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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Sharp v Caledonia Group Services Ltd [2005] UKEAT 0041_05_0111 (1 November 2005)
URL: http://www.bailii.org/uk/cases/UKEAT/2005/0041_05_0111.html
Cite as: [2006] ICR 218, [2005] UKEAT 0041_05_0111, [2005] UKEAT 41_5_111, [2006] IRLR 4

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BAILII case number: [2005] UKEAT 0041_05_0111
Appeal No. UKEAT/0041/05

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
             At the Tribunal
             On 9 August 2005
             Judgment delivered on 1 November 2005

Before

HIS HONOUR JUDGE ANSELL

MRS R CHAPMAN

MRS L TINSLEY



MS A SHARP APPELLANT

CALEDONIA GROUP SERVICES LTD RESPONDENT


Transcript of Proceedings

JUDGMENT

© Copyright 2005


    APPEARANCES

     

    For the Appellant MR ROBIN ALLEN QC
    (Of Counsel) and
    MR DAMIAN McCARTHY
    (Of Counsel)
    Instructed by:
    Russell Jones & Walkers
    Swinton House
    324 Gray's Inn Road
    London WC1X 8DH

    For the Respondent MISS SUZANNE McKIE
    (Of Counsel)
    Instructed by:
    Fox Williams Solicitors
    10 Dominion Street
    London EC2M 2EE

    SUMMARY

    In an equal pay claim involving a presumption of direct discrimination the genuine material factor defence requires justification by objective criteria.

    .


     

    HIS HONOUR JUDGE ANSELL

  1. This an appeal from a judgment of a London (South) Employment Tribunal who following a hearing which took place in September 2004, in reasons promulgated to the parties on 16 November 2004 unanimously decided that the difference between the Appellant's pay and that of Mr Barnes was due to a genuine material factor which was not the difference in sex and thus the Appellant's complaint under s.1 of the Equal Pay Act was dismissed. The Appellant was also successful in her Sex Discrimination Act claim in respect of the Respondent's discretionary bonus scheme and the Respondent was ordered to pay the Appellant the sum of £5,000 for injury to feelings and adjourned the rest of her financial loss claim.
  2. This Appeal relates to the dismissal of the equal pay claim and this hearing takes place following permission granted at a preliminary hearing held on 18 April 2005 presided over by HHJ D Serota QC who gave permission for this Appeal to proceed on grounds numbered 1, 2 and 4 in the Appellant's Grounds of Appeal which were categorized by HHJ D Serota QC in paragraph 30 of his preliminary decision as relating "to the correctness of the decision in Fernandez". This relates to the decision of the Employment Appeal Tribunal in Parliamentary Commissioner for Administration v Fernandez [2004] IRLR 22 ("Fernandez") and the consideration of the correctness of that decision in the light of the earlier decision of the European Court of Justice in Brunnhofer v Bank Der Osterrichischen Postparkasse AG ("Brunnhofer") [2001] 1RLR 271. The headings of the three Grounds of Appeal were allowed through by the preliminary hearing were:
  3. (1) Failure to properly examine the material factor defence (failure to apply Brunnhofer and Barton).

    (2) Restrictive examination of the material factor defence

    (4) Failing to consider "pay" and proportionality

    Background Facts

  4. It will be necessary below to consider some of the procedural history of the Tribunal application which was presented on 16 August 2002. But at this stage we need only mention that in the course of the proceedings the Tribunal appointed an independent expert Mr Yeeles to consider the issue of whether the Appellant's work was of equal value to that of her fellow workers Mr Bennett and Mr Barnes, the chosen comparators, as at 1 March 2002, the date chosen for comparison. The expert concluded that as at 1 March 2002 the Claimant's work was not of equal value to that of Mr N. Bennett but was of equal value to that of Mr Barnes.
  5. Mr Barnes was first employed in October 1979 by the Respondent's predecessors – British and Commonwealth Holdings plc as a chauffeur to Lord Cayzer. In 1986 he became private secretary to Lord Cayzer who was then chairman of the company. The Cayzer family had a very substantial interest in both the Respondent and British and Commonwealth Holdings plc. From 1988 Mr Barnes became an employee of the Respondent's and continued to work as private secretary to Lord Cayzer although he also worked for Major White another of the directors, and in addition held the title of office manager, and in that capacity reported to Mr Charles Cayzer another executive director. Mr Barnes was effectively the personal assistant of Lord Cayzer often accompanying him on annual holidays and overseas trips. Mr Barnes continued in that capacity until the death of Lord Cayzer in 1999. After that time he continued to be office manager and secretary to Major White although the nature of his duties changed considerably. By the date of comparison, 1 March 2002, he was employed as office manager, working in an administrative capacity on a number of selected managerial, administrative and secretarial duties. The Tribunal found that his role and duties were very different to that of the Claimant. His salary in March 2002 was £40,000.
  6. The Appellant began working for the Respondent in March 1996 – initially as a temporary member of staff and on 13 May 1996 she accepted a permanent contract for the post of financial accountant taking over from her line manager in July 1996. As of March 2002 her salary was £35,250.
  7. The Tribunal's findings in relation to the differences in pay between the Appellant and Mr Barnes were set out in paragraph 14 of their decision, thus:
  8. 14. Until about 1997 Mr Barnes salary was set largely by Lord Cayzer. Although Lord Cayser could not give evidence, we accept that the significant salary which he earned was set with reference to the very personal nature of the relationship which he enjoyed with Lord and Lady Cayzer. Although Mr Barnes did not give evidence in person, the Claimant's knowledge of Mr Barnes dated from mid 1996 at the earliest. At that time Mr Barnes was on a salary significantly higher that her own and she has not seriously challenged the nature of his duties. We accept that at least until 1999 the difference in pay was entirely due to a general material factor which was not the difference of sex, namely the personal nature of the Claimant duties to the Chairman of the company. His duties could not be compared to those of office staff carrying out more traditional office based work. After Lord Cayzer's death the company continued to increase the Claimant's salary in line with inflation. Although the Claimant says that he should not have had these increases if he was simply being "red circled" we accept the evidence of Mr Cartwright that the management committee recognised that he was highly paid for the services that he did but considered that, in view of the history with the company and the special nature of the services he had carried out, it would be "inappropriate and unfair to reduce his salary after his years of long service".

    The Tribunal's conclusions on equal pay were set out in paragraph 56 to 58 namely:

    "56 . Equal Pay It was unsatisfactory that the Respondent had not, required Mr Barnes to give evidence and Mr McCarthy, rightly, made much of this. Nonetheless Mr Cartwright gave direct evidence of his understanding of the general nature of Mr Barnes duties which accords with the evidence In Mr Barnes witness statement. We have accepted this evidence. In considering whether the Respondent had made out a genuine material factor defence the issue was why the Respondent paid him more than the Claimant. To that extent, although the nature of Mr Barnes's duties is a factor in assessing the credibility of the Respondent's explanation, it is not for the Tribunal to assess how onerous or otherwise those duties were.
    57. Mr Barnes salary had been set by Lord Cayzer for most of the period of his employment with Caledonia, He was earning significantly more than the Claimant before she commenced working with the Respondent and we accept that the reason for this was the personal nature of his relationship with, and duties for, Lord Cayser. Although after 1999 these duties ceased we accept the evidence of Mr Cartwright that the board of directors decided, in the light of his historic role as confidante, assistant and companion to Lord Cayser that he should not have his salary reduced when the nature of his duties changed after Lord Cayzer's death. This was a genuine reason which had nothing to do with sex. On that basis no equality clause operated between the Claimant's contract and that of Mr Barnes.

    58. Given our conclusion above it is not necessary to consider at what stage the Claimant's work became of equal value to that of Mr Barnes or to deal with any remedy."

    Procedural History

  9. Before turning to the Grounds of Appeal it is necessary for us to set out briefly certain aspects of the procedural history of the case before the Tribunal. In her application to the Tribunal the Appellant complained that male staff in her office were paid on a higher scale and received greater benefits and bonuses than she did, indeed in paragraph 4 of her narrative she alleged that she had been informed by her payroll manager that male staff were paid on a higher scale than female staff members. She focused her complaints particularly on Mr A Bennett but also mentioned two male counterparts in subsidiary companies – Andy Bunn and David Blunn and also mentioned "the office manager". In further particulars that she filed on 22 November 2002 Mr Barnes was identified by name as the office manager. She set out his then current responsibilities and alleged that his role was far less senior than her own.
  10. By a Tribunal order of 30 April 2003 the Respondents were required to provide the Applicant by 14 May 2003 with further and better particulars of their genuine material factor defence. That information was provided in a letter dated 14 May 2003 from the Respondent's solicitors, Messrs Fox Williams. The letter set out in detail Mr Barnes' work and relationship with Lord Cayzer and that after Lord Cayzer's death in 1999 Mr Barnes continued as private secretary to Major Wyatt and to two employees, Mr Will Wyatt and Mr Jamie Cayzer Colvin as well as in his role as office manager. The letter continued:
  11. "although the management of Caledonia felt that Mr Barnes was being well paid for the job he was now doing, it viewed it as inappropriate and unfair to reduce his salary after his years of long service to Caledonia and Lord Cayzer. Accordingly, Mr Barnes' pay is very much a recognition of his past contribution to Lord Cayzer and Caledonia".

  12. By a further Tribunal order of 15 September 2003 the Tribunal chairman Mrs F Spencer ordered that the date for comparison by the independent expert of the Appellant's job and that of her comparators was to be 1 March 2002, being the last date at which the Appellant worked at the Respondent before she went on sick leave. It is appropriate to set out paragraph 3 of her reasons as follows:
  13. "3. The Tribunal notes that the Applicant's draft list of issues poses the question whether the Applicant "does" work of equal value with that of her comparators. No reference is made to past periods. No suggestion was made at the hearing on 30 April that the Applicant's job or that of the comparators had changed over time. The Tribunal notes that in paragraph 15 of the Originating Application dated 16 August 2002 the Applicant's case is simply that "in breach of section 1 of the Equal Pay Act 1970 the Respondent pay the Applicant less then her male work colleague, "If either party wishes to raise an issue that the work of the Applicant and/or that of her comparators has changed so significantly over the six years preceding the date of the originating application that a report by the expert as of 1st March 2002 will not determine the issue in respect of past periods, this issue should be raised without delay."

    .
  14. It appears from a letter dated 12 February 2004 sent by the Appellant's solicitors to the Employment Tribunal, that there had some discussion between the parties in relation to whether an earlier date was needed in relation to the comparator Mr Bennett. However, at a further directions hearing on 8 March 2004 attended by Mr McCarthy and Miss McKie it was ordered that:
  15. "for the avoidance of doubt the date of comparison for determining whether the job of the Applicant is of equal value to the jobs of Mr Barnes and/or Mr Bennett is 1 May 2002."

    Further the Tribunal ordered that the independent expert's report was to be available by 19 April 2004. We refer to the reasons given by the Tribunal on that occasion and in particular paragraph 2 which sets out the position thus:

    "2. One of the issues for the Tribunal to determine was whether there should be any change to the date of comparison of the respective roles for the purposes of the expert's report. This had been suggested in a letter from the Applicant's representatives of 12 February 2004 and clarification was sought by the independent expert. However at today's hearing Mr McCarthy accepted that the date should be 1 March 2002. Mr Yeeles commented that, in the event that he was to find that the Applicant's job was of equal value to. that of Mr Barnes as at 1 March 2002, issues would arise as to how far back any equalisation of pay would be valid given the Respondent's case that Mr. Barnes' role had been diminishing over time. However, the Tribunal took the view that this was an issue which went to remedy and would be determined by the Tribunal in the light of whatever evidence was available to it at the time. It would not be appropriate in this case to require the independent expert to look at a number of unspecified dates for the purpose of making his comparison."

    Grounds of Appeal

  16. We turn to Grounds of Appeal as advanced by Mr Allen QC which arise from the Tribunal's interpretation of s.1(3) of the Equal Pay Act 1970 – the genuine material factor defence. Section 1 of the Act provides that:
  17. "1. Requirement of equal treatment for men and women in same employment

    1(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one.

    1(2) An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed (the 'woman's contract'), and has the effect that –
    (a) where the woman is employed on like work with a man in the same employment-
    (i) if (apart from the equality clause) any term of the woman's contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and
    (ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed, the woman's contract shall be treated as including such a term;
    (b) where the woman is employed on work rated as equivalent with that of a man in the same employment-
    (i) if (apart from the equality clause) any term of the woman's contract determined by the rating of the work is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and
    (ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed and determined by the rating of the work, the woman's contract shall be treated as including such a term.
    (c) where a woman is employed on work which, not being work in relation to which paragraph (a)
    or (b) above applies, is, in terms of the demands made on her (for instance under such headings as effort, skill and decision), of equal value to that of a man in the same employment-
    (i) if (apart from the equality clause) any term of the woman's contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and
    (ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed, the woman's contract shall be treated as including such a term.
    1(3) An equality clause 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) (a) or (b) above, must be a material difference between the woman's case and the man's; and
    (b) in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference."

    It is not in dispute between the parties that s.1 involves a two stage process, firstly to assess whether the Appellant and her male comparator are doing either like work, work rated as equivalent or work of equal value which thereby gives rise to an equality clause; and the second stage whether it is determined that that equality clause should not operate by reason of the genuine material factor defence which requires the need to establish the variation in pay is genuinely due to a material factor which is not the difference of sex. The two issues raised in this case are firstly whether the historical inequality in pay arising out of the alleged different nature of duties between the Appellant and Mr Barnes can be used as a material factor and secondly whether the reasons put forward for the inequality have to be objectively justified irrespective of whether it is alleged that the inequality in pay arises from either direct or indirect discrimination.

  18. Turning to first ground Mr Allen QC criticizes the Tribunal's approach in paragraph 14 and 57 in concluding that what Mr Barnes did for Lord Cayzer, namely the personal nature of his duties for the chairman of the company which could not be compared to those of office staff, coupled with the Directors' wish to maintain his salary after his long years of service were relevant to the consideration of s.1(3). He contended that the alleged different nature of the work itself cannot amount to a material factor defence since s.1(3) can only be applied once the selfsame work has been assessed to be of equal value. In particular, he criticized the Tribunal's findings that at least until 1999, the difference in pay was entirely due to a genuine material factor when no assessment had been made of the work at that time as to whether or not it was of equal value.
  19. Further Mr Allen QC argued that because of the tribunal's interlocutory order of 8 March 2004 which provided that issues in relation to how far back an equalization of pay would go were matters which went to the remedy's decision, it was not appropriate for the tribunal within the consideration of the genuine material factor to consider the extent to which there had been a diminution in the work done by Mr Barnes. He argued that the tribunal were in effect doing that which they had said would not do, namely to look at the diminution as a basis for the rationale of the material factor defence and drawing their own conclusions with regard to the inequality of the work certainly up to 1999 without the benefit of any independent expert input. He contended that the tribunal, by declining to decide at what stage the Appellant's work and that of Mr Barnes became of equal value, they had failed to carry out the essential first step required by s.1(3) which is to identify the "variation" to which the material factor defence was to provide an explanation. In other words if the Appellant's work was of equal value to that of Mr Barnes at the time that he was working for Lord Cayzer, it was irrelevant to the question whether there is a material factor of what work he was doing. In such case, he contended that the work he did for Lord Cayzer or that his wages were maintained after Lord Cayzer's death were irrelevant to s.1(3). It seemed to us that he was contending that it was necessary for the tribunal to firstly assess when the Appellant's work and that of Mr Barnes became of equal value in order that one could consider what factors were then potentially available to justify the inequality in pay.
  20. In response Miss McKie firstly argued that this ground now being advance by Mr Allen was not the subject of a complaint within the Notice of Appeal or alternatively did not survive the preliminary hearing before HHJ Serota QC. As we indicated above, Judge Serota allowed through Grounds 1, 2 and 4, describing them generically as relating to the correctness of the Fernandez decision. Ground 2 referred in very general terms to the tribunal's restrictive examination of the material factor defence, and Ground 4 related to the Tribunal's failure to consider pay and proportionality. The ground which appears to be closest to that which is now being advanced by Mr Allen was a ground that was not allowed through by Judge Serota namely Ground 5 headed "Personal Duties cannot form the basis of a Material Fact of Defence"
  21. Further she contended that the date of comparison namely the 1 March 2002 was confirmed and accepted by Mr McCarthy at the Directions Hearing of 8 March 2004 at a time when he well knew the nature of the defence that was being advanced in relation to the history of Mr Barnes' employment that had been set out some 10 months previously in Fox Williams' letter of 14 May 2003. She also referred us to Mr McCarthy's closing submissions before the Employment Tribunal where from paragraph 41 onwards Mr McCarthy dealt with the issue of the inequality of pay. His complaints in the main related to the vagueness of the case being advanced by the employers in relation to Mr Barnes' historic role and his personal duties for the Cayzer family together with the lack of documentation relating to Mr Barnes' level of salary being discussed and agreed. He did not submit that these matters were incapable of being raised as part of the defence. In any event she contended that there was no error in the Tribunal's approach with regard to the issue of the history of the two employees, contending that even where work has been assessed of equal value it was open to a tribunal to consider the respective duties that each employee had to perform, according to the perception of the employer, together with the history of the employment in relation to each employee that caused the employers to come to the conclusion that they were justified in treating the two employees differently.
  22. We agree with the submissions advanced by Miss McKie. Firstly, we are not satisfied that Mr Allen's current objections to the tribunal's approach in using their perceptions as to the difference in duties coupled with the history of inequality between the two workers which had been raised by the Respondents' quite clearly as part of their defence, had been raised below by Mr McCarthy on behalf of the Appellant, as part of his argument submissions concerning the genuine material factor defence. In particular he had accepted that the relevant date for the purposes of comparing the respective roles was 1 March 2002 and had not argued for the purposes of the merits hearing that the tribunal would have to conduct a similar comparison throughout the period when the Appellant and Mr Barnes were employed together. It is of course a well-known principle that a new point of law cannot be raised before us that had not been raised below, save in very exceptional circumstances. See Kumchyk v Derbyshire Country Council [1978] ICR 1116. Secondly, insofar as the issue had been raised in the Notice of Appeal, and we are not satisfied that it was raised in the form that is now being advanced, it only appears in Ground 5 which is a ground that was not allowed to proceed following the preliminary hearing. We repeat that the perception of that preliminary hearing set out in paragraph 30 of Judge Serota's decision was that the arguable points of appeal all related to the correctness of the decision in Fernandez. Finally, we are satisfied although we have not heard extensive and lengthy argument that the tribunal's approach was correct in relation to considering the historical difference in duties up to the death of Lord Cayzer and the employer's reasons for not equalizing pay thereafter. Whether those reasons were sufficient to discharge the burden on the employers in proving their defence is an issue which we shall consider further below when dealing with the main ground of appeal. We see no reason however why an employer's perception of a difference in duties set against the relevant history should not provide in principle some basis for consideration of the defence. Whether or not those reasons have to be objectively justified is an issue to which we now turn.
  23. Brunnhofer or Fernandez

  24. At the heart of this Appeal is the question whether an employer may succeed in a material factor defence by relying upon a factor which does not objectively justify the difference in pay between the employee and her comparator. Elizabeth Slade in the 17th edition of her excellent work "Tolley's Employment Handbook" states that this question "remains vexed" and points out "there is a marked difference in the approach taken to the scope of the defence at European and domestic levels". She suggests that the European approach requires that the difference in pay has to be objectively justified whereas the domestic approach is simply to require the employer to be able to account for the difference by reference to a factor which is material but is not the sex of the employee unless the factor relied upon by the employer is one which may itself indirectly discriminate against female employees, in which case the factor has to be objectively justified. Mr Allen QC submits that the European line of authorities culminating in Brunhoffer must be preferred over the English authorities which culminate in the Fernandez decision. He submitted that we were bound to follow a clear European decision in a discrimination case and that if we are not prepared so to do a reference should be made to the European Court of Justice.
  25. The tribunal's views on the law were set out in paragraph 45 of their decisions as follows:
  26. "45. The type of matters that could constitute a genuine material factor include, for example, higher qualification, longer service, and better productivity. A difference is material for these purposes if it is significant and relevant. The question here for the tribunal is whether the employer (upon whom the burden tests) has established a genuine reason which (a) explains and (b) causes the difference In pay. 1n accordance with the decision of the European Court of Justice "in Brunnhofer v Bank der Osterreichischen Postparkasse AG that reason or reasons should be objective, unrelated to any discrimination based on sex and in conformity with the principle of proportionality. It is not for us to consider what is or is not a fair wage or whether the comparator was overpaid and the Claimant underpaid. The issue is to determine whether or not the employer has acted for a genuine reason which is not tainted with sex."

    Although it will be seen that the tribunal mentioned Brunnhofer and spoke of objective reasons both parties have agreed before us that the overall impact of paragraph 45 taken with paragraph 57 has to follow the domestic approach and not seek objective justification.

    Domestic Authorities

  27. We firstly consider the English line of authorities. In North Yorkshire County Council v Radcliffe [1995] ICR 833 the applicants were female school catering assistants originally employed by the Respondent Council at National Joint Council Rates of pay and conditions. Their work which was almost exclusively carried out by females had been rated as of equal value to that of men employed by the council at various establishments. Following compulsory tendering the council declared some of the catering assistants redundant and dismissed them and re-employed them through the direct service organization at rates of pay that in the majority of cases were below Joint Council Rates. The House of Lords upheld the tribunal's conclusions that the council had not shown that the variation was generally due to a material factor other than the difference of sex. At page 839(D) Lord Slynn dealt with issues that had been raised in the case as to the relationship between s.1 of the Equal Pay Act 1970 and s.1 of the Sex Discrimination Act 1975 and he set out the position thus:
  28. "By section I (3) (as substituted):
    "An equality clause 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)(a) or (b) above, must be a material difference between the woman's case and the man's; and
    (b) in the case of an equality clause falling within subsection (2)(c)above, may be such a material difference."
    There has been much argument in this case as to the relationship between section I of the Act of 1970 and section I of the Act of 1975. The latter distinguishes between (a) a case where an employer on the ground of her sex treats a woman less favourably than he treats or would treat a man (section 1(1)(a», and (b) a case where the employer applies to a woman a requirement or condition which he applies or would apply equally to a man but which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it and which the employer cannot show to be justifiable irrespective of the sex of the person to whom it is applied and which is to the detriment of a woman because she cannot comply with it (section 1(1)(b». The first ((a» is commonly referred to as "direct" discrimination, the latter ((b» as "indirect" discrimination. It is submitted that this distinction must be introduced equally into the Act of 1970. For my part I do not accept that this is so. There is no provision in the Act of 1975 which expressly incorporates the distinction into the Act of 1970 even though Schedule I to the Act of 1975 incorporated a number of amendments into the Act of 1970 and even though Part II of that Schedule set out the Act of 1970 in full in its amended form.
    In my opinion the Act of 1970 must be interpreted in its amended form without bringing in the distinction between so-called "direct" and "indirect" discrimination. The relevant question under the Act of 1970 is whether equal treatment has been accorded to men and women employed on like work or for men and women employed on work rated as equivalent. Whether they are employed on work rated as equivalent depends on whether the woman's job and the man's job had been given an equal value in terms of the demand made on a worker under various headings on a study undertaken with a view to evaluating in those terms the jobs to be done by all or any of the employees in an undertaking (section 1 (5).
    In the present case it is plain that such evaluation was made and the women were found to be engaged on work rated as equivalent to work done by men. That is sufficient for the women to be entitled to a declaration by the industrial tribunal in their favour unless section 1 (3) of the Act as set out previously is satisfied.
    This was the question for the industrial tribunal to consider. By a majority they were satisfied that the council had failed to show that the variation between the applicants' contracts and those of their male comparators was due to a material factor which was not the difference of sex."

  29. In Tyldesley v TML Plastics Ltd [1996] IRLR 395 Mrs Tyldesley was paid less than a male comparator. The employer said the reason for this was that the comparator understood and was committed to the concept of total quality management. The tribunal had found that in relying on a s.1(3) defence the employer had to show, in addition to their being a variation genuinely due to a material factor which was not the difference in sex, the difference was objectively justified. The EAT (Mummery J presiding) disagreed and held that it was not necessary in order to establish the defence to show objective justification unless the factor relied on was one which affected a considerably higher proportion of women than men, so as to be indirectly discriminatory and thus tainted by sex discrimination. Thus, it followed that it was sufficient if the employer genuinely believed (even if mistaken and even if the belief was not reasonable) that the factor was material.
  30. Mummery J set out the position thus at page 3615 - 3624:
  31. "In this case, the tribunal appeared in the extended reasons to think that, in order to make out the defence under section 1 (3), it also had to be shown by the employer that there was an objective justification for the discrimination and that the employer was pursuing measures that corresponded to a real need and were appropriate and necessary to meet that need.
    This approach places an additional burden on the employer to establish the defence under section I (3) which is not expressly stated in the relevant statutory provisions. In our view, this is not the correct approach. It is not necessary under section I (3) for the employer to satisfy the test of "objective justification" to make out the defence. In our view, the legal position is as follows.
    (1) The Equal Pay Act 1970, article 119 of the E.C. Treaty (O.J. 1992 No. C.224) and the Equal Pay Directive (Council Directive (75/117/E.E.C.)) have as their purpose the elimination of sex discrimination, not that of achieving
    "fair wages." Their detailed provisions are to be construed in the light of that purpose.
    (2) A difference in pay explained by a factor not itself a factor of sex, or tainted by sex discrimination, should, in principle, constitute a valid defence.
    (3) The comment of the House of Lords in Rainey v. Greater Glasgow Health Board [1987] ICR 129, 145, that, in order to establish the defence under section 1 (3) of the Act of 1970, objective justification must be shown, applies only where, as on the facts of Rainey, the factor to be relied upon is one which affects a considerably higher proportion of women than men, so as to be indirectly discriminatory and thus tainted by sex discrimination, unless justified. The same observation may be made in relation to the comments of the Court of Justice in Jenkins v. Kingsgate (Clothing Productions) Ltd. (Case 96/80) [1981] ICR 592 and Enderby v. Frenchay Health Authority (Case C-127/92) [1994] ICR 112. Those were both cases where the factor relied upon was one which affected a considerably higher proportion of women than men and therefore required objective justification.
    (4) Even if Enderby was not a case of indirect discrimination, as understood by English law, the pre-condition of enjoying a higher salary in that case was membership of a group which comprised predominantly men. A prima facie case of unequal treatment was made out which needed to be rebutted by objective justification. No such case arises here. There was no suggestion that the requirement of particular experience of, or embracing, total quality management was one which affected a considerably higher proportion of women than men.
    (5) Accordingly, there was no allegation or evidence in this case of indirect discrimination which required rebuttal by objective justification.
    (6) In the absence of evidence or a suggestion that the factor relied on to explain the differential was itself tainted by gender, because indirectly discriminatory or because it adversely impacted on women as a group in the sense indicated in Enderby, no requirement of objective justification arises: see Calder v. Rowntree Mackintosh Confectionery Ltd. [1992] I.C.R. 372, 379-380F, and [1993] I.C.R. 811 and Yorkshire Blood Transfusion Service v. Plaskitt [1994] ICR 74, 79-80F. Thus, even if a differential is explained by careless mistake, which could not possibly be objectively justified, that would amount to a defence under section 1 (3) and for the purpose of article 119 of the E.C. Treaty, provided that the tribunal is satisfied that the mistake was either the sole reason for it or of sufficient influence to be significant or relevant. If a genuine mistake suffices, so must a genuine perception, whether reasonable or not, about the need to engage an individual with particular experience, commitment and skills.
    For those reasons, the industrial tribunal erred in law in directing itself that the explanation for the difference in pay had to be objectively justified. It was sufficient in law that the explanation itself caused the difference or was a sufficient influence to be significant and relevant, whether or not that explanation was objectively justified."

  32. In Strathclyde Regional Council v Wallace [1988] IRLR 146 the applicants were female teachers who carried out the work of principal teachers but had not been appointed to this promoted post and were paid less than they would have received had they been so appointed. They claimed equal pay with male comparators who were appointed principal teachers. Like work was established and it was agreed that disparity in pay between the women and their male comparators was not based on sex. The tribunal had said that there was insufficient evidence to found a material factor defence in circumstances where there were a variety of reasons including financial restraints, administrative practices advanced by way of explanation for the failure to appoint, none of which were sex based. The House of Lords held that there was no need for objective justification which only arose when the employer was relying on a factor that was gender discriminatory – something that was not an issue in that case. The House of Lords held that the Equal Pay Act was not concerned with fair wages but only with sex related pay discrimination whereas the objective sought by the applicants had been to achieve equal pay for like work regardless of sex and not to eliminate any inequalities due to sex discrimination. At Page 210G Lord Browne-Wilkinson observed that:
  33. "To my mind it would be very surprising if a differential pay structure which had no disparate effect or impact as between the sexes should prove to be unlawful under the Equal Pay Act 1970. The long title to that act describes its purpose as being:
    'An Act to prevent discrimination, as regards terms and conditions of employment, between men and women.'"

  34. Later at page 212D Lord Browne-Wilkinson continued as follows:
  35. "The cases establish that the Equal Pay Act 1970 has to be construed so far as possible to work harmoniously both with the Sex Discrimination Act 1975 and article 119. All three sources of law are part of a code dealing with unlawful sex discrimination: see Shields v. E. Coomes (Holdings) Ltd. [1978] I.C.R. 1159 and Garland v. British Rail Engineering Ltd. [1982] ICR 420. It follows that the words "not the difference of sex" where they appear in section 1(3) of the Equal Pay Act 1970 must be construed so as to accord with the Sex Discrimination Act 1975 and article 119 of the E.C. Treaty, i.e. an employer will not be able to demonstrate that a factor is "not the difference of sex" if the factor relied upon is sexually discriminatory whether directly or indirectly. Further a sexually discriminatory practice will not be fatal to a subsection (3) defence if the employer can "justify" it applying the test in the BilkaKauj7/C/us case [1987] I.C.R. 11O.
    In North Yorkshire County Council v. Ratcliffe [1995] I.C.R. 833, 839, this House expressed the view, obiter, that the Equal Pay Act 1970 has to be interpreted without introducing the distinction between direct and indirect discrimination drawn by section I of the Sex Discrimination Act 1975. That dictum must not be carried too far. Whilst there is no need to apply to the Equal Pay Act 1970 the hard and fast statutory distinction between the two types of discrimination drawn in the Sex Discrimination Act 1975, this House did not intend, and had no power, to sweep away all the law on equal pay under article 119 laid down by the European Court of Justice, including the concept of justifying, on Bilka grounds, practices which have a discriminatory effect on pay and conditions of service. The law on article 119, whilst recognising that in many cases there is a de facto distinction between direct and indirect discrimination, does not draw the same firm legal demarcation between the two as does the Sex Discrimination Act 1975 which permits justification of indirect discrimination but not of direct discrimination. The correct position under section l(3) of the Equal Pay Act 1970 is that, even where the variation is genuinely due to a factor which involves the difference of sex, the employer can still establish a valid defence under subsection (3) if he can justify such differentiation on the grounds of sex, whether the differentiation is direct or indirect. I am not aware as yet of any case in which the European Court of Justice has held that a directly discriminatory practice can be justified in the Bilka sense. However, such a position cannot be ruled out since, in the United States, experience has shown that the hard and fast demarcation between direct and indirect discrimination is difficult to maintain.
    From what I have said, it is apparent that, in considering section 1(3) of the Equal Pay Act 1970, the only circumstances in which questions of "justification" can arise are those in which the employer is relying on a factor which is sexually discriminatory. There is no question 'of the employer having to "justify" (in the Bilka sense) all disparities of pay. Provided that there is no element of sexual discrimination, the employer establishes a subsection (3) defence by identifying the factors which he alleges have caused the disparity, proving that those factors are genuine and proving further that they were causally relevant to the' disparity in pay complained of."

    Finally at 214 he said this:

    "In my judgment the law was correctly stated by Mummery J. giving the judgment of the Employment Appeal Tribunal in Tyldesley v. T. M. L. Plastics Ltd. [1996] ICR 356, in which he followed and applied the earlier appeal tribunal decisions in Calder v. Rowntree Mackintosh Confectionery Ltd. [1992] I.C.R. 372 and Yorkshire Blood Transfusion Service v. Plaskitt [1994] ICR 74. The purpose of section I of the Equal Pay Act 1970 is to eliminate sex discrimination in pay not to achieve fair wages. Therefore, if a difference in pay is explained by genuine factors not tainted by discrimination that is sufficient to raise a valid defence under subsection (3): in such a case there is no further burden on the employer to "justify" anything. However if the factor explaining the disparity in pay is tainted by sex discrimination (whether direct or indirect) that will be fatal to a defence under subsection (3) unless such discrimination can be objectively justified in accordance with the tests laid down in the Bilka [1987] ICR 110 and Rainey [1987] ICR 129 cases."

  36. It seems to us that Lord Browne-Wilkinson's helpful analysis contains one key sentence which lies at the heart of this Appeal. He referred to "a difference in pay as explained by genuine factors not tainted by discrimination". This in our mind raises the question what is the standard of proof required for any employer to discharge his duty of explanation in those circumstance, i.e. to show the factors are not tainted. Is it subjective albeit genuine or objective? This was clearly not an issue in the Strathclyde case because of the concession that the disparity in pay had nothing to do with gender; thereby removing the requirement for proof either subjective or objective.
  37. Two years later in the case of Glasgow City Council & Others v Marshall & Others [2000] ICR 196 the House of Lords were again dealing with the issue of gender and the material factors in equal pay claims brought by instructors of special schools comparing themselves with teachers engaged in like work along side them. Once again the applicants did not challenge the council's assertion that there was a complete absence of any sex discrimination in the pay arrangements. Again the House of Lords held that the equality clause in s.1 was not intended to operate when no sex discrimination was involved. They held that the tribunal had erroneously required the employer to show a good, in the sense of objectively justified reason for the differential when there was no basis for this in the legislation. At page 202F Lord Nicholls, with whom the other members of the Appellate committee agreed, said as follows:
  38. "I do not believe the Act of 1970 was intended to have this effect. Nor does the statutory language compel this result. 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 or, in a case within section I (2)(c), may be a "material" difference, that is, a significant and relevant difference, between the woman's case and the man's case.
    When section I 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 evidence 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.

    Again, we note in that final paragraph there is a reference to a requirement to "prove the absence of sex discrimination, direct or indirect but without comment as to the standard of proof required. The final domestic authority is Fernandez to which we shall return once we have considered the European authorities.

    E C Law

  39. Article 141(formerly Article 119 of the Treaty of Rome) provides that:
  40. "1 Each Member State should ensure the principle of equal pay for male and female workers for equal work or work of equal value is applied.
    2. For the purpose of this Article, "pay" means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment from his employer.
    Equal pay without discrimination based on sex means-
    (a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement;
    (b) that pay for work at time rates shall be the same for the same job.
    3. The Council, acting in accordance with the procedure referred to in Article 251, and after consulting the Economic and Social Committee, shall adopt measures to ensure the application of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation, including the principle of equal pay for equal work or work of equal value.
    4. With a view to ensuring full equality in practice between men and women in working life, the principle of equal treatment shall not prevent any Member State from maintaining or adopting measures provided for specific advantages in order to make it easier for the under-represented sex to pursue a vocational activity or to prevent or compensate for disadvantages in professional careers."

    The Council Directive 75/117/EEC-Equal Pay Directive provided as follows:

    "Article 1
    The principle of equal pay for men and women outlined in Article 119 of the Treaty, herein after called "Principle of Equal Pay", means for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration.
    In particular, where a job classification system is used for determining pay, it must be based on the same criteria for men and women and so drawn up as to exclude any discrimination on grounds of sex.
    Article 2
    Member States shall introduce into their national legal systems such measures as are necessary to enable all employees who consider themselves wronged by failure to apply the principle of equal pay to pursue their claims by judicial process after possible recourse to other competent authorities.
    Article 3
    Member States shall abolish all discrimination between men and women arising from laws, regulations or administrative provisions which is contrary to the principle of equal pay.
    Article 4
    Member States shall take the necessary measures to ensure that provisions appearing in collective agreements, wage scales, wage agreements or individual contracts of employment which are contrary to the principle of equal pay shall be, or may be declared, null and void or may be amended.
    Article 5
    Member States shall take the necessary measures to protect employees against dismissal by the employer as a reaction to a complaint within the undertaking or to any legal proceedings aimed at enforcing compliance with the principle of equal pay.
    Article 6
    Member States shall, in accordance with their national circumstances and legal systems; take the measures necessary to ensure that the principle of equal pay is applied. They shall see that effective means are available to take care that this principle is observed.

    Council Directive 97/80/EC – the burden of proof directive provides an article for that:

    "Article 4
    Burden of Proof
    1. Member States shall take such measures as are necessary, in accordance with their national judicial systems, to ensure that, when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court .or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment.
    2. This Directive shall not prevent Member States from introducing rules of evidence which are more favourable to plaintiffs.
    3. Member States need not apply paragraph 1 to proceedings in which it is for the court or competent body to investigate the facts of the case."

  41. In Macarthys v Smith [1980] ICR 672 the question referred to the ECJ by the Court of Appeal concerned whether or not a comparison under the Equal Pay Act could be made between a male and female employee who had worked in the same establishment but not at the same time. At page 683A the Court said this:
  42. "(d) In order to determine whether a difference in treatment between A men and women in any aspect or condition of remuneration constitutes discrimination on grounds of sex, in violation of the principle of equal pay, it is appropriate to adopt a similar approach to that followed by the European Court of Human Rights in its judgment of July 23, 1968: a case relating to certain aspects of the laws on the use of languages in education in Belgium, Series A, paragraph 10, p. 34. The principle of equality of treatment is violated if a given difference of treatment has no objective and reasonable justification. Moreover, it is appropriate to compare the treatment of the alleged victim of sex discrimination by the employer and the treatment of an actual or hypothetical worker of the other sex. The relevance of selecting a worker, whether contemporaneously or previously employed on equal work, as a basis of comparison, permits one to ascertain whether there has been a difference of treatment between men and women on grounds of sex in any aspect or condition of a remuneration. Such a comparison is not confined to contemporaneous employment, nor to successive employment; it may include a comparison between the manner in which the employer has treated the alleged victim of sex discrimination and the manner in which the employer has treated or would treat a worker of the other sex. The reference to the work of a worker who has been previously employed is merely one example of the means whereby an alleged victim of sex discrimination may seek to prove that she has been less favourably treated on grounds of sex than the employer has treated or would treat a worker of the other sex.
    (e) In its report to the Council of January 16, 1979, on the state of application as at February 12, 1978, of the principle of equal pay the Commission suggested that, for the comparison of two wages, reference should be made to the wage normally paid by the undertaking employing the worker for whom the comparison is made to an employee of the opposite sex performing work of an equal value or, failing this, of a very similar value.
    (f) These principles have been recognised and implemented by the United Kingdom Government in all legislation against unfair discrimination, except in relation to sex discrimination in contractual terms under which a worker is employed at an establishment within the United Kingdom, and in particular in the Race Relations Acts 1968 and 1976, the Pair Employment (Northern Ireland) Act 1976 and the Sex Discrimination Act 1975. All these statutes enable a comparison to be made in the employment field between the treatment of an alleged victim of discrimination and the treatment of other workers irrespective of whether such other workers are contemporaneously employed, and indeed irrespective of whether they are actual or hypothetical comparisons. Unless such a comparison is able to be made to ascertain whether the ground or reason for unequal pay for equal work is the sex of the worker concerned, it is impossible to ensure application of the principle of equal pay to all workers and the elimination of all discrimination on grounds of sex with regard to remuneration."

    Later at page 687B the Court said this:

    "(f) A difference in pay which is the product of individual circumstances or outside forces, and not discrimination based on sex, obviously does not come within the scope of article 119 of the Treaty or article 1 of the Directive."

    Both counsel sought to derive some comfort from this authority; Mr Allen QC from the general principle set out that the equality of treatment principle violated if a given difference of treatment has no objective and reasonable justification. Miss McKie referred to the particular facts of the case that were referred to the ECJ and also the final passage to which we have referred above, from which she argued that if an employer could argue that there were genuine individual circumstances or outside forces which cause the difference in pay, such a difference was therefore not tainted by sex and required no further objective justification.

  43. Jenkins v Kingsgate (Clothing Productions) Ltd [1981] IRLR 228 (ECJ) is a case which is referred to in the Brunnhofer case and which forms the basis in part of the split between the majority and the minority in the EAT in the Fernandez case. Jenkins involved the payment to a female employee working part-time of a lowly hourly rate as compared to her male comparator working full-time. The head note of Jenkins records that the Advocate General in his submissions to the ECJ stated that a requirement which has a disproportionate impact on women meant that there was prima facie case of discrimination which required some special justification from the employer. Miss McKie argued that this view was suggestive that objective justification was only required when the reason for the difference is tainted by sex discrimination or otherwise indirectly sex discriminatory. The key elements in the decision can be seen from paragraph 66 to 72.
  44. "66
    First three questions
    It appears from the first three questions and the reasons stated in the order making the reference that the national court is principally concerned to know whether a difference in the level of pay for work carried out part-time and the same work carried out full-time may amount to discrimination of a kind prohibited by Article 119 of the Treaty when the category of part-time workers is exclusively or predominantly comprised of women.
    67
    The answer to the questions thus understood is that the purpose of Article 119 is to ensure the application of the principle of equal pay for men and women for the same work. The differences in pay prohibited by that provision are therefore exclusively those based on the difference of the sex of the workers. Consequently the fact that part-time work is paid at an hourly rate lower than pay for full-time work does not amount per se to discrimination prohibited by Article 119 provided that the hourly rates are applied to workers belonging to either category without distinction based on sex.
    68
    If there is no such distinction, therefore, the fact that work paid at time rates is remunerated at an hourly rate which varies according to the number of hours worked per week does not offend against the principle of equal pay laid down in Article 119 of the Treaty in so far as the difference in pay between part-time work and full-time work is attributable to factors which are objectively justified and are in no way related to any discrimination based on sex.
    69
    Such may be the case, in particular, when by giving hourly rates of pay which are lower for part-time work than those for full-time work the employer is endeavouring, on economic grounds which may be objectively justified, to encourage full-time work irrespective of the sex of the worker.
    70
    By contrast, if it is established that a considerably smaller percentage of women than of men perform the minimum number of weekly working hours required in order to be able to claim the full-time hourly rate of pay, the inequality in pay will be contrary to Article 119 of the Treaty where, regard being had to the difficulties encountered by women in arranging to work that minimum number of hours per week, the pay policy of the undertaking in question cannot be explained by factors other than discrimination based on sex.
    71
    Where the hourly rate of pay differs according to whether the work is part-time or full-time it is for the national courts to decide in each individual case whether, regard being had to the facts of the case, its history and the employer's intention, a pay policy such as that which is at issue in the main proceedings although represented as a difference based on weekly working hours is or is not in reality discrimination based on the sex of the worker.
    72
    The reply to the first three questions must therefore be that a difference in pay between full time workers and part-time workers does not amount to discrimination prohibited by Article 119 of the Treaty unless it is in reality merely an indirect way of reducing the level of pay of part-time workers on the ground that that group of workers is composed exclusively or predominantly of women."

    Again, both counsel seek to derive assistance from this case. Miss McKie from paragraph 67-

    "The differences in pay prohibited by that provision are therefore exclusively those based on the difference of the sex of the workers"

    Whereas Mr Allen QC draws attention to paragraph 68 which again refers to factors which are:

    "objectively justified and are in no way related to any discrimination based on sex."

    We note that when the case returned to the EAT Mr Justice Browne-Wilkinson, as he then was, said that unfortunately the ECJ judgment had not given clear guidance on the question the EAT had posed, and that which had caused the EAT greatest difficulty. The question was whether it was sufficient for the employer to show only that he had no intention of discriminating or must he also show that the difference in pay is objectively justified for some other reason (see paragraph 27 of 1981 IRLR 388). Earlier in the judgement Mr Justice Browne-Wilkinson had said this:

    "Were it not for the judgment of the European Court of Justice, we would have held that Section 1(3) requires an employer to do more than just prove an intention to discriminate. The equality clause implied by section 1(2) of the Act of 1970 operates to counteract all discrimination, whether direct or indirect and whether intentional or unintentional."

  45. In Bilka-Kaufhaus GmbH v Weber Von Hartz [1987] ICR 110 the employer had a department store in which it employed both full-time and part-time employees. But it preferred to employ full-time employees as the ancillary costs were less and they were available at all times when the store was open. Its part-time employees did not qualify for its occupational pension scheme unless they had been employed for a period of 20 years of which 15 years had been full-time working. The applicant, a woman, had been employed for 15 years as sales assistant but she had only worked full-time during that period for 11½ years, she was excluded from the scheme. On a reference to the European Court by the Federal Labour Court in Germany, the issue was whether the employer's policy was indirect discrimination contrary to Article 119 or whether it could be justified. The court held that the exclusion of part-time employees from the occupational pension scheme, and the majority of employees excluded were women would impinge a principle of equal pay for equal work unless an employer could show that policy was based on objectively justified factors unrelated to any discrimination on the grounds of sex. The court's conclusions were set out in paragraph 29 as follows:
  46. "29. If, therefore, it should be found that a much lower proportion of men than of men work full-time, the exclusion of part-time workers from the occupational pensions scheme would be contrary to article 119 of the Treaty where, taking into account the difficulties encountered by women workers in working full-time, that measure could not be explained by factors
    30. However, if the undertaking is able to show that its pay practice may be explained by objectively justified factors unrelated to any discrimination on grounds of sex there is no breach of article 119
    36. It is for the national court, which has sole jurisdiction to make findings of fact, to determine whether and to what extent the grounds put forward by an employer to explain the adoption of a pay practice which applies independently of a worker's sex but in fact affects more women than men may be regarded as objectively justified economic grounds. If the national court finds that the measures chosen by Bilka correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objectives pursued and are necessary to that end, the fact that the measures affect a far greater number of women than men is not sufficient to show that they constitute an infringement of article 119.
    37. The answer to question 2 (a) must therefore be that under article 119 a department store company may justify the adoption of a pay policy excluding part-time workers, irrespective of their sex, from its occupational pension scheme on the ground that it seeks to employ as few part-time workers as possible, where it is found that the means chosen for achieving that objective correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objective in question and are necessary to that end."

  47. Miss McKie has commented that most of the European authorities which predate Brunhoffer predominately concern reasons which were held to be indirectly sex discriminatory – see also Handels-Og v Dansk [1989] IRLR 532. One of the issues raised by the domestic case law approach is to determine exactly when pay discrimination is to be categorized as indirect or at least such that it requires to be objectively justified if the employee is to have a defence under s.1(3).
  48. Before returning to more recent European authorities, Mr Allen took us to a leading text book on the subject Schermers and Waelbroeck – Judicial Protection in the European Communities 5th Edition 1992 (i.e. prior to Brunnhofer).
  49. "116. In Community law great care is taken to guarantee equality or to prevent discrimination. The Court accepted the principle of equal treatment as a superior rule of law. Discrimination is unequal treatment in situations which are identical or comparable. The Treaties prohibit it on several occasions. EEC Article 119 offers a basis for the prohibition of discrimination between the sexes; EEC Article 7 prohibits discrimination on grounds of nationality, as do many regulations. Article 40 (3) of the EEC Treaty prohibits discrimination in the agricultural sector. Discrimination is prohibited in the rules on free movement of goods, persons, services and 'merely a specific enunciation of the general principle of equality which is one of the fundamental principles of Community law. This principle requires that similar situations shall not be treated differently unless differentiation is objectively justified. Different treatment constitutes no discrimination when it is objectively justified or at least or at least in economic matters not arbitrary.
    A possible divergence between national legislations does not create in itself a discrimination prohibited by Community law, as long as there have been no harmonization rules and provided that all other rules of Community law are complied with. But within the national legal system no discrimination is permitted with respect to nationals of other Member States. When, for example, the national legal system grants particular rights to an unmarried partner, such rights may not be refused when the unmarried partner is foreign."
    117. Difference in treatment may be acceptable if it can be sufficiently justified. It is permitted, for example, to grant aid to sugar in transit within a Member State which is refused to sugar in transit between Member States on the sole ground that the latter kind is aid is very difficult to supervise.

    Mr Allen QC pointed out to us that the numerous footnotes used to justify the principles in text contained references to EEC cases going back to 1977.

  50. Returning to the European Authorities in Enderby v Frenchay Health Authority [1994] ICR 112 the applicant a female employed as a speech therapist by the health authority considered that she was a victim of sex discrimination due to the fact that at her level of seniority within the National Health Service members of her profession which was overwhelmingly a female profession were appreciably less paid then members of comparable professions in which at an equivalent professional level there were more men than woman. And in particular she was comparing herself with two men – a clinical psychologist and pharmacist. The employer sought to justify the difference in pay by showing that the pay rates had resulted from different collective bargaining processes, each of which was free from any sex bias. The ECJ found that whilst this explained the difference in pay, it did not objectively justify it, and in those circumstances the employer did not have a defence. At paragraph 13 the court dealt with the issue as follows:
  51. "13. It is normally for the person alleging facts in support of a claim to adduce proof of such facts. Thus, in principle, the burden of proving the existence of sex discrimination as to pay lies with the worker who, believing himself to be, the victim of such discrimination, brings legal proceedings against his employer with a view to removing the discrimination.
    14. However it is clear from the case law of the court that the onus may shift when that is necessary to avoid depriving workers who appear to be the victims of discrimination of any effective means of enforcing the principle of equal pay. Accordingly, when a measure distinguishing between employees on the basis of their hours of work has in practice an adverse impact on substantially more members of one or other sex, that measure must be regarded as contrary to the objective pursued by article 119 of the Treaty, unless the employer shows that it is based on objectively justified factors unrelated to any discrimination on grounds of sex: see Bilka-Kaufhaus G.m.b.H. v. Weber van Hartz (Case 170/84) [1987] ICR 110, 125, para. 31; Kowalska v. Freie und Hansestadt Hamburg (Case C-33/89) [1992] I.C.R. 29, 35, para. 16 and Nimz v. Freie und Hansestadt Hamburg (Case C-184/89) [1991] E.C.R. 1-297,320, para. 15. Similarly, where an undertaking applies a system of pay which is wholly lacking in transparency, it is for the employer to prove that his practice in the matter of wages is not discriminatory, if a female worker establishes, in relation to a relatively large number of employees, that the average pay for women is less than that for men: see Handels-og Kontorfunktionoerernes Forbund i Danmark v. Dansk Arbejdsgiverforening (Case 109/88) [1991] I.C.R. 74, 80, para. 16.
    15. In this case, as both the health authority and the United Kingdom observe, the circumstances are not exactly the same as in the cases just mentioned. First, it is not a question of de facto discrimination arising from a particular sort of arrangement such as may apply, for example, in the case of part-time workers. Secondly, there can be no complaint that the employer has applied a system of pay wholly lacking in transparency since the rates of pay of National Health Service speech therapists and pharmacists are decided by regular collective bargaining processes in which there is no evidence of discrimination as regards either of those two professions.
    16. However, if the pay of speech therapists is significantly lower than that of pharmacists and if the former are almost' exclusively women while the latter are predominantly men, there is a prima facie case of sex discrimination, at least where the two jobs in question are of equal value and the statistics describing that situation are valid.
    17. It is for the national court to assess whether it may take into account those statistics, that is to say, whether they cover enough individuals, whether they illustrate purely fortuitous or short term phenomena, and whether, in general, they appear to be significant.
    18. Where there is a prima facie case of discrimination, it is for the employer to show that there are objective reasons for the difference in pay. Workers would be unable to enforce the principle of equal pay before national courts if evidence of a prima facie case of discrimination did not shift to the employer the onus of showing that the pay differential is not in fact discriminatory: see, by analogy, Handels-og Kontorfunktionaerernes Forbund i Danmark v. Dansk Arbejdsgiverforening (Case 109/88) [1991] I.C.R. 74, para. 13.
    19. In these circumstances, the answer to the first question is that, 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."

    Miss McKie submitted that though arguably the reason for the difference in pay was not indirectly sex discriminatory, in the sense often understood under the Sex Discrimination Act. It was clear from the facts that the reason was tainted by sex discrimination. She contends that the ECJ were saying no more that where there was a clear primo facie case of sex discrimination because of the appreciable difference in pay between the two jobs, one of which was carried out almost exclusively by women, the employer was then obliged to show the difference in pay was objectively justified. Mr Allen referred us to the general approach set out in paragraph 18.

  52. Finally before Brunnhofer we consider Hill & Stapleton v Revenue Commissioners and Dept of Finance [1998] IRLR 466. Two female employees worked a job-sharing scheme in the civil service during which time they each moved up one point in the incremental pay scale with each year of service and were paid fifty percent of the salary for clerical assistants, After two years they switched to full-time employment but their position on the incremental pay scale was adjusted in accordance with an instruction that each year's job-sharing service was only reckonable as six months full-time service. The issue for the ECJ was whether the principle of finally equal pay was contravened, if employees who convert from job-sharing to full-time work regress on the incremental scale, and hence on their salary scale due to the application by the employer of the criteria of service calculated by time worked in a job and, if so, did the employer have to provide special set of classification for re-course to the criterion of service to find his actual time worked in awarding incremental credit. The ECJ dealt with the position thus:
  53. "23
    It should be noted in that regard, as indeed the Labour Court has found, that it has not been established that the unfavourable treatment applied to Ms Hill and Ms Stapleton constitutes direct discrimination on grounds of sex. It is thus necessary to examine whether that treatment may amount to indirect discrimination.
    24
    According to settled case law, Article 4( 1) of the Directive precludes the application of a national measure which, although formulated in neutral terms, works to the disadvantage of far more women than men, unless that measure is based on objective factors unrelated to any discrimination on grounds of sex (see, to that effect, case C-343/92 De Weerd, nee Roks, and others v Bestuur van de Bedrijfsvereniging voor de Gezondheid, Geestelijke en Maatschappelijke Belangen and others [1994] ECR 1-571, paragraph 33, and case C444/93 Megner and Scheffel v Innungskrankenkasse Rheinhessen-Pfalz [1996] IRLR 236, paragraph 24)…
    33
    Within the category of full-time workers, therefore, there is unequal treatment, as regards pay, of employees who previously jobshared, and who regress in relation to the position which they already occupied on the pay scale.
    34
    In such a case, provisions of the kind at issue in the main proceedings result in discrimination of female workers vis-à-vis male workers and must in principle be treated as contrary to Article 119 of the Treaty and therefore contrary to the Directive. It would be otherwise only if the difference of treatment found to exist between the two categories of worker were justified by objective factors unrelated to any discrimination based on sex (see, along these lines, case 170/84 Bilka v Webervon Hartz [1986] IRLR 317, paragraph 29; case 171/88 Rinner-Kuhn v FWW Spezial-Gebaudereinigung [1989] IRLR 493, paragraph 12; case C-457/93 Kuratorium fur Dialyse und Nierentransplantation v Lewark [1996] IRLR 637, paragraph 31).
    35
    It is for the national court, which has sole jurisdiction to assess the facts and interpret the national legislation, to determine whether and to what extent a legislative provision which, though applying independently of the sex of the worker, actually affects a greater number of women than men is justified by objective reasons unrelated to any discrimination on grounds of sex (Jenkins [1981] IRLR 228, paragraph 14; Bilka [1986] IRLR 317, paragraph 36; and Rinner-Kuhn [1989] IRLR 493, paragraph 15)."

    Brunnhofer

  54. Ms Brunnhofer worked in an Austrian bank and claimed equal pay with a male colleague. Both were classified under a collective agreement in the same category but from the time of his recruitment the male received an individual supplement higher than the supplement received by Ms Brunnhofer. The Bank claimed that there were rejected reasons for the difference in the supplements. According to the Bank the male comparator carried out more important functions than Ms Brunnhofer who is not authorized to enter into binding commitments on behalf of the Bank, and also the quality of their work was said to be different.
  55. The questions referred to the ECJ by the Higher Regional Court for Vienna were as follows:
  56. "1 (a) In assessing whether work is equal work or constitutes the same job within the meaning of Article 119 of the EC Treaty (now Article 141 EC) or is the same work or work to which equal value is attributed within the meaning of Directive 75/117/EEC, is it sufficient, where individual contracts of employment stipulate supplements to pay fixed by collective agreement, to ascertain whether the two workers being compared are classified in the same job category under the collective agreement?
    (b) If the reply to Question 1 (a) is in the negative: In the situation described in Question 1 (a), is the same classification under the collective agreement evidence of the same work or work of equal value within the meaning of Article 119 (now Article 141) of the Treaty and of Directive 75/117/EEC, with the result that it is for the employer to prove that the work is different?
    (c) Can the employer rely on circumstances not taken into account in the collective agreements in order to justify a difference in pay?
    (d) If the reply to Question 1(a) or 1 (b) is in the affirmative: Does this also apply if the classification in the job category under the collective agreement is based on a job description couched in very general terms?
    2(a) Are Article 119 (now Article 141) of the Treaty and Directive 75/117/EEC based on a definition of worker which is uniform at least in so far as the worker's obligations under the contract of employment depend not only on generally defined standards, but also on the individual capability of the worker himself?
    (b) Are Article 119 (now Article 141) of the Treaty and Article 1 of Directive 75/117/EEC to be interpreted as meaning that the fixing of different pay may be objectively justified by circumstances which can be established only ex post facto, such as in particular a specific employee's work performance?"

    The Advocate-General's opinion dealing with the facts of the case recorded that the Bank maintained that "objective factors explain the difference in salary". Later at paragraph 20 of his opinion he set out his views thus:

    "the referring Court will ultimately have to establish, on the basis of the facts and evidence provided by her, whether the case is one of unequal pay not justified by objective differences between the work actually done by Ms Brunnhofer and that actually done by her male comparator."

  57. The ECJ having considered the six questions asked by the Vienna Court concluded that they essentially concerned three points. The second of which was:
  58. "the rules of evidence concerning the existence of unequal pay for men and women and a possible objective justification for any difference in treatment."
  59. In continuing with their preliminary marks the Court set out the general position thus:
  60. "27
    It should be recalled at the outset that Article 119 of the Treaty lays down the principle that the same work or work to which equal value is attributed must be remunerated in the same way, whether it is performed by a man or a woman (see, to that effect, inter alia case C-236/98 Jamstalldhetsombudsmannen v Orebro lans landsting [2000] IRLR 421, paragraph 36).
    28
    As the Court has already held in case 43/75 Defrenne II [1976] ECR 455, paragraph 12, that principle, which is a particular expression of the general principle of equality which prohibits comparable situations from being treated differently unless the difference is objectively justified, forms part of the foundations of the Community.
    30
    So understood, the fundamental principle laid down in Article 119 of the Treaty and elaborated by the Directive precludes unequal pay as between men and women for the same job or work of equal value, whatever the mechanism which produces such inequality (see Barber [1990] IRLR 240, cited above, paragraph 32), unless the difference in pay is justified by objective factors unrelated to any discrimination linked to the difference in sex (see, in particular, case 129/79 Macarthys [1980] IRLR 210, paragraph 12, and case C243/95 Hill and Stapleton [1998] IRLR 466, paragraph 34)."

  61. Mr Allen QC places a considerable reliance on paragraph 30, in particular the phrase, "whatever the mechanism" which he contended referred to either direct or indirect discrimination. Miss McKie submitted that both in Macarthys and more particularly in Hill v Stapleton the Court was not dealing with issues related to justification in direct discrimination cases.
  62. The Court then set out that a finding of inequality in pay between the appellant and her main comparator would not be sufficient basis for concluding that discrimination prohibited by Community Law exists. Firstly, it must be ascertained whether the employees concerned were performing work of equal value (see paragraph 39) and secondly "the differences in treatment prohibited by article 119 are exclusively those based on the difference in sex of the employees concerned – see Jenkins". The ECJ then set out a stage by stage approach with the onus firstly on the employee to prove that her pay was less than that of her comparator and that her work was the same or of equal value so that "prime facie she is the victim of discrimination which can be explained only by the difference in sex" (paragraph 58). The ECJ continued as follows:
  63. "60
    If the plaintiff in the main proceedings adduced evidence to show that the criteria for establishing the existence of a difference in pay between a woman and a man and for identifying comparable work are satisfied in this case, a prima facie case of discrimination would exist and it would then be for the employer to prove that there was no breach of the principle of equal pay.
    61
    To do this, the employer could deny that the conditions for the application of the principle were met, by establishing by any legal means inter alia that the activities actually performed by the two employees were not in fact comparable.
    62
    The employer could also justify the difference in pay by objective factors unrelated to any discrimination based on sex, by proving that there was a difference, unrelated to sex, to explain the payment of a higher monthly supplement to the chosen comparator."
  64. Thereafter the need for objective justification is again referred to in paragraph 63:
  65. "The national court is essentially asking whether a difference between a woman's and a man's pay for the same work or work of equal value is capable of being objectively justified…"

    Paragraph 64:

    "The national court is thereby seeking to determine legal criteria which would enable the existence of an objective justification for unequal treatment prima facie based on sex to be established."

    Paragraphs 66-68:

    "66
    It is appropriate to recall here the case law according to which a difference in the remuneration paid to women in relation to that paid to men for the same work or work of equal value must, in principle, be considered contrary to Article 119 of the Treaty and, consequently, to the Directive. It would be otherwise only if the difference in treatment were justified by objective factors unrelated to any discrimination based on sex (see, inter alia, Macarthys [1980] IRLR 210, paragraph 12, and Hill and Stapleton [1998] IRLR 466, paragraph 34).
    67
    Furthermore, the grounds put forward by the employer to explain the inequality must correspond to a real need of the undertaking, be appropriate to achieving the objectives pursued and necessary to that end (case 170/84 Bilka [1986] IRLR 317, paragraph 36).
    68
    As regards the first part of that latter aspect of the reference, as reformulated, concerning
    possible justifications for unequal treatment, it need merely be stated that it follows from the foregoing that the employer may validly explain the difference in pay, in particular by circumstances not taken into consideration under the collective agreement applicable to the employees concerned, in so far as they constitute objectively justified reasons unrelated to any discrimination based on sex and in conformity with the principle of proportionality."

    And finally at paragraph 79:

    "the difference in pay between a woman and a man occupying the same job can be justified only by objective factors unrelated to any discrimination linked to the difference in sex."

  66. And finally in paragraph 80 in answering the reply to the questions posed to the Court the ECJ said as follows:
  67. "A difference in pay is capable of being justified by circumstances not taken into consideration under the collective agreement applicable to the employees concern provided that they constitute objective reasons unrelated to any discrimination based on sex and in conformity with the principle of proportionality."

  68. Mr Allen QC submitted that the Brunnhofer principles clear in themselves have been approved in subsequent ECJ cases see Lawrence and Others v Regent Office Care Ltd and Others [2003] ICR 1092 where at paragraph 12 of the Court's decision they said as follows:
  69. 12 As the court held in Defrenne v Sabena (Case 43/75) [1976] ICR 547, 566, para 12, that principle, which is a particular expression of the general principle of equality which prohibits comparable situations from being treated differently unless the difference is objectively justified, forms part of the foundations of the Community: see Brunnhofer v Bank der osterreichischen Postsparkasse AG (Case C-381/99) [2001] ECR 1-4961, 4988, para 28.

    The Brunnhofer/Bilka approach was also adopted by this court see Barton v Investec Securities Ltd [2003] ICR 1205.

    Fernandez

  70. The Brunnhofer approach did not receive approval from Judge Clark and one of his lay members, Mr Manners, in the Fernandez case, the other lay member Mr Bleiman accepted the need for objective justification. In Fernandez the applicant had commenced employment as a case worker at a lower salary than a female case worker employed by different departments in the same office. The female case worker was subsequently paid a recruitment and retention allowance which the male applicant did not receive and a greater performance related pay award based on a higher marking in the annual appraisals. The applicant had brought an equal pay claim against his employer and the employer accepted that both workers were employed on light work put forward a genuine material factor of defence which the tribunal rejected on the grounds that the employer had failed to show objective justification on a difference in pay. The EAT held that it was not necessary under either U.K or Community Law for an employer to prove objective justification in a case where the factor relied on was not tainted by sex discrimination, and no suggestion of prima facie in direct discrimination was raised, holding it that the employer need only show that profit explanation was genuine and not a sham, that the less favourable treatment was due to that reason, and that the reason was not the difference in sex and the factor relied on was a material difference.
  71. Having set out the U.K decisions, the majority view in Fernandez was set out by Judge Clark from paragraphs 25 to 34 as follows:
  72. "25
    The European jurisprudence
    Mr Allen took us to a number of ECJ decisions, in various fields of law, which applied this principle, to be found in Brunnhofer, paragraph 28, where the Court said:
    'As the Court has already held in case 43/75 Defrenne II [1976] ECR 455, paragraph 12, that principle [Article 119 (now 141)J [that the same work must be remunerated in the same way, whether it is performed by a man or a woman] which is a particular expression of the general principle of equality which prohibits comparable situations from being treated differently unless the difference is objectively justified, forms part of the foundations of the Community.'
    It is at this point that this tribunal finds itself divided.
    26
    The majority accept that general proposition, however, as the Court went on to say in Brunnhofer, paragraph 40:
    '... the differences in treatment prohibited by Article 119 are exclusively those based in the difference in sex of the employees concerned.' "
    We paraphrase that observation to mean, using the expression to be found in the domestic cases, that the variation in pay is tainted by sex.
    27
    This in turn begs the question, when is a pay differential tainted by sex? To answer this question we return to the basic principles of sex discrimination law. In a case of direct sex discrimination, where there is a difference of sex and less favourable treatment of the complainant compared with his or her comparator the employer is required to provide an explanation for the difference in treatment which is gender neutral. If he does so, that is the end of the claim; if he does not then, today the provisions of s.63A SDA come into play. That amendment was not in force at the time of the material events in the present case.
    28
    However, if the employment tribunal. finds direct sex discrimination is made out, then such discrimination cannot be justified, in the Bilka sense or at all. Mummery LJ so observed when considering the then relatively new and different provisions of the Disability Discrimination Act 1995 in Clark u Nouacold [1999] IRLR 318, 324. For an extreme example of the principle that direct sex discrimination cannot be justified in the European jurisprudence see the ECJ judgment in Tele Danmark AI S v Handels [2001] IRLR 853.
    29
    Pausing there, it seems to us as a matter of logic that where direct discrimination is found not to exist no question of objective justification can arise. The factor relied on by the employer is untainted by sex and Article 119 (now 141) is, as the ECJ pointed out in Brunnhofer, concerned with prohibiting differences in treatment based on the difference in sex.
    30
    Equally, where the factor relied upon amounts to direct sex discrimination, again the question of objective justification cannot arise.
    31
    Conversely, where a prima facie case of indirect discrimination is made out in relation to the factor relied upon by the employer to establish the s.I(3) defence then that factor is tainted by sex discrimination unless it can be objectively justified. That, we think, is the effect of Bilka, itself a case of alleged indirect sex discrimination.
    32
    Which brings us to Brunnhofer. It is important to note the relevant question posed by the national court. Question2(b) reads:
    'Are Article 119 (now Article 141) of the Treaty and Article 1 of [the Equal Treatment] Directive 75/117/EEC to be interpreted as meaning that the fixing of different pay may be objectively justified by circumstances which can be established only ex post facto, such as in particular a specific employee's work performance?'
    33
    It is that question which is addressed in paragraph 63 and following of the judgment. Thus, the reference to the Bilka test at paragraph 67, on which Mr Allen relies, must be seen in the context of the specific question posed to the Court. We do not understand the Court to be laying down, in that case, any requirement that in a case where the factor relied on by the employer is not tainted by direct sex discrimination, and where no suggestion of prima facie indirect sex discrimination is raised, that it is nonetheless necessary for the employer to objectively justify the pay difference in the Bilka sense.
    34
    In these circumstances the majority are not persuaded that the European jurisprudence requires us to depart from the approach set out in the domestic jurisprudence to which we have referred.

  73. Mr Bleiman in a minority made reference to the question posed to the ECJ by the Vienna Court in Brunnhofer and thereafter to the many references which we have set out above to the requirement for objective justification. Although troubled by paragraph 40 of Brunnhofer "the differences in treatment prohibited by article 19 are exclusively those based on the difference in sex of the employers concerned" - the reference taken from Jenkins, Mr Bleiman noted that this one-line paragraph was not "brought to bear by the Court of Justice on any of the facts of the Austrian case" and took that passage to be no more than a re-statement of the Jenkins judgement but also made reference to the next paragraph in Jenkins which made reference to objective justification. At paragraph 42 of Fernandez Mr Bleiman concludes, "the minority therefore reads Brunnhofer paragraph 40 as merely a brief recollection, with approval, of the fuller statement in Jenkins and that explicitly requires objective justification to escape the ambit of article 119".
  74. We are impressed by the analysis of Mr Bleiman in Fernandez and share his views regarding the clear direction given by Brunnhofer no more so than in paragraph 30 of the Brunnhofer decision which, precludes unequal pay as between men and women for the same job, or work of equal value whatever the mechanism unless the difference in pay is justified by objective factors unrelated to any discrimination linked to the difference in sex.
  75. The majority in paragraph 33 of Fernandez firstly suggest that the Brunnhofer decision should be narrowly interpreted relating to the narrow question of whether differential pay can be objectively justified by ex post facto events such as the employee's work performance. However, that was only one of a number of questions posed to the ECJ in Brunnhofer. Their answers consisted of a very careful analysis of the three-stage process in equal pay claims, namely the determination where the work is the same or of equal value, the burden of proof and the objective justifications for unequal pay.
  76. At the heart of Judge Clark's analysis is the majority view expressed in paragraph 33:
  77. "…We do not understand the Court to be laying down, in that case, any requirement that in a case where the factor relied on by the employer is not tainted by direct sex discrimination,…that it is nevertheless necessary for the employer to objectively justify the pay difference in the Bilka sense"

    Mr Allen submitted and we agree that the issue of tainting by direct discrimination arises not from the factor in an equal pay case but at an earlier stage once, as the court put it in Brunnhofer:

    "the Plaintiff…has produced evidence to show that the criteria for establishing the existence of a difference in pay between a woman and a man and for identifying comparable work are satisfied".

    Once like work, or work rated as equivalent, or work of equal value has been established - once any of those three conditions have been satisfied a prima facie case of discrimination would exist. It is the finding of fact under section 1(2)(a) or(b) or (c) that equate, Mr Allen QC submitted, to the primary facts found in a normal discrimination case which cause the burden of proof to shift thereafter requiring the employer to show that there is no discrimination whatsoever. The Brunnhofer principles suggest that the employer could show that there was no breach of the principle of equal pay by proving that the activities were not in fact comparable, e.g. that the applicants analysis of equal value was flawed, or by justifying the difference by objective factors. A further possibility would be from an admission such as that made in Wallace or Marshall that sex played no part in the difference of pay.

  78. Miss McKie pointed to the practical difficulties that might arise as a result of requiring objective factors and following the Bilka principles reminding us that equal pay cases often have a long history where the relevant persona who made the important decisions regarding pay may no longer be available to give relevant evidence. She argued that the clear guidelines now given in cases such as Igen v Wong [2005] IRLR 258have set a sufficiently high hurdle for employers in direct discrimination cases.
  79. Mr Allen QC responded to us by submitting that whatever practical difficulties might be encountered would be a price worth paying for the elimination of inequality in pay which was a key foundation of European Community legislation. He submitted that the requirement for objective justification was necessary to pursue the principle of equal treatment which was regarded as the superior rule of law within the community aimed at the introduction of transparent and fair pay policies for men and women within the workplace. He reminded us that the ECJ Code of Practice on Equal Pay (2003) contained helpful guidelines on equal pay review, which could assist and employers in setting up an objectively justified pay structure.
  80. We can see no reason whatsoever for not following the Brunnhofer decision which provides clear guidelines in equal pay cases as to the need for objective justification in all cases; insofar as there is a conflict between that decision and earlier U.K. decisions then we must now follow the European decision - see Automatic Holdings plc v HM Commissioners for Inland Revenue [2005] UKHL 54 and in particular Lord Nicholls at paragraph 16.
  81. It is agreed that the Tribunal approached the genuine material factor defence on a subjective rather than objective view. As a result there will have to be a re-hearing of the case which in view of the different approach that now has to be taken by the Tribunal it should be before a fresh tribunal.
  82. Finally in view of the importance of this decision we are prepared to give both sides leave to appeal.


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