Lord Justice Underhill:
INTRODUCTION
- About 30,000
claimants,
mostly women, working in
Asda
supermarkets have brought equal pay
claims
against their employer,
Asda
Stores Ltd, which is the Appellant before us, on the basis of
comparisons
with the pay of male employees employed at depots as part of
Asda's
distribution operation ("the
comparators").
The
claims
are primarily brought under the Equality Act 2010, but if the
claims
are well-founded some of the
Claimants
would be entitled to arrears going back before that Act
came
into force, and their
claims
would in respect of that period be governed by the Equal Pay Act 1970. The
Claimants
also rely, so far as necessary, on the direct effect of EU law, and more specifically of article 157 of the Treaty on the Functioning of the European Union ("TFEU") and its predecessors.
Asda
contends
that the
Claimants
are not entitled to
compare
themselves for equal pay purposes with employees working in its distribution operation. A preliminary hearing to determine that question took place in the Employment Tribunal in Manchester before Employment Judge Ryan over six days in June 2016. By a thorough and well-organised Judgment and Reasons sent to the parties on 14 October 2016 he decided the issue in favour of the
Claimants.
His decision was upheld by Kerr J in the Employment Appeal Tribunal by a judgment handed down on 31 August 2017. This is
Asda's
appeal against that decision.
Asda
was represented before us by Mr
Christopher
Jeans QC and Mr Patrick Halliday, both of whom appeared in both the ET and the EAT, though in the ET they were led by Lord Falconer of Thoroton. The
Claimants
were represented by Mr Andrew Short QC, leading Ms Naomi
Cunningham
and Ms Keira Gore: all three also appeared in both the ET and the EAT.
THE FACTS IN OUTLINE
- I need not set out the facts in detail at this stage. I will have to return to some points in the
course
of my discussion of the issues.
Asda
had at the date of the ET hearing 630 stores, in which some 133,000 employees worked. Its distribution operation
comprised
24 distribution
centres/depots
employing 11,600 employees. In its early years the operation of its depots was mostly outsourced, but from 2003 they were all in-house and the workforce was employed by
Asda.
- The ET set out at para. 27 of its Reasons, and appears to have accepted, the evidence of
Asda's
Distribution Director, Mr Stansfield, that:
"
ASDA's
distribution and retail sectors are fundamentally different. They have evolved differently over time; operate in separate industries; have different objectives; are located in markedly different physical environments; demand different skill-sets; are subject to varied regulation and, most importantly, have distinctly different functions.
Asda
is essentially a retailer; its stores are its profit-making
centres.
The primary function of distribution is to act as an in-house provider of logistics services to
ASDA's
retail stores: it is predominantly a
cost
centre,
rather than a profit-making operation, and is not
consumer-facing."
None of the depots is located on the same site as any of the stores.
- The ET found at para. 29 of its Reasons that
"The terms and
conditions
of the employees depend on the type of establishment at which they work. Retail employees are employed on Retail terms. Distribution employees are employed on Distribution terms. Those terms are set by reference to different processes."
- As regards retail employees, no trade union is recognised for
collective
bargaining purposes. All employees are on the same package of terms, wherever they work. Pay is set annually as a result of various internal processes and is simply "imposed".
- As regards distribution employees, until 2010 there was
considerable
variation from site to site as to the terms and
conditions
applying, partly reflecting the fact that several
centres
had originally been outsourced to different third parties. But in May 2012
Asda
concluded
a recognition agreement with the GMB
covering
all employees at all of its distribution
centres
(subject to three immaterial exceptions). The agreement prescribes "model terms and
conditions"
for the employees
covered
(subject, again, to some immaterial exceptions) but pay rates are negotiated separately for each
centre
and in
consequence
display some variation from depot to depot.
Asda
is a subsidiary of the US
company
Wal-Mart Inc., and its principal decisions as regards pay have to be approved by Wal-Mart.
- The
Claimants
assert that the terms and
conditions
of
Asda
employees in Distribution doing work of equal value are superior to theirs in various respects, including principally hourly rates of pay,
contractual
allowances or bonuses and various aspects of working hours. The details are immaterial for our purposes.
THE BACKGROUND LAW
THE DOMESTIC LEGISLATION
- When the 1970 Act first
came
into force, which was on 29 December 1975, the right to equal pay was accorded by section 1 (2) in two
cases
– (a) where a woman was employed on "like work" with a man "in the same employment" and (b) where she was employed on work "rated as equivalent" with that of a man in the same employment. With effect from 1 January 1984, as a result of a decision of the ECJ in
Commission
v UK (
Case
61/81), [1982] ICR 578, a third
case
was added – (
c)
where a woman was employed on work "of equal value" with that of a man in the same employment.
- The phrase "in the same employment", which is
common
to all three
cases,
was defined in section 1 (6) of the 1970 Act as follows:
"… [F]or purposes of this section … men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which
common
terms and
conditions
of employment are observed either generally or for employees of the relevant
classes."
- Section 1 (3) of the 1970 Act afforded an employer a defence where the differential which is the subject of the
claim
is shown to be "due to a material factor which is not the difference of sex".
- The 2010 Act reproduces essentially the same scheme as the 1970 Act but a different drafting technique is adopted. Section 65 (1) provides for the same three grounds of
comparison
as under section 1 (2), but the
comparator
is defined simply as "B" rather than "a man in the same employment". The scope of permitted
comparisons
is prescribed, so far as relevant for our purposes, by section 79 (2)-(4), which reads:
"(2) If A is employed, B is a
comparator
if subsection (3) or (4) applies.
(3) This subsection applies if —
(a) B is employed by A's employer or by an associate of A's employer, and
(b) A and B work at the same establishment.
(4) This subsection applies if —
(a) B is employed by A's employer or an associate of A's employer,
(b) B works at an establishment other than the one at which A works, and
(
c)
common
terms apply at the establishments (either generally or as between A and B)."
Section 80 (2) (a) provides (so far as material for our purposes) that "[t]he terms of a person's work are … the terms of the person's employment that are in the person's
contract
of employment". The equivalent to section 1 (3) of the 1970 Act, albeit differently worded, is at section 69.
- It will be observed that although the elements of the relevant parts of section 1 (6) of the 1970 Act are mostly reproduced in substantially identical terms in section 79 (2)-(4) of the 2010 Act, the parenthesis in sub-section (4) (
c)
uses the phrase "as between A and B" rather than "for employees of the relevant
classes".
I shall have to
consider
later whether this makes a substantive
change
in the relevant law.
THE EU LEGISLATION
- Article 119 of the Treaty of Rome began:
"Each member state shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work."
There are two further short paragraphs by way of amplification but they are not material for our purposes.
- In 1975 the
Council
of Ministers adopted
Council
Directive 75/117/EEC. This defined "the principle of equal pay for men and women outlined in Article 119 of the Treaty" as (by article 1):
"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".
Article 2 required member states to introduce domestic legislation whereby employees
could
enforce the principle of equal pay. In Worringham v Lloyds Bank Ltd (
case
69/80) [1981] ICR 558 the ECJ said, at para. 21 of its judgment (p. 589E):
"Although article 1 of the directive explains that the
concept
of 'same work'
contained
in the first paragraph of article 119 of the Treaty includes
cases
of 'work to which equal value is attributed', it in no way affects the
concept
of 'pay'
contained
in the second paragraph of article 119 but refers by implication to that
concept."
The necessary implication of that is that the phrase "equal pay for equal work" in article 119
covers
"work to which equal value is attributed".
- In Defrenne v Sabena (
case
no. 43/74) [1976] ICR 547 the ECJ held that article 119 gave employees a directly enforceable right to equal pay in some
circumstances
notwithstanding a failure by the relevant member state to implement the Directive. The
Court
said, at paras. 18-24 of its judgment (pp. 566-7):
"18. For the purposes of the implementation of these provisions a distinction must be drawn within the whole area of application of article 119 between, first, direct and overt discrimination which may be identified solely with the aid of the
criteria
based on equal work and equal pay referred to by the article in question and, secondly, indirect and disguised discrimination which
can
only be identified by reference to more explicit implementing provisions of a
community
or national
character.
19. It is impossible not to recognise that the
complete
implementation of the aim pursued by article 119, by means of the elimination of all discrimination, direct or indirect, between men and women workers, not only as regards individual undertakings but also entire branches of industry and even of the economic system as a whole, may in
certain
cases
involve the elaboration of
criteria
whose implementation necessitates the taking of appropriate measures at
community
and national level.
20. This view is all the more essential in the light of the fact that the
community
measures on this question, to which references will be made in answer to the second question, implement article 119 from the point of view of extending the narrow
criterion
of 'equal work', in accordance in particular with the provisions of
Convention
No. 100 on equal pay
concluded
by the International Labour Organisation in 1951, article 2 of which establishes the principle of equal pay for work 'of equal value'.
21. Among the forms of direct discrimination which may be identified solely by reference to the
criteria
laid down by article 119 must be included in particular those which have their origin in legislative provisions or in
collective
labour agreements and which may be detected on the basis of a purely legal analysis of the situation.
22. This applies even more in
cases
where men and women receive unequal pay for equal work
carried
out in the same establishment or service, whether public or private.
23. As is shown by the very findings of the judgment making the reference, in such a situation the
court
is in a position to establish all the facts which enable it to decide whether a woman worker is receiving lower pay than a male worker performing the same tasks.
24. In such situation, at least, article 119 is directly applicable and may thus give rise to individual rights which the
courts
must protect."
- The Treaty of Rome was amended by the Nice Treaty in 2003, at which point article 119 became article 141 and was somewhat reformulated. Paragraph (1) read:
"Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied."
The new drafting thus spells out what the
Court
had in Worringham held was implicit in the old.
- Article 157 (1) of the TFEU is in identical terms to article 141.
THE ISSUES
- We are at this stage, as I have said,
concerned
only with whether the
Claimants
are entitled to
compare
themselves with employees in the distribution operation at all. If the decision is that they are, it remains to be established whether they do work of equal value with their
comparators
and, if so, the extent of any differential and whether
Asda
has "material factor" defence. As to that issue, they put their
case
on two bases, which I take in turn.
- As a matter of domestic law, the
Claimants
acknowledge that they do not work in the same establishments as any of their
comparators,
because
Asda's
stores and its depots are entirely separate; but they
claim
that
common
terms of employment apply at both, either generally or as between themselves and their
comparators,
so that they
can
rely on section 79 (4) (
c)
of the 2010 Act – or, as regards the period
covered
by the 1970 Act, that they are in the same employment as defined in section 1 (6). On that basis, the essential issue is whether
common
terms do in fact apply at the stores and the distribution
centres
within the meaning of those sections.
- Alternatively, the
Claimants
rely on the direct effect of EU law, as established by Defrenne. They
contend,
in reliance on the decision of the
CJEU
in Lawrence v Regent Office
Care
Ltd (
C-320/00),
[2003] ICR 1092, that
comparison
is possible in any
case
where there is a "single source" for the terms of employment of the
claimant
and the
comparator,
and they say that that is plainly so in their
case
since they are both employed by the same employer. As to this,
Asda
does not accept that the effect of Lawrence is that as a matter of EU law an employee
can
compare
herself with any other employee of the same employer. But it
contends
that, even if it is, EU law does not have direct effect in a
claim
under section 65 (1) (
c)
(i.e., equal value) because a
claim
of that kind – unlike a
claim
under heads (a) or (b) (i.e. like work or work rated as equivalent) – falls into the
category
recognised in para. 18 of the judgment in Defrenne where more specific implementing legislation is required.
- In the ET and the EAT the primary focus was on the direct effect
case,
and they both dealt with the "single source" issue in that
context.
I prefer to take the domestic law
case
first, though I will
consider
issues of EU law (and specifically single source) in that
context
to the extent that they inform the interpretation of the domestic legislation.
A. DOMESTIC LAW
THE
CASE-LAW
ON THE SCOPE OF THE PERMITTED
COMPARISON
- There are two decisions of the House of Lords and one of the Supreme
Court
addressing the meaning and effect of section 1 (6) of the 1970 Act as regards
cross-establishment
claims.
Although we are now primarily
concerned
with section 79 (4) of the 2010 Act those authorities remain the essential basis for any analysis, and I take them in turn.
Leverton
- In Leverton v
Clwyd
County
Council
[1989] AC 706 the applicant was employed by the
council
as a nursery nurse at an infant school. She brought a
claim
under the then new equal value provisions of the 1970 Act seeking equal pay with a number of male
clerical
workers in various
council
offices: none of them worked at her school. Both she and they were
classified
by the
council
as working in its Administrative Professional Technical and
Clerical
("APT&
C")
Services; and the terms and
conditions
for both nursery nurses and
clerical
workers were set out in the same national
collective
agreement ("the Purple Book"), determined by the National Joint
Council
for Local Authorities' Administrative Professional Technical and
Clerical
Services. The Agreement set out a number of salary points on a single spinal
column
and assigned different kinds of employee to different ranges of the
column.
The applicant sought to be paid in accordance with the same range as her
comparators.
- The applicant's
claim
was dismissed by a majority in the industrial tribunal ("the IT"), on the basis both (a) that she was not in the same employment as her
comparators
because none of them was employed at the same establishment as her and (b) that, even if she was, the difference between her terms and theirs was due to a material factor other than the difference of sex. The EAT dismissed her appeal, though only on the basis of the same employment point. The
Court
of Appeal, by a majority, upheld the decision of the EAT. The House of Lords dismissed her appeal, but only on the material factor ground. On the same employment point, which is what is relevant for our purposes, it upheld the view of the minority members in both the IT and the
Court
of Appeal that the applicant and her
comparators
were in the same employment.
- I need not set out the reasoning of the IT or the EAT: the reasoning of the minority member in the IT which the House of Lords approved is quoted in the passage from the speech of Lord Bridge which I set out below. I should, however, set out the relevant passage from the dissenting judgment of May LJ in the
Court
of Appeal. At p. 717 D-E he says that the essential question is the
correct
construction
of the phrase "
common
terms and
conditions".
He
continues,
at pp. 717-9 (I add paragraph numbers for ease of reference):
"[1] First, I respectfully
cannot
accept the industrial tribunal's
construction
of this phrase. There is in my opinion no warrant for
construing
'
common'
as 'broadly
common'.
The only two legitimate
constructions
of the phrase are either that '
common'
means 'the same', or alternatively that the terms and
conditions
of all the relevant employees belong equally to more than one, are generally known, or are in general use, to employ some of the definitions in the Shorter Oxford English Dictionary. It may well be, and is indeed the position in the present
case,
that they are
contained
in a book such as the 'Purple Book'. Further, as the words themselves
contemplated,
such general terms and
conditions
may be
common
to all the employees of the particular employer, or
common
to the relevant
classes.
[2] I reject the first of the above meanings of the phrase for the reasons given by the industrial tribunal … . If it were the
correct
construction
then the
consequent
required identity of the terms and
conditions
of employment of the applicant and
comparators
would defeat the whole purpose of the legislation.
[3] Thus I am driven to adopt the alternative
construction
of the phrase '
common
terms and
conditions'
to which I have just referred. Though so driven, however, it seems to me that by this route one does arrive at the purposive destination to which the draftsman was directing one. In support of this
construction
it is to be observed that the phrase is just 'at which
common
terms and
conditions
… are observed', not 'terms and
conditions
common
to the applicant and her
comparators
are observed', or anything similar. Thus one is led to a
concept
of terms and
conditions
in a general sense, applicable across the board, or across the particular boards of the relevant
classes
of employee.
[4] In other words, the object of section 1(2)(
c)
and 1(6) is to ensure that a woman doing work of the same value 'in the same employment' enjoys equal terms and
conditions.
If the woman and the man are employed by the same or an associated employer at the same establishment then they are, well understandably, to be treated as in the same employment under the first two lines of the last phrase of section 1(6). ...
[5] It may be, however, that the man to whose work the woman alleges her work for the same or any associated employer is of equal value may be employed at a different establishment of the employer or associated employer. Then she is to be treated as in the same employment as the man if her establishment and his establishment are in the same
concern
and if at those establishments (this follows from the use of the words 'at which' in the subsection)
common
terms and
conditions
are observed either generally or for employees of the relevant
classes,
that is to say, the
class
of employee of which the woman is a member and the
class
of which the man is a member. Before the woman
can
have an equality
claim
there must, either throughout the employer's business, or at least in relation to the
classes
of employee to which each belong, uniformity of employment. A woman working in an establishment A, ex hypothesi doing work of the same value as the man,
cannot
have an equality
claim
in respect of that man working in establishment B,
cannot
to that end
claim
to be in the same employment as the man, unless at least she and her fellow employees doing the same work in establishment A and the man and his fellow employees doing the same work in establishment B each are subject to
common
terms and
conditions.
Otherwise either the woman or the man or both might be a 'rogue' enjoying uncommon terms and
conditions
of employment, possibly because of the particular establishment in which they work."
- In the House of Lords Lord Bridge delivered the only substantial speech on the same employment point. After setting out the history, he summarised the rival
contentions
as follows, at pp. 744-5:
"On the question whether the appellant was in the same employment as the
comparators
working at different establishments, the view which prevailed with the majority of the industrial tribunal, the Employment Appeal Tribunal, and the majority of the
Court
of Appeal was that the
comparison
called
for by section 1(6) was between the terms and
conditions
of employment of the appellant on the one hand and of the
comparators
on the other and that it was only if this
comparison
showed their terms and
conditions
of employment to be 'broadly similar' that the test applied by the phrase '
common
terms and
conditions
of employment' in section 1(6) was satisfied. The majority of the industrial tribunal, affirmed by the Employment Appeal Tribunal and the majority of the
Court
of Appeal, held that the difference in this
case
in working hours and holidays was a radical difference in the '
core
terms' of the respective
contracts
of employment which prevented the
comparison
from satisfying the statutory test. The
contrary
view embraced by the dissenting member of the industrial tribunal and by May L.J. in the
Court
of Appeal was that the
comparison
called
for was much broader, viz. a
comparison
between the terms and
conditions
of employment observed at two or more establishments, embracing both the establishment at which the woman is employed and the establishment at which the men are employed, and applicable either generally, i.e. to all the employees at the relevant establishments, or to a particular
class
or
classes
of employees to which both the woman and the men belong. Basing himself implicitly on this view, the dissenting member of the industrial tribunal expressed his
conclusion
in the matter tersely. Having referred to the Purple Book, he said:
'3. Within that agreement there are nine sections and numerous
clauses.
They do not apply, with few exceptions, to any particular grade. It is
clearly
a general agreement and not specific to any particular group or
class
of employee.
4. It is, in my opinion, beyond doubt that the applicant and the
comparators
are employed on
common
terms and
conditions,
i.e. the A.P.T. &
C.
agreement, and
clearly
it is within the provisions of section 1(6).'"
- At p. 745 D-E Lord Bridge says that he prefers the minority view in the
courts
below. He
continues
(p. 745 E-G):
"It seems to me, first, that the language of the subsection is
clear
and unambiguous. It poses the question whether the terms and
conditions
of employment 'observed' at two or more establishments (at which the relevant woman and the relevant men are employed) are '
common',
being terms and
conditions
of employment observed 'either generally or for employees of the relevant
classes'.
The
concept
of
common
terms and
conditions
of employment observed generally at different establishments necessarily
contemplates
terms and
conditions
applicable to a wide range of employees whose individual terms will vary greatly inter se. On the
construction
of the subsection adopted by the majority below the phrase 'observed either generally or for employees of the relevant
classes'
is given no
content.
Terms and
conditions
of employment governed by the same
collective
agreement seem to me to represent the paradigm, though not necessarily the only example, of the
common
terms and
conditions
of employment
contemplated
by the subsection."
