mr Justice Underhill, Mr T Haywood and Mr B Gibbs)
Ref No: UKEAT/0241/09/CEA
Strand, London, WC2A 2LL |
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B e f o r e :
Vice President of the Court of Appeal, Civil Division
LORD JUSTICE RIMER
and
LORD JUSTICE TOMLINSON
____________________
COUNCIL OF THE CITY OF SUNDERLAND |
Appellant |
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- and - |
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Respondent |
____________________
Mr Robin Allen
QC and Mr Philip Engelman (instructed by Stefan Cross Solicitors Ltd) for the Respondent
Hearing date : 7, 8 March 2012
____________________
Crown Copyright ©
Lord Justice Maurice Kay :
Grounds of appeal
"should have been whether the Council has established a non-sex discriminatory reason for the pay differential. However, in the EAT's analysis, the next step is to go straight to the question of objective justification. This is contrary to the approach taken by the Court of Appeal in Armstrong No 1."
The law
"An equality clause falling within subsection (2) ..(b) ..above shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor –
(a) in the case of an equality clause falling within subsection (2) ..(b) above, must be a material difference between the woman's case and the man's case …"
This is the GMF defence.
"The scheme of the Act is that a rebuttable presumption of sex discrimination arises once the gender-based comparison shows that a woman, doing like work or work rated as equivalent or work of equal value to that of a man, is being paid or treated less favourably than the man. The variation between her contract and the man's contract is presumed to be due to the difference of sex. The burden passes to the employer to show that the explanation for the variation is not tainted with sex. In order to discharge this burden the employer must satisfy the tribunal on several matters. First, that the proffered explanation, or reason, is genuine, and not a sham or pretence. Second, that the less favourable treatment is due to this reason. The factor relied upon must be the cause of the disparity. In this regard, and in this sense, the factor must be a 'material' factor, that is, a significant and relevant factor. Third, that the reason is not 'the difference of sex'. This phrase is apt to embrace any form of sex discrimination, whether direct or indirect. Fourth, that the factor relied upon is … a 'material' difference, that is, a significant and relevant difference, between the woman's case and the man's case.
When section 1 is thus analysed, it is apparent that an employer who satisfies the third of these requirements is under no obligation to prove a 'good' reason for the pay disparity. In order to fulfil the third requirement he must prove the absence of sex discrimination, direct or indirect. If there is any element of sex discrimination, such as evidence that the difference in pay has a disparately adverse impact on women, the employer will be called upon to satisfy the tribunal that the difference in pay is objectively justifiable. But if the employer proves the absence of sex discrimination he is not obliged to justify the pay disparity." (Emphasis added).
"An employer who can prove that a difference in pay as between a man and a woman is due to a material factor which is not the difference of sex is protected by the defence contained in section 1(3) … In the Armstrong case, Arden and Buxton LJJ … took that to be axiomatic and consistent with what Lord Nicholls said in [Marshall]. I agree."
"Once disparate adverse impact has been established, the burden passes to the employer in respect of two issues. First, that the difference between the man's and the woman's contract is not discriminatory, in the sense of being attributable to a difference of gender. Second, if the employer cannot show that the difference in treatment was not attributable to a difference of gender he must then demonstrate that there was nonetheless an objective justification for the differences between the woman's and the man's contract."
"19… where significant statistics disclose an appreciable difference in pay between two jobs of equal value, one of which is carried out almost exclusively by women and the other predominantly by men, Article 119 of the Treaty requires the employer to show that that difference is based on objectively justified factors unrelated to any discrimination on grounds of sex.
…
23… the fact that the respective rates of pay of two jobs of equal value, one carried out almost exclusively by women and the other predominantly by men, were arrived at by collective bargaining processes which, although carried out by the same parties, are distinct, and, taken separately, have in themselves no discriminatory effect, is not sufficient objective justification for the difference in pay between those two jobs."
"… where the statistics show that the pay practice has produced an adverse impact on women over a long period and where the statistics are convincing, it will generally be difficult for an employer to show that the adverse impact had nothing to do with sex." (Paragraph 71).
Perversity
"It was clear that the Tribunal's reasoning was not based on any consideration of the honesty of the Council's witnesses or decision takers and that it had not found any intention deliberately to conceal the true reasons for the payment/non-payment of bonus. Rather, it found the explanation to be a sham simply because the relevant schemes no longer in fact rewarded productivity. That did not justify a finding of sham."
"[The Council's] evidence, stripped down to its bare essentials, was that by fixing the rate of output at certain performance levels …, management was able to deploy the requisite numbers of employees in order to fulfil the Council's contractual obligations. If the employees were in fact working at a lesser rate … then they would not have been able to fulfil those contractual obligations with their existing labour-force; they would need to deploy more employees and greater numbers of plant/vehicles. This did not happen. On the contrary, there was a reduction in numbers over the years."
Accordingly, the productivity link remained unbroken throughout the years covered by this part of the claimants' equal pay claim.
"… certain features were common to them all. In particular each of them had been created in the early 1970s and at that time had been the subject of measurement of performance by the [Council's] Work Study section. On the other hand, and most importantly: there was little if any monitoring and no further measurement whether in relation to performance or with regard to the effect of the scheme on productivity; increases in expected performance levels and/or decreases in numbers deployed appeared to be linked significantly to greater efficiency through increased mechanisation and new technology and/or the conversion of a sliding scale for the bonuses to a fixed percentage which occurred at a relatively early stage; at least since that event, there were at best very few occasions on which bonus payments had been withheld or reduced; from a fairly early stage each scheme operated a Task and Finish system which allowed all the bonus earners to leave work early at least on a Friday (and the refuse collectors on each day of the week) once the workload had been completed and notwithstanding that they also received a bonus; and the abolition of each bonus scheme, and thus the withdrawal of the alleged financial incentive, had no effect at all on performance levels. On a number of occasions during the Joint Problem Solving Meetings held in 2005 several senior officers of the [Council] … made comments which were recorded in the Minutes and which amounted to an acceptance that the bonus payments to the male workers were discriminatory: while those phrases had to be treated with some care, it was implicit in the stance being taken on behalf of the [Council] that there was an acceptance on its part that these schemes were no longer productivity-based incentives. Indeed, as we have made clear we concluded that not merely then but many years before and certainly before the period with which these issues were most concerned the bonus payments were seen by the workforce and management alike to be a fixed part of salary."
That passage, in a nutshell, demonstrates the rationale behind the ultimate conclusion that, although productivity was a significant consideration when the bonus schemes were introduced in the 1970s, by the late 1990s they had long ceased to have anything to do with productivity and were perceived as being and were a fixed part of salary.
"93. [a perversity appeal] ought only to succeed where an overwhelming case is made out that the employment tribunal reached a decision which no reasonable Tribunal, on a proper appreciation of the evidence and the law would have reached. Even in a case where the Appeal Tribunal has 'grave doubts' about the decision of the employment tribunal, it must proceed with 'great care': British Telecommunications plc v Sheridan [1990] IRLR 27 at paragraph 34.
94.Over the years there have been frequent attempts, consistently resisted by the Employment Appeal Tribunal, to present appeals on fact as questions of law. The technique sometimes employed is to trawl through the extended reasons of an employment tribunal, selecting adverse findings of fact on specific issues on which there was a conflict of oral evidence, and alleging, without adequate particulars, supporting material or even proper grounds, that these particular findings of fact are perverse and that therefore the overall decision is perverse. …
95.Inevitably there will from time to time be some cases in which an employment tribunal has unfortunately erred by misunderstanding the evidence, leading it to make a crucial finding of fact unsupported by evidence or contrary to uncontradicted evidence. In such cases the appeal will usually succeed. But no appeal on a question of law should be allowed to be turned into a rehearing of parts of the evidence by the Employment Appeal Tribunal. …"
The question will become: did the ET in the present case make findings which were erroneous in law by reason of perversity?
(1) Uncontradicted evidence
(2) Mr Charlton
"There was never any attempt on the part of the [Council] to assess the true value of the post in terms of the appropriate annual wage. … From the start, the view was taken that if at all possible the post should be filled by one of the [Council's] gardeners and furthermore that the salary of the post should be whatever the successful candidate was already receiving. Thus, although the role did not actually carry any bonus at all, it was treated as if it did so. … Mr Charlton … simply retained his entire remuneration package … no thought had been given to the assessment of the true and appropriate rate of pay for the job, to whether someone might wish to undertake a role at that level of pay even if it was less than they were currently receiving or to the measurement of the necessary task in order to apply a proper bonus scheme … that indicated that at least by the end of the 1990s management as well as the workforce viewed the so-called bonus payment as being part of the remuneration package and in effect part of the going rate for the job."
(3) Historical legacy
(4) Hartlepool Borough Council v Dolphin
"It is right that the Tribunal is not required to pass judgment on whether the scheme introduced by the respondent is a good scheme or a bad scheme, for its task simply is to see whether it is genuine. Were the schemes intended to and do they in fact achieve productivity improvements? (Emphasis added)"
(5) Conclusion on perversity
The Armstrong point
"… if the bonus schemes had been genuine, we would have found that they were indirectly discriminatory against women …"
"… for the reasons we have given, we came to the conclusion that the bonus schemes were not genuine and thus that they were sex-tainted." (Mr Reade's emphasis in his skeleton argument.)
"It is important not to lose sight of the purpose for which the question is being asked. The comparators were being paid more than the claimants for doing work which had been rated as being of the same value. That could only (so far as relevant for present purposes) be justified if the additional amount represented a reward for doing more than the basic work expected of them. The effect of the Tribunal's findings was that that was not the case. The fact that, as a matter of history, the level of work expected reflected what had once been regarded as exceptional does not mean that performance of the relevant tasks was exceptional during the relevant period or that that was what the bonus was being paid for."
I respectfully agree with that analysis.
In a passage based on the hypothesis that the bonus schemes were genuine and not a sham, the ET stated:
" … if the bonus schemes had been genuine, we would have found that they were indirectly discriminating against women but that justification had been established in relation to all claimants bar Ms Hennessey who was the only cleaner actually before us."
Conclusion
Lord Justice Rimer:
Lord Justice Tomlinson: