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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> MFI UK Ltd v Bradley & Ors [2003] UKEAT 1125_02_2107 (21 July 2003)
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Cite as: [2003] UKEAT 1125_2_2107, [2003] UKEAT 1125_02_2107

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BAILII case number: [2003] UKEAT 1125_02_2107
Appeal No. EAT/1125/02

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
             At the Tribunal
             On 6 May 2003
             Judgment delivered on 21 July 2003

Before

THE HONOURABLE MR JUSTICE WALL

MS S R CORBY

MR J C SHRIGLEY



MFI UK LIMITED APPELLANT

MRS R S BRADLEY AND OTHERS RESPONDENT


Transcript of Proceedings

JUDGMENT

Revised


    APPEARANCES

     

    For the Appellant MR K BRYANT
    (of Counsel)
    Instructed by:
    Messrs Silks
    Solicitors
    Barclays Bank Chambers
    27 Birmingham Street
    Oldbury B69 4EZ
    For the Respondents MR H MENON
    (of Counsel)
    Instructed by:
    Messrs Russell Jones & Walker
    Solicitors
    4th Floor General Buildings
    18 - 20 Grey Street
    Newcastle Upon Tyne
    NE1 6AE


     

    THE HONOURABLE MR JUSTICE WALL

  1. In this appeal, the Respondent to the proceedings before the Employment Tribunal, MFI UK Ltd (which we will call "the Appellant") appeals against the decision of the Employment Tribunal sitting at Thornaby on Tees on 9 & 10 September 2002, and promulgated on 20 September 2002.
  2. The Applicants before the Tribunal were 16 employees of the Appellant, 11 of whom were women and 5 of whom were men. As the positions of the 11 women applicants were identical, the claim of the first, Mrs R S Bradley, was taken as representative. The Tribunal, however, dealt only with the cases of the 11 women. It described the claims by the male applicants as "somewhat more complicated" and adjourned them for further argument in the light of its decision relating to the 11 women and any action taken by the Appellant pursuant to that decision. This appeal, accordingly, relates only to the Tribunal's decision in relation to the 11 women.
  3. The unanimous decision of the Tribunal was that the claims of the 11 women applicants of unlawful indirect sex discrimination contrary to section 1 of the Sex Discrimination Act 1975 (the 1975 Act) were well founded. The discrimination found was the making of selective `disturbance payments to a group of employees who changed their shift pattern, from which the 11 women were excluded and which they asserted was to the detriment of a considerably larger proportion of women than men. The case was argued only under the 1975 Act, and we have dealt with the appeal on the basis of the arguments which were presented to the Tribunal and to us. Self-evidently, we say nothing about the men's claims.
  4. The facts

  5. The essential facts are not in dispute and we take them from the Tribunal's reasons. The Appellant is a well-known manufacturer of furniture, which it sells through its retail shops. All 16 Applicants worked at the Appellant's site at Stockton on Tees. All worked in the PVC and laminates section of the factory. Initially, this section of the factory operated 5 days each week. In March 2001, however, the Appellant realised that it needed to increase its production to meet an increase in orders. In order to do this, the Appellant decided to introduce a 24-hour, 7-day operation in the press and glue areas of the PVC and laminates section. This 7 day working came into effect in August 2001.
  6. The Tribunal found that this change affected approximately 161 people, of whom 150 were men and 11 were women. The shift pattern proposed by the Appellant was designated 3-2-2, that is to say 3 morning shifts, followed by 2 afternoon shifts, followed by 2 night shifts followed by 2 days off – each shift lasting 8 hours. There is no suggestion in the evidence that the change was more difficult for the 11 women than the 150 men, or that it affected them differently.
  7. The 161 employees whom the proposals affected were given 90 days' notice of the change, and consultations were begun by the Appellant with the recognised union, the TGWU. The Appellant needed to introduce the changes quickly. Discussions took place with the work's council. It rapidly became clear during the course of the consultation with those affected, that the proposal to introduce the 3-2-2 shift system was deeply unpopular.
  8. As a consequence, the general manager of the Stockton on Tees site, Mr Williams, was asked by the work's council to recognise in financial terms the upheaval caused by the implementation of an unpopular system. Mr Williams decided to make a discretionary payment of £280 to each person affected. That payment, the Tribunal found, followed a request by the work's council, and was made in the light of the difficulties encountered during the consultation. It was also motivated by the Appellant's anxiety to implement quickly changes which were proving unpopular.
  9. The Tribunal found that the first payments were made in August 2001. It also appears, that a further 43 men (but no women) moved on to the new shift pattern, and were given the discretionary payment in January 2002.
  10. In summary, therefore, the Tribunal found that 193 men and 11 women received a payment of £280 to change from a fixed 5-day shift system to a 7-day continental 3-2-2 system. Whilst it is not clear to us where the additional 43 men came from (since the Tribunal found that only 161 people were from the press and glue areas of the PVC and laminate section were affected) we work on the figures found by the Tribunal namely that 204 people received the £280 extra payment, of whom 193 were men and 11 women.
  11. At the same time, negotiations were taking place with workers in another of the Appellant's factories at Howden near Hull. As a result of what had been agreed at that factory, Mr Williams wrote to the staff at Stockton who were working on the 7- day shift system, telling them that he had been authorised to offer them a move to a 3 days on/3 days off 12 hour rotating shift system. This occurred on 20 November 2001.
  12. The proposal for the 3 days on/3 days off shift pattern was designed to include everyone in the PVC and laminate section of the Stockton factory. It was later changed to a 12 hour  4 days on/4 days off system. All the staff in the PVC and laminate sections, including those who had not moved on to the 3-2-2 shift pattern and who had not received a payment, were asked to vote on the new system. Of those asked to vote, a large majority (97.4%) were in favour. The choice they were given was whether they went on to a 7-day 3-2-2 system or a 7-day, 4 days on/4 days off system. They were not given the option of remaining on their existing 5-day shift pattern.
  13. The Tribunal found that the new system for those not already on the 3-2-2 system involved significant disruption. They moved from 5-day working to 7-day working. They moved from a fixed 8 hour shift to a shift pattern which involved working 2 day shifts followed by 2 night shifts. Although all the employees agreed to change to the new system they did so because it was the lesser of two evils. Those applicants who gave evidence to the Tribunal said they were under some pressure. One felt that if she had not agreed quickly to the new system then she might find herself no longer working with her colleagues, a factor which was important to her. Another felt that she might lose her job if she did not agree to the new system, particularly since she had a record of absence arising from health problems.
  14. The Appellant produced statistics of those on the payroll in October 2001 who did not receive a payment when moving to the 4 days on/4 days off system. These statistics that there were 145 such employees in the Stockton factory who changed directly from 5 day working to the new shift system of 4 days on/4 days off and who did not receive a payment of £280. Of these, 98 were men, and 47 were women. There was some doubt about these statistics, but the Tribunal considered it safer to rely on the Appellant's figures rather than those produced by the Applicants.
  15. The Appellant also produced statistics to show that 24-hour shift patterns had been introduced in all its other plants. At none of the other plants were any disturbance payments made. Thus, in the production facility at Runcorn, a shift pattern was introduced in January 2001 which affected 175 staff. Of these, 131 were men and 44 were women. At the maintenance facility at Runcorn, a new shift pattern was introduced in August 2001. This affected 20 men. At the Howden F8 facility the shift patterns were changed on 18 February, and 65 men were affected. At the Howden F5 production facility, changes were introduced on 18 February 2002, affecting 42 men and 6 women. At the Howden F8 facility, changes were introduced on 26 January 2002, affecting 18 men and at the Howden F5 facility changes were introduced in March 2002 affecting 22 men. Further changes were introduced in a facility at Carlton Street in Hull in August 2002, affecting 158 men and 2 women.
  16. The figures in paragraph 14 shows that in the Appellant's other plants a total of 506 employees changed from 5 day to 7 day working without a disturbance payment, of whom 454 were men and 52 were women. If we add in the total for Stockton, it seems that a total of 855 people in the Appellant's overall workforce were affected by the change from 5 day to 7 day working, of whom 745 were men and 110 were women. Of those, 204 moved from 5 day to 7 day working via the 3-2-2 structure and received a payment of £280. Of those 204, as we have already seen, 193 were men and 11 were women.
  17. We think it may be convenient at this point to identify all the figures in tabular form:
  18. Total Men Women
    Stockton workforce in total 349 291 58
    Workforce (excluding Stockton) 506 454 52
    Total workforce 855 745 110
    Total receiving £280 at Stockton 204 193 11
    Total not receiving £280 at Stockton 145 98 47
    Total of workforce not receiving £280 651 552 99

    Mrs Bradley's Claim

  19. In her form IT1, Mrs Bradley puts her case simply. She describes herself as a packer/assembler at the Appellant's premises at Stockton on Tees. She gives her basic wage as £275 per week, and she puts her case in the following way: -
  20. "I was told that I would need to go on to shifts. Other departments which went on shifts received a payment of £280. My department was refused this payment. The difference appears to be that those departments were mainly male. Whereas my department is mainly female……….
    I believe the company have sexually discriminated against the department in withholding the payment…….."

  21. From the Forms IT1 it is apparent that the compensatory payment of £280 represented approximately 1 week's wages.
  22. The legislation

  23. The relevant legislation for our purposes is section 1(2) and section 5(3) of the Sex Discrimination Act 1975 (the 1975 Act), as substituted by the Sex Discrimination (Indirect Discrimination and Burden of Proof) Regulations 2001. Section 1 (2) of the Act reads: -
  24. "In any circumstances relevant for the purposes of a provision to which this subsection applies, a person discriminates against a woman if -…..
    (b) he applies to her a provision, criterion or practice which he applies or would apply equally to a man but –
    (i) which is such that it would be to the detriment of a considerably larger proportion of women than of men,
    and
    (ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied,
    and
    (iii) which is to her detriment"

  25. Section 5, which is the interpretation section contains within it subsection 5(3) which reads as follows: -
  26. "A comparison of the cases of persons of different sex or marital status under… section 1(2)……. must be such that the relevant circumstances in the one case are the same, or not materially different, in the other."

    The Tribunal's Decision

  27. The Tribunal directed itself that the 1975 Act implemented the Equal Treatment Directive (76/207/EEC), and that the Tribunal was required to interpret the Act so far as is possible to give effect to the Directive. It then identified the following issues which had to be addressed: -
  28. "(a) Has the employer applied to the Applicant a provision, criterion or practice?
    (b) When deciding whether such a practice is to the detriment of a considerably larger proportion of women than of men, there may be several different pools available for consideration. The issue for the Tribunal is whether the pool is a relevant pool: - see Coker v Lord Chancellors Department [2001] IRLR 116;
    (c ) Has the employer shown that the practice is justifiable on grounds not related to sex? Whether a practice is justifiable requires an objective balance to be struck between the discriminatory effect of the practice and the reasonable needs of the person who applies it: - see Greater Manchester Police v Lea [1990] IRLR 372. If there is a prima facie discriminatory practice, then the employer must give clear and cogent reasons to justify it. The Tribunal must look at the matter objectively when dealing with the matter of justification: see Coker (supra)….. "

  29. The Tribunal decided firstly that, notwithstanding that the payment of £280 was made to a group of workers who initially moved on to a pattern of working which was later abandoned, it had to look at the move from 5-day working to 7-day working as a continuum. Accordingly, as a part of the change, the employers made disturbance payments only to some of those who changed. The Tribunal decided that the making of these payments was a "practice" within the meaning of section 1(2)(b) of the 1975 Act. It directed itself that if it held that the making of the disturbance payments in an allegedly discriminatory way was not a working practice, then it would not be giving effect to the Directive. No complaint is made about this direction.
  30. Having decided that there was a "practice", the Tribunal went on to ask itself whether or not the practice had a disproportionate impact on women. Critical to this argument was the definition of what has become known as "the pool" for the purposes of section 1(2)(b)(i) of the Act. In this respect the Tribunal accepted the argument put forward on behalf of the women applicants, and looked at the people who were not paid the disturbance payment at Stockton only. It put the matter in this way:
  31. We look at those people who were not paid the disturbance payment at Stockton. We agree with (counsel for the 11 women applicants) that it would be wholly inappropriate to take into account for the purposes of assessing disparate impact the non-payment to workers at (the Appellant's) other factories. No payments were made at any of these factories. There was no discriminatory practice in other factories. If the workers in other factories were included in the assessment, then the pool would not be the relevant pool.
  32. The Tribunal also agreed with the Claimants on the consequences once the "pool" was limited to employees at Stockton. There were a total of 291 men and 58 women at Stockton. Of the 58 women, 47 were not paid. That constituted 81%. Of the 291 men, 98 were not paid; that constituted 34%. It followed, the Tribunal found, that disturbance payments were made to a considerably larger proportion of women than of men, and that this was to their detriment.
  33. The Tribunal asked itself next whether the Appellant had justified the practice irrespective of the sex of the person to whom it was applied. In doing that, it balanced the discriminatory effect of the practice with the reasonable needs of the employer. The employer had argued that there was a very good reason for making the payment to those people who were moving to the 3-3-2 system. It accepted that the payments were made because the Appellant's proposal was unpopular. However, the Tribunal found that the payments were made by the Appellant as a sweetener to shorten the consultation process and to persuade the workers to accept the system and to implement it quickly.
  34. The Appellant had argued that it did not need to make the payment on the implementation of the 4 days on/4 days off shift system for two reasons. The first was that the staff had voted to accept the shift pattern; secondly the employer had plenty of time to implement the new proposals. The Tribunal approached the matter by asking the following question: having made the payment to a group of workers who were predominantly men, was the Appellant justified in not making the payment to a group of workers who were predominantly women? Since the only explanation offered was that the Appellant was able to implement the second change without the need to make the payment, the Tribunal did not consider that an adequate justification of the discriminatory practice had been made out. It was, accordingly, satisfied that the claims made by the female applicants were well founded.
  35. The grounds of appeal

  36. The Appellant takes two points in its notice of appeal. The first relates to the pool. It argues that the Tribunal should not have limited the pool to those workers working in the Appellant's Stockton on Tees site. The payment had been made to workers to reward or encourage them to accept the new 3-2-2 system. The pool should have been extended to all workers working in all of the Appellant's factories in which the £280 payment could have been made. It should not have been limited to the factory in which the payment was made.
  37. Secondly, the Tribunal had been wrong to reject the Appellant's alternative argument of justification. At the time it was made, the management of the Appellant believed that a payment was necessary in order to persuade workers to sign up. When later a new 4 days on/ 4 days off shift was proposed to all workers, the management did not deem it necessary any longer to persuade staff that was clearly justification on the grounds unrelated to sex.
  38. The Appellant submitted that the Tribunal had erred by applying the wrong test. It rejected the justification put forward seemingly on the grounds that the management could have made the payment anyway (in order to be fair after the event) to all staff. Whether justification was valid or not must be determined at the time of the decision to make the payment to some staff and later not to make the payment to other staff. It must also be considered in the light of what the operational reasons for the decisions were, and a defence of justification should not fail because a Tribunal believes that unnecessary payments should be made to all staff in order to be fair to each.
  39. The Notice of Appeal adds a third Meek v City of Birmingham District Council ground namely that the Tribunal failed adequately to set out its reasons for making the findings it makes in relation to the pool and justifications.
  40. The argument for the Appellant

  41. The grounds in the Notice were skilfully developed in argument by Mr Keith Bryant for the Appellant. He submitted, firstly, that it was wrong for the Tribunal to discount even the possibility that a pool including employees at other factories could be a relevant pool. By excluding entirely from its deliberations even the possibility that a wider pool may also be a relevant pool, the Tribunal, he submitted, erred in law.
  42. Secondly, Mr. Bryant argued that the Tribunal gave no proper or logical reasons for excluding the possibility of a wider relevant pool. The reasons which it did give were, he submitted, themselves flawed. The first reason was that no payment had been made at any other factory. Given that the required comparison for determining whether or not there was a disproportionate impact was between areas of the Appellant's business where payments had been made and areas where they had not, by definition, he argued, any pool would have to include areas where payments had not been made. The Tribunal's reasoning would also be apt to exclude areas of the Stockton factory where payments had not been made. That, he submitted, clearly could not be right.
  43. The second reason the Tribunal had given was that "there was no discriminatory practice in the other factories". That, Mr. Bryant submitted, entirely prejudged the issues for determination by the Tribunal and could not properly be relied upon to support the restricted pool. Accordingly, he argued, either the Tribunal had relied upon flawed reasoning in restricting the pool; alternatively, if it relied upon some other reason or reasons, it had failed to set out those reasons adequately, or at all.
  44. Finally in relation to the pool, Mr Bryant submitted that in any event the pool relied upon by the Tribunal was not an appropriate pool. Once an impugned requirement or condition (or in this case practice) has been defined, there is likely to be only one pool which serves to test its effect: - see the judgment of Sedley LJ in Allonby v Accrington and Rossendale College [2001] IRLR 364. It is generally a matter of logic to identify the pool. In this case, the common factor between the employees to be used for comparison was that they were subject to the imposition of a 7-day working pattern by the Appellant. In the circumstances, the proper comparison had to be between on the one hand those upon whom 7-day working was being imposed, and who had received a discretionary payment; and on the other hand those upon whom 7-day working was being imposed, but who had not received such a payment. To restrict the pool to a sub-set of those upon whom the shift change was being imposed was, he submitted, illogical and represented an error of law. In this regard, Mr Bryant relied upon Jones v University of Manchester [1993] IRLR 218 as cited in Lord Chancellor v Coker [2001] IRLR 116.
  45. The argument for the Applicants

  46. For the applicants, Mr Hari Menon relied upon the argument which had succeeded before the Tribunal, and on the Tribunal's reasoning. The relevant pool was the total number of men and women to whom the employer applied the provision, criteria or practice. The selection of the pool was a matter of logic. The Tribunal had correctly identified the pool as being the Stockton site at which the practice (the £280 payment) was applied. That practice had not been adopted at any of the Appellant's other sites. The assertion that the pool ought to be extended to its other sites where the payment £280 was not applied was illogical and contrary both to section 5(3) of the 1975 Act and the cited authorities. Accordingly, the Tribunal had been amply justified in selecting the pool as it did: it had not erred in law, and its conclusions could not be characterised as perverse. Likewise, its decision on justification was correct.
  47. Discussion and analysis: disproportionate impact

  48. The members of the EAT have not found this an altogether easy appeal. The first difficulty lies in the identification of the correct "pool". Selection of the pool is a matter for the Tribunal, and in any case there is likely – as here - to be more than one candidate for the designation of appropriate pool. Although Sedley LJ in Allonby states that the selection of the pool is a matter of logic and not of discretion and fact-finding, the question which nonetheless arises is whether or not the Tribunal can be said to have erred in law in selecting a pool limited to the factory at Stockton.
  49. We have not found this an altogether easy question. Mr. Bryant made a powerful case for the proposition that it was an error of law for the Tribunal to exclude consideration of the wider pool by ruling that it was "wholly inappropriate" to take into account the non-payment to employees at the Appellant's other factories. We also think Mr. Bryant has a point when he criticises the Tribunal for asserting (as part of the reasoning process in identifying the pool) that "there was no discriminatory practice in the other factories". The latter assertion plainly puts the cart before the horse and pre-judges the issue. The object of the pool exercise is to decide whether or not the Appellant has behaved in a way that is indirectly discriminatory: that process cannot be predicated on the premise that it had.
  50. That said, however, we have come to the conclusion that it cannot be said it was illogical for the Tribunal to limit the pool to the workforce in the factory where the practice was applied, and that furthermore the Tribunal cannot be said to have made an error of law in so doing. On this basis, of course, any indirect sexual discrimination established is limited to the female employees at Stockton. In other words, on the Tribunal's limited interpretation of the pool, it would not be possible – as the Appellant plainly fears – for workers in other factories to claim that they had been discriminated against on the basis of the payments to the Stockton workers.
  51. In any event, even if the pool was widened to comprise all those affected or capable of being affected by the act of the employer which is called in question, it seems to us that the point is academic. We say that because, when the wider pool is examined, a disproportionate impact remains. The statistics are straightforward. In the remaining factories or plants owned by the Appellants (excluding Stockton) 454 men and 52 women moved from 5-day working to 7-day 4:4:2 working without a compensatory payment. So in purely numerical terms, many more men did not receive the payment than women. Of the total workforce of 855, 651 (76%) received no payment. Of those 552 were men (64.56% of the workforce) and 99 were women (11.57% of the workforce).
  52. These figures do not, however, provide the information required by section 1(2)(b)(i) of the 1975 Act. As Ralph Gibson LJ sated in Jones v University of Manchester [1993] IRLR 218 at 226 (paragraph 47): -
  53. "Further, I do not accept that the relevant total is merely of those men and women who can comply with the requirement. The section refers not to the number of men and the number of women who can comply with the requirement but to the proportion of men and of women. That shows, in my judgment, that those men and those women who can comply with the requirement are to be considered as a proportion of another number, and that that number must be the relevant total of men and women to whom the requirement is or would be applied."

  54. If the case is examined in these terms, what emerges can, once again, be shown in tabular form. We follow the exercise undertaken by the Tribunal in relation to Stockton, and apply it to the whole workforce.
  55. 1) Stockton (as per the Tribunal's judgment)
    Men not paid % of men not paid Women not paid % of women
    98 ex 291 34% 47 ex 58 81%
    Result (Tribunal's finding) disproportionate impact
    (2) Total workforce
    Men not paid % of men not paid Women not paid % of women
    552 ex 745 74% 99 ex 110 90%

  56. In narrative form, these figures demonstrate that of the 745 men in the workforce, 193 (26%) received a payment, and 552 (74%) did not. Of the 110 women in the workforce, 11 (10%) received a payment and 99 (90%) did not. The difference between 74% and 90%, in our judgment, falls within the terms of section 1(2)(b)(i) and is thus affects a considerably larger proportion of women than of men.
  57. Accordingly, it seems to us, that whether one takes the narrow or wider pool, disproportionate impact would appear to be established on the figures.
  58. Justification

  59. On this part of the case we agree with Mr. Menon that the Appellant has failed to show that the Tribunal erred in law in rejecting the Appellant's arguments. Although we have already summarised the Tribunal's reasons in paragraphs 25 and 26 of this judgment, it is, we think, worth setting out exactly what the Tribunal said in paragraph 38 of its reasons: -
  60. 38. We have asked whether the respondent has justified the practice irrespective of the sex of the person to whom it is applied. In doing so we have balanced the discriminatory effect of the practice with the reasonable needs of the employer. The employer stays that there was a very good reason for making the payment to those people who were moving to the 3-3-2 system. We accept that the payments were made because the respondent's proposal was unpopular. The payment was made by the respondent as a sweetener to shorten the consultation process and to persuade the workers to accept the system and to implement it quickly. The respondent say (sic) that they did not need to make the payment on the implementation of the 4 on / 4 off shift system for two reasons. The first was that the staff had voted to accept the shift pattern and secondly the employer had plenty of time to implement the new proposals. We approach the matter in this way. Having made the payment to a group of workers who were predominantly men, was the respondent justified in not making the payment to a group of workers who were predominantly female? The only explanation offered is that the respondent was able to implement the second change without the need to make the payment. We do not consider that an adequate justification for the discriminatory practice.

  61. Mr. Menon pointed out that the Tribunal in paragraph 33(c) of the reasons gave itself a correct direction in law by reference to Greater Manchester Police v Lea [1990] IRLR 372 and Coker v Lord Chancellor's Department (supra). Mr. Menon further reminded us that it is not sufficient for the employer to contend that its objective were not discriminatory, or that the practice in question was "gender neutral" : - see Whiffen v Milham Ford Girls' School [2001] IRLR 468, paragraph 34; and that the onus was on the Appellant to give "clear and cogent" reasons for justifying the practice: see Coker v Lord Chancellor's Department (supra at paragraph 38 per Lord Johnston).
  62. We bear in mind that the initial payments of £280 were negotiated with the TGWU and the work's council, and we agree with Mr. Bryant that the Tribunal perhaps could have expressed itself more fully. The essential point, however, is that the Tribunal was in our view entitled to reject the explanation proffered by the Appellant that the payments were not being made to other women employees because it was no longer necessary to persuade the workforce to agree to the new shift system; and to hold on that basis that the Appellant had not justified the failure to make the payments. In our judgment the Tribunal's reasoning is sufficient and does not fall foul of the decision in Meek v Birmingham City Council [1987] IRLR 250.
  63. Conclusion

  64. In these circumstances, the appeal will be dismissed.


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