Although Lord Bridge goes on to give further reasons in support of his
conclusion,
it is important to appreciate that that paragraph expresses his view of the "
clear
and unambiguous" meaning of the relevant words of section 1 (6) and would accordingly be sufficient if it stood alone.
- In the two following paragraphs Lord Bridge goes on to explain why what he regards as the
clear
meaning of the statutory language also accords with "the manifest purpose of the legislation". He says, at pp. 745-6:
"That purpose is to enable a woman to eliminate discriminatory differences between the terms of her
contract
and those of any male fellow employee doing like work, work rated as equivalent or work of equal value, whether he works in the same establishment as her or in another establishment where terms and
conditions
of employment
common
to both establishments are observed. With all respect to the majority view which prevailed below, it
cannot,
in my opinion, possibly have been the intention of Parliament to require a woman
claiming
equality with a man in another establishment to prove an undefined substratum of similarity between the particular terms of her
contract
and his as the basis of her entitlement to eliminate any discriminatory differences between those terms.
On the
construction
of section 1(6) which I would adopt there is a sensible and rational explanation for the limitation of equality
claims
as between men and women employed at different establishments to establishments at which
common
terms and
conditions
of employment are observed. There may be perfectly good geographical or historical reasons why a single employer should operate essentially different employment regimes at different establishments. In such
cases
the limitation imposed by section 1(6) will operate to defeat
claims
under section 1 as between men and women at the different establishments. I take two examples by way of illustration. A single employer has two establishments, one in London and one in Newcastle. The rates of pay earned by persons of both sexes for the same work are substantially higher in London than in Newcastle. Looking at either the London establishment or the Newcastle establishment in isolation there is no sex discrimination. If the women in Newcastle
could
invoke section 1 of the Act of 1970 to achieve equality with the men in London this would eliminate a differential in earnings which is due not to sex but to geography. Section 1(6) prevents them from doing so. An employer operates factory A where he has a long standing
collective
agreement with the ABC union. The same employer takes over a
company
operating factory X and becomes an 'associated employer' of the persons working there. The previous owner of factory X had a long standing
collective
agreement with the XYZ union which the new employer
continues
to operate. The two
collective
agreements have produced quite different structures governing pay and other terms and
conditions
of employment at the two factories. Here again section 1(6) will operate to prevent women in factory A
claiming
equality with men in factory X and vice versa. These examples are not, of
course,
intended to be exhaustive. So long as industrial tribunals direct themselves
correctly
in law to make the appropriate broad
comparison,
it will always be a question of fact for them, in any particular
case,
to decide whether, as between two different establishments, '
common
terms and
conditions
of employment are observed either generally or for employees of the relevant
classes'.
Here the majority of the industrial tribunal misdirected themselves in law and their
conclusion
on this point
cannot
be supported."
- Mr Jeans submitted that the two examples given in the second paragraph of that passage showed the essence of Lord Bridge's ratio, namely that terms were only
common
between two establishments when the "regimes" at both had a
common
genesis, in terms of either history or geography. I do not accept that. As I have noted, Lord Bridge had already stated his fundamental ratio, based on what he took to be the plain meaning of the statutory language. This passage simply gives illustrations of
circumstances
in which "non-
common"
terms and
conditions
might be observed as between different establishments of the same employer.[1] The word "regime" is perfectly appropriate for the point that he was making, but it is not useful as an all-purpose alternative to the statutory language.
- I do not think that there is any doubt about the ratio of Leverton, but because the history of this
case
suggests that there is still some uncertainty it may be useful if I state it
concisely
here. The essential
concept
conveyed
by the reference to "
common
terms and
conditions
… [being] observed" at two establishments is that no distinction is made between the establishments as regards what terms and
conditions
apply (at least for the relevant
classes).
That is what May LJ, whose reasoning was approved by the House of Lords, means by referring to terms and
conditions
applying "across the board" (para. [3] in the passage quoted). And that is why Lord Bridge says that the existence of a single
collective
agreement like the APT&
C
agreement is the paradigm
case
of
common
terms and
conditions
being observed at different establishments, because such an agreement (typically) prescribes terms without reference to a particular workplace. In their submissions in the House of Lords
counsel
for the applicant – Mr Anthony Lester QC and Mr David Pannick – described the relevant test as being whether the terms and
conditions
"differ according to the establishment at which that person is employed" and
continued:
"in other words, are the terms and
conditions
applicable to the relevant jobs irrespective of the establishment at which the employees work?" (p. 731
C-D).
That is in my view the essence of the test adopted by the House in Leverton.
- That ratio involves the explicit rejection of the approach taken by the majority in the IT and this
Court,
which had involved
considering
the degree of similarity or otherwise between the terms of the applicant and the
comparator(s):
see, most explicitly Lord Bridge's statement that Parliament did not intend that a woman "should have to prove an undefined substratum of similarity between the particular terms of her
contract
and [her
comparator's]".
Although this approach should therefore be dead, the history of the present
case
shows that it is not willing to lie down.
- [Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]It also follows from the
correct
approach that it is not necessary that any employees in the
comparator's
class
should actually be employed in the
claimant's
establishment. If, to take Lord Bridge's paradigm
case,
the employer has negotiated a
collective
agreement providing for the terms and
conditions
of its employees (or at least those in the relevant
classes)
at all its establishments
common
terms and
conditions
for those employees will, necessarily, apply at those establishments irrespective of who actually works there. One way of making the same point is to say that if someone in the
comparator's
class
was employed at the
claimant's
establishment he would enjoy the terms in question. Although that hypothesis is at the
centre
of the analysis in the later
cases
considered
below, it is not explicitly deployed in Lord Bridge's speech in Leverton: however, the substantive point is illustrated by the facts of the
case,
since there were no
clerical
workers employed at the applicant's school.[2]
Smith
- In British
Coal
Corporation
v Smith [1996] ICR 515 the applicants were female
canteen-workers
and
cleaners
employed at British
Coal
establishments[3] seeking the same terms and
conditions
as surface mineworkers at a number of pits. Some of the applicants worked at the same pits as their
comparators,
but others did not and needed to make
cross-establishment
claims.
Terms and
conditions
of employment for
canteen-workers
and
cleaners
were governed by a single national
collective
agreement which applied at every establishment, but the position as regards surface mineworkers was not so straightforward. Most of their terms and
conditions
were also governed by a single national
collective
agreement, but –
crucially
to the issues on the appeal – in two particular respects that was not the
case:
entitlement to
concessionary
fuel was determined on an area-by-area basis and incentive bonus payments (which might represent as much as 15% of earnings and were accordingly
certainly
not de minimis) were the subject of pit-by-pit negotiation.
- It was British
Coal's
case
that the differences as regards
concessionary
coal
and incentive bonus meant that mineworkers
could
not be said to be employed on
common
terms and
conditions:
it was necessary for the purpose of section 1 (6) that all terms and
conditions
be
common
(subject possibly to a de minimis exception). That issue had not arisen in Leverton because it was not
contended
that the APT&
C
agreement was anything other than
comprehensive
as regards the range of terms
covered.
- The IT rejected that argument. Its essential reasoning is set out at pp. 528-9 in the speech of Lord Slynn in the House of Lords. I need not reproduce it in full here. In short, it held that the terms and
conditions
of mineworkers
could
still be regarded as
common
across all British
Coal's
establishments notwithstanding the limited degree of local variation as regards incentive bonus and
concessionary
coal.
All mineworkers were entitled to incentive bonus structured in essentially the same way, albeit that there were differences in the detailed implementation; and, as it put it, "local variations do not destroy the
centralised,
industry-wide nature of the entitlement" (p. 529E). Likewise the fact that in some areas the entitlement to
concessionary
coal
was higher than in others did not mean that
common
terms and
conditions
were not observed between the areas in question.
- That decision was upheld by the EAT but reversed in this
Court.
It was, however, restored by the House of Lords. Lord Slynn delivered the only speech. He described the IT as having taken "a broad
common
sense approach … in accordance with the speech of Lord Bridge [in Leverton]" (p. 528 G-H).
- In my view the ratio of Smith is, and is only, that in
considering
whether
common
terms and
conditions
are observed as between employees in the
comparator's
class
HREF='#note4'>[4] at two establishments – that is, the
claimant's
establishment and the
comparator's
– it is not necessary that all the terms are
common:
"broad
commonality"
is enough[5]. Nothing else was in issue. However I should refer to three other points.
- First, Lord Slynn recognised, though the point was not in dispute, that it was not necessary for the purpose of a
cross-establishment
claim
that anyone in the
comparator's
class
should actually be employed at the
claimant's
workplace. He said, at p. 526 F-G:
"If there are no such men at the
claimant's
place of work then it has to be shown that like terms and
conditions
would apply if men were employed there in the particular jobs
concerned."
That is of
course
the hypothesis to which I have already referred in the
context
of Leverton: see para. 36 above.
- Secondly, it was
common
ground in Smith that what was required was a
comparison
between the terms applied to employees in the
comparator
class
employed (a) at the
comparator's
establishment and (b) (though possibly only hypothetically) at the
claimant's
establishment – i.e. between the terms enjoyed by mineworkers at different establishments. The
comparison
is between the terms applicable at the two establishments, not between the terms applicable to
claimant
and
comparator.
Exactly that point was of
course
decided in Leverton: see para. 35 above.
- Thirdly, Lord Slynn
characterised
the applicants'
case,
which he accepted, as being that it was sufficient that "there be a broad similarity of terms" (p. 526H) and said that it was right for the IT to
carry
out a "broad
comparison"
(pp. 528 F-G and 530
C-D).
That is unexceptionable, but the history of the present
case
shows that the phrase is
capable
of being (mis)understood as referring to a similarity between the applicants' terms and their
comparators'.
As I have just said, that is not the relevant
comparison.
The "broad similarity" which Lord Slynn said was required was between the terms of the surface mineworkers at different pits: if there was no such similarity it would be impossible to say that mineworkers enjoyed the same terms wherever they worked and thus that a mineworker employed at an office in, say, London where a
claimant
worked would be paid the same as her
comparator
at a pit in Yorkshire.
North
- In North v Dumfries and Galloway
Council
[2013] UKSC 45, [2013] ICR 993, the
claimants
were
classroom
assistants and nursery nurses employed at schools operated by the respondent
council
who sought to
compare
their pay with that of manual workers employed by the
council
at various depots. The terms of both the
claimants
and their
comparators
were governed by (different) national
collective
agreements – "the Blue Book" in the
case
of the
claimants
and "the Green Book" in the
case
of the manual workers. The ET
considered
the hypothesis identified at para. 42 above and found that if the manual workers had been employed at the
claimants'
schools they would have been employed on Green Book terms: as a
collective
agreement it applied to all the
council's
employees wherever they worked. On that basis it held that
common
terms and
conditions
applied (for the relevant
classes)
at the schools and the depots.
- The
core
facts in North are very
close
to those in Leverton, and the ET's
conclusion
might have appeared inevitable. The only apparent difference is that there were separate
collective
agreements for the
claimants'
class
and the
comparators',
whereas in Leverton a single agreement
covered
both. But, as Lady Hale, who delivered the only judgment, pointed out at para. 10 (p. 997 D-E), that
can
make no difference: what matters is that the terms under both agreements apply wherever employees of the relevant
classes
are employed. However, the
council's
case
was that it did not make sense to describe terms as being "observed" at an establishment if an employee of the relevant
class
would never in practice be employed there, and that in such a
case
the hypothesis applied by the ET was illegitimate. It had to be at least "feasible" that a manual worker would be employed at one of the
council's
schools, and the evidence in the ET had been that it was not, or in any event that if he were his terms and
conditions
would in practice have to be varied: see para. 32 of Lady Hale's judgment (p. 1003 G-H).
- Lady Hale rejected the
council's
case.
She expressly accepted the argument of Ms Dinah Rose QC for the
claimants,
which she summarised as follows, at para. 30 (p. 1003 B-D):
"Not surprisingly, Ms Rose … argues that the tribunal should not speculate about the adjustments to the
comparators'
present terms and
conditions
which might be made in the unlikely event that they were transferred to the
comparators'
workplace. The hypothesis is that the
comparators
are transferred to do their present jobs in a different location. The question is whether in that event, however unlikely, they would remain employed on the same or broadly similar terms and
conditions
to those applicable in their
current
place of work. As Lord Slynn had recognised in [Smith], the object of the legislation was to allow
comparisons
to be made between workers who did not and never would work in the same workplace. An example might be a manufacturing
company,
where the (female)
clerical
workers worked in an office block, whereas the (male) manufacturers worked in a factory."
Lady Hale also endorsed Ms Rose's submission, summarised at para. 31 (p. 1003 E-F), that it was "unnecessary and illegitimate" to hypothesise the existence of a
completely
new all-purpose handyman, who might be the kind of manual worker who
could
plausibly be employed at a school.
- At paras. 4-14 (pp. 996-8) Lady Hale reviewed the decisions in Leverton and Smith. At para. 12 (p. 998 D-E) she summarises the relevant principles to be derived from them as follows:
"First, the '
common
terms and
conditions'
referred to in section 1(6) are not those of, on the one hand, the women applicants and, on the other hand, their
claimed
comparators.
They are, on the one hand, the terms and
conditions
under which the male
comparators
are employed at different establishments from the women and, on the other hand, the terms and
conditions
under which those male
comparators
are or would be employed if they were employed at the same establishment as the women. Second, by '
common
terms and
conditions'
the subsection is not looking for
complete
correspondence
between what those terms are, or would be, in the woman's place of work. It is enough that they are, or would be, broadly similar."
The first of those points is the one which I have made at paras. 35 and 43 above, and the second (though slightly
compressed)
is the point which was the subject of the actual decision in Smith.
- Lady Hale
continues,
at para. 13 (p. 998 F-G), by spelling out Lord Slynn's point that the
commonality
of terms between the two establishments may be hypothetical. She says:
"It is also plain from the reasoning of both Lord Bridge in the Leverton
case
[1989] ICR 33 and Lord Slynn in the British
Coal
Corpn
case
[1996] ICR 515 that it is no answer to say that no such male
comparators
ever would be employed, on those or any other terms, at the same establishment as the women. Otherwise, it would be far too easy for an employer so to arrange things that only men worked in one place and only women in another. This point is of particular importance, now that women are entitled to
claim
equality with men who are doing
completely
different jobs, provided that the women are doing jobs of equal value. Those
completely
different jobs may well be done in
completely
different places from the jobs which the women are doing."
- At paras. 33-41 (pp. 1003-6) Lady Hale gave five reasons for preferring the
claimants'
case
on the "feasibility" issue. The first is that on the reported facts in Smith it might well not have been feasible for a mineworker to be employed at some of the applicants' workplaces (see n. 3 above). The second is that to require such a test (or the
cognate
"real possibility" test) was an unwarranted gloss on the language of the statute. The remaining three reasons I should set out in full.
- Lady Hale's third reason is that the adoption of a requirement that an employee in the
comparator's
class
might realistically, even if in fact they did not, work at the
claimant's
establishment would defeat the policy objectives of the equal pay provisions. She says, at para. 34 (p. 1004 A-D):
"In the third place, to adopt such a test would be to defeat the object of the exercise. This is not just a matter of preventing employers from so organising their workplaces that the women work in one place and the men in another. There may be perfectly good reasons for organising the work into different places. But the object of the legislation is to secure equality of treatment, not only for the same work, but also for work rated as equivalent or assessed by the experts to be of equal value. It stands to reason, therefore, that some very different jobs which are not or
cannot
be
carried
out in the same workplaces may nevertheless be rated as equivalent or assessed as having equal value. One example is the (female) office worker who needs office equipment in a
clean
environment and the (male) factory worker who needs machines which
create
dirt and dust. But another is the (female) factory worker who puts microscopic
circuits
on silicon
chips
in one factory and the (male) factory worker who assembles
computer
parts in another. The fact that of necessity their work has to be
carried
on in different places is no barrier to equalising the terms on which it is done. It is well known that those jobs which require physical strength have traditionally been better rewarded than those jobs which require dexterity. It is one of the objects of the equality legislation to iron out those traditional inequalities of reward where the work involved is of genuinely equal value."
- The fourth reason is given at para. 35 (p. 1004 D-G). Lady Hale starts by saying:
"… [I]t is not the function of the same employment test to establish
comparability
between the jobs done. That
comparability
is established by the like work, work rated as equivalent and work of equal value tests."
She refers also to the possibility of explaining any differential by reference to section 1 (3) of the 1970 Act. She
continues:
"The 'same employment' test should not be used as a proxy for those tests or as a way of avoiding the often difficult and
complex
issues which they raise (tempting though this may be for large employers faced with multiple
claims
such as these). Its function is to establish the terms and
conditions
with which the
comparison
is to be made. The object is simply to weed out those
cases
in which geography plays a significant part in determining what those terms and
conditions
are."
- In his oral submissions Mr Jeans submitted that that passage showed that Lady Hale only understood
comparability
to be possible where an employer agrees to
collective
agreements applying across its workforce and "is not operating separate businesses in separate locations". That was important because
Asda's
retail and distribution operations were in substance different businesses, with wholly different origins and locations: see para. 6 above. I do not believe that Lady Hale meant any such thing. She was doing no more than acknowledging the role of the "same employment" test as a filter, while emphasising its limited purpose. The passage is not directed at defining the
circumstances
in which
common
terms and
conditions
apply across establishments. It is in fact
clear
from the passages quoted at paras. 49 and 57 above that she envisaged
cross-establishment
comparisons
being possible between very different kinds of operation of the same employer.
- Lady Hale's fifth reason is that the
claimants'
construction
of section 1 (6) "is more
consistent
with the requirements of European Union law": see para. 36 (p. 1004 G-H). She develops that point at paras. 37-41 by reference specifically to the decision of the
CJEU
in Lawrence (see para. 24 above). It is necessary to
consider
what she says with some
care.
- In Lawrence local authority staff had been transferred under TUPE to the employment of a private
contractor.
They sought to bring equal pay
claims
by reference to the terms of employees who had remained in the
council's
employment. On a reference the
Court
held that such
comparison
was not legitimate. At paras. 17-18 of its judgment (pp. 1108-9) it said:
"17. There is, in this
connection,
nothing in the wording of article 141(1) EC to suggest that the applicability of that provision is limited to situations in which men and women work for the same employer. The
court
has held that the principle established by that article may be invoked before national
courts
in particular in
cases
of discrimination arising directly from legislative provisions or
collective
labour agreements, as well as in
cases
in which work is
carried
out in the same establishment or service, whether private or public: see, inter alia, Defrenne [1976] ICR 547, 568, para 40; Macarthys Ltd v Smith (
Case
129/79) [1980] ICR 672, 690, para 10, and Jenkins v Kingsgate (
Clothing
Productions) Ltd (
Case
96/80) [1981] ICR 592, 613–614, para 17.
18. However, where, as in the main proceedings here, the differences identified in the pay
conditions
of workers performing equal work or work of equal value
cannot
be attributed to a single source, there is no body which is responsible for the inequality and which
could
restore equal treatment. Such a situation does not
come
within the scope of article 141(1) EC. The work and the pay of those workers
cannot
therefore be
compared
on the basis of that provision."[6]
- At paras. 36-39 of her judgment Lady Hale refers to that passage and sets out
corresponding
passages from the opinion of the Advocate-General. At the beginning of para. 40 (p. 1006 A-B) she says:
"The position is thus that, for the principle of equal pay to have direct effect, the difference in treatment must be attributable to a single source which is
capable
of putting it right."
She goes on to observe that there appears to be "no
case
in the
Court
of Justice in which the principle of equal pay has not been applied between men and women who work for the same employer". She reviews the decision of this
Court
in Robertson v Department for Environment, Food and Rural Affairs [2005] EWCA
Civ
138, [2005] ICR 750, in which a
comparison
was not permitted between the terms of
civil
servants in different departments: although all
civil
servants are formally employed by the
Crown,
responsibility for setting terms and
conditions
had been delegated by legislation to the different Ministers.
- At para. 41 Lady Hale
concludes
that it is unnecessary to decide whether Robertson was
correctly
decided. (I note in passing that that means that lower
courts,
including this
Court,
remain bound by it.) She
continues
(p. 1006 D-F):
"In this
case
it is quite
clear
that the difference in treatment between the
claimants
and their
comparators
is attributable to a single source, namely the local authority which employs them and which is in a position to put right the discrepancy if required to do so. If section 1(6) were to operate as a barrier to a
comparison
which was required by EU law in order to give effect to the fundamental principle of equal treatment, it would be our duty to disapply it. However, for the reasons given earlier, it sets a low threshold which does not operate as a barrier to the
comparison
proposed in this
case."
- I believe that the effect of Lady Hale's reasoning on the single source point
can
be analysed as follows:
(1) The fact that the
claimants
were employed by the same employer as their
comparators
meant, in that
case,
that their terms and
conditions
had a single source within the meaning of Lawrence: see para. 56 above. In my view it is
clearly
implicit in para. 40 of her judgment that in the ordinary
case
employment by the same employer will satisfy the requirement for a single source. By declining to reach a
conclusion
about Robertson Lady Hale left open the possibility that there might be
cases
where a person who was in law the employer might not be regarded as the "source" of their employees' terms of employment; but such
cases
would be untypical.
(2) It followed that as a matter of EU law the
claimants
were entitled to
compare
themselves with the
comparators:
that is necessarily implicit in the second and third sentences of para. 41. It is also necessarily implicit that Lady Hale saw nothing in the
circumstances
of North itself that might take it outside the general rule stated above.
(3) The "low threshold" for
comparison
which on her
construction
section 1 (6) in any event presented (the reference, I am sure, is to her fourth reason – para. 52 above) meant that domestic law allowed the
cross-establishment
comparison
in the instant
case
(see the final sentence of para. 41), so that EU law need only be relied on as an additional reason supporting that
construction
(see para. 36). I do not understand Lady Hale to have been adopting a Marleasing approach, but it would not matter if she were.
(4) If,
contrary
to (3), section 1 (6) would prevent the
comparison,
it would have to be disapplied because the
claimants'
right to
compare
with their
claimed
comparators
had direct effect under article 157 as applied by Defrenne: see the penultimate sentence of para. 41, read with the first sentence of para. 40.
- The first three elements in that analysis are plainly ratio, but the final element is obiter. In short, North is in my view binding authority that the fact that
claimant
and
comparator
have the same employer will in the ordinary
case
mean that the terms have a single source and thus that EU law permits
comparison
between them for equal pay purposes; but it is not binding authority that EU law is in that respect directly effective.
- It is
convenient
at this stage to deal with
Asda's
second ground of appeal before us, which is that "'single source' is not a sufficient basis for
comparison".
Mr Jeans submitted that the parameters for
comparison
since Defrenne had been that the relevant employees should be "in the same establishment or service". He emphasised the
centrality
of the
concept
of the establishment across many fields of EU employment law and referred us to authority showing that it typically refers to a particular workplace (e.g. the decision of the
CJEU
in USDAW v WW Realisation 1 Ltd (
C-80/14)
[2015] ICR 675). He was
constrained
to acknowledge that the phrase "or service" might widen the scope of permitted
comparison
to some extent; but he said that it did not go so far as to
cover
all employees of the same employer. The issue in Lawrence itself was whether the
claimants
could
pursue a
comparison
with employees of a different employer: what it established was that identity of employer was a necessary
criterion,
but it was not
concerned
with whether it was sufficient. He accepted that some domestic authorities had appeared to understand it that way, but he argued that they were wrong and not binding on us. We were referred (though not in most
cases
in his oral submissions) to: South Ayrshire
Council
v Morton [2002] ScotCS 42, [2002] ICR 956; Armstrong v Newcastle upon Tyne NHS Hospital Trust [2005] EWCA
Civ
1608, [2006] IRLR 124; South Tyneside Metropolitan Borough
Council
v Anderson [2007] EWCA
Civ
654, [2007] ICR 1581; Potter v North
Cumbria
Acute Hospitals NHS Trust [2008] UKEAT 0004/08/1704, [2009] IRLR 176; Beddoes v Birmingham
City
Council
[2010] UKEAT 0037/10/0905, [2011] 3
CMLR
42;
City
of Edinburgh
Council
v Wilkinson [2011]
CSIH
70, [2012] IRLR 202; and Glasgow
City
Council
v Unison
Claimants
[2014] ScotCS
CSIH
27, [2014] IRLR 532.
- I do not believe that this ground of appeal
can
succeed in the light of North. The Supreme
Court
decided, as part of its ratio, that on the facts of the
case
before it identity of employer was as a matter of EU law a sufficient basis for
comparison.
Those facts are essentially typical; although Lady Hale left open the possibility that there might be
cases
where the employer was not the "source" of all its employees' terms that
could
only be on the basis of exceptional facts of some kind. That being so, I see no advantage in myself
conducting
any detailed examination of the authorities, including Lawrence. I acknowledge that paras. 36-41 of Lady Hale's judgment in North are very shortly reasoned and do not address any of the domestic authorities to which we were referred. But the passage is
clear,
and since it is binding there is nothing more to be said. I would, however, add that even in the absence of authority I think it likely that I would have
come
to the same
conclusion,
as Kerr J did in the EAT (see paras. 41-47 of his judgment).
- My
conclusion
on this point overlaps with
Asda's
third ground of appeal, which is that even if "single source" is as a matter of EU law a gateway to
comparability
the fact that it was the employer of both the
Claimants
and the
comparators
does not on the facts of the present
case
mean that their terms had a single source. But it is more
convenient
to address that point later in this judgment: see paras. 107-114 below.
Overview of the Relevant Law
- I should summarise what I believe to be the effect of those authorities as regards
cross-establishment
comparisons
as a matter of domestic law.
- The over-arching point is that at least in the ordinary
case
EU law will permit an employee to
compare
herself with any employee of the same employer: see para. 58 (1) above. It follows, on Marleasing principles, that unless there is some special feature of the
case,
as there was in Robertson, a tribunal will be bound to
construe
the provisions of the 2010 Act, so far as possible, to allow such a
comparison.
It may be tempting to treat that as a short-
cut
obviating the need to
consider
the domestic provisions altogether, but that would be wrong in principle. The domestic provisions must be the starting-point, even if they fall to be
creatively
construed
so as to achieve
conformity
with EU law. (I am not at this stage
considering
direct effect.) Accordingly, in the summary that follows I proceed wholly by reference to the domestic provisions.
- I make three introductory points:
(1) The authorities are all
concerned
with section 1 (6) of the 1970 Act and it will be easier if I take its language as a starting-point, save that I will refer to terms "applying", as in the 2010 Act, rather than "being observed", because it
clearly
means the same thing and is more
convenient.
(2) I will use the formulation "for employees of the relevant
classes"
from the 1970 Act: I
consider
below whether the formulation "as between A and B" in the 2010 Act has a different effect.
(3) I will refer to A's establishment as X and B's as Y and will assume that A is a
cleaner
and B a manual worker.
- First, the question whether
common
terms apply at X and Y depends on whether they apply irrespective of which particular establishment a relevant employee is employed at: see Leverton, as summarised at para. 34 above. The test will be satisfied whether that is so "generally" (i.e. for all employees) or only for employees in the relevant
classes
– that is, the
classes
to which A and B respectively belong. Which gateway it makes sense to focus on depends on the
circumstances
of the particular
case
(as to this, see further para. 73 below).
- Second, that question entails
comparing
the terms applying as between the two establishments, not as between the
claimant
and the
comparator:
that is
clear
from each of Leverton, Smith and North (paras. 35, 43 and 48 above). At the risk of spelling it out unnecessarily, the tribunal needs to ask either "do
common
terms of employment apply at X and at Y for all employees ?" (the "generally" alternative) or "do
common
terms of employment apply for
cleaners
at X and at Y and for manual workers at X and at Y ?" (the "relevant
classes"
alternative). In the oral submissions before us the
correct
comparison
was described as "vertical", and the incorrect as "horizontal": I am not sure the labels are perfect, but they will do as a shorthand.
- Third,
common
terms apply at X and Y not only where they apply to actual employees in the relevant
classes
working there but where they would apply, even if a manual worker would never in practice be employed at X or a
cleaner
at Y. That is, as I have said, implicit in Leverton but it is explicitly
confirmed
in Smith and North: see paras. 42 and 49 above. This was described in the ET and the EAT as "the North hypothetical": that is not really accurate, because the point pre-dates North, but I will adopt the label for present purposes. It is important to understand the role of the North hypothetical. The fact that if a manual worker were employed at X he would enjoy the same terms as B is a
consequence
of the fact (if established) that the same terms apply for manual workers irrespective of where they work: it is not the test as such.
Considering
the North hypothetical is a potentially useful thought-experiment, but it will often be possible to answer the question whether
common
terms apply, even if no-one in B's
class
is employed at X, without resort to it: it was not
considered
in Leverton, because it was enough to point to the fact that the Purple Book applied to all the
council's
employees wherever they might be employed.
- Fourth, even where it is helpful expressly to
consider
the North hypothetical, doing so does not involve working out a detailed scenario under which someone in the
comparator's
class
might be employed at the
claimant's
establishment, with some adjustment to the facts, and then asking what terms would apply in that scenario. As Lady Hale made
clear
by accepting Ms Rose's submissions in North (see para. 47 above), an exercise of
creative
imagination of that kind is not required. The North hypothetical is, to repeat, simply a way of asking whether the terms for the relevant employees apply irrespective of where they work.
- Fifth, it will be straightforward to answer the North hypothetical question in the
claimant's
favour if there is a
collective
agreement governing the terms of the two
classes
without reference to where they work; and that is so whether it is a single agreement which
covers
both
classes
(as in Leverton) or separate agreements for each
class
(see per Lady Hale in North – para. 46 above). But although that is the paradigm
case
it is not the only basis on which it may be possible to find that
common
terms and
conditions
apply (or, more particularly, that the North hypothetical is satisfied). It would equally be the
case,
for example, if an employer "imposed" terms on an across-the-board basis; or, simply, if it
could
be seen that as a matter of fact employees in the relevant
classes
enjoyed the same terms and
conditions
wherever they were employed.
- Sixth, the requirement that
common
terms apply as between the establishments does not mean that all the terms of the relevant employees at both must be
common.
It is enough that terms of
cleaners
at X and
cleaners
(actual or hypothetical) at Y and of manual workers at Y and manual workers (actual or hypothetical) at X are "broadly"
common,
taking a
common
sense approach: see Smith (and North: paras. 43 and 49 above).
- Seventh, it follows from the foregoing – and specifically from para. 67 – that it is irrelevant whether there is any similarity between the actual terms of A and B. The question is whether the terms for
cleaners
are (or would be) the same (or broadly so) whether they are employed at X or at Y and likewise as regards the terms for manual workers. If that test is satisfied,
cleaner
and manual worker terms may be identical to each other (save of
course
in the respect which gives rise to the
claim),
or wholly different in structure and
content,
or anywhere in between.
- Finally, it should be noted that on a strict analysis the "generally" alternative is redundant. All that a
claimant
need ever prove is that
common
terms and
conditions
apply for the two relevant
classes
– that is, hers and the
comparator's:
that
cannot
be a more demanding test than proving that they apply generally and will typically be less demanding. To put it another way, the effect of the words is, logically, "generally or at least for employees of the relevant
classes".
Proving that broadly similar terms and
conditions
apply between establishments "generally" – i.e. for all
classes
of employee – is simply one way of proving that they apply for the
classes
in question; but it may be a more straightforward route in a particular
case.
HAS THE 2010 ACT
CHANGED
THE LAW ?
- As already noted, the phrase in section 1 (6) of the 1970 Act "establishments … at which
common
terms and
conditions
of employment are observed either generally or for employees of the relevant
classes"
is replaced in section 79 (4) (
c)
by "
common
terms apply at the establishments (either generally or as between A and B)".
Asda
unsuccessfully
contended
in both the ET and the EAT that the effect of that
change
is to alter the substantive
comparison
required, and thus also remove the justification for applying the North hypothetical. It maintains that
contention
before us as ground 10 in its grounds of appeal. Mr Jeans submitted that the plain effect of the new wording was that the only question was whether the
claimant
and
comparator
as individuals enjoyed broadly similar terms with each other, i.e. a "horizontal"
comparison,
and that the "vertical"
comparison
between employees of the same
class
in the two establishments was no longer necessary. He speculated that Parliament might reasonably have regarded the law as stated in Smith as "surprising".
- I agree with the ET and the EAT in rejecting that submission. Since the point is one of pure law I need not set out their reasoning but will simply state my own (though I believe it broadly
corresponds
to theirs).
- My starting-point is that I regard it as very unlikely that Parliament in enacting the 2010 Act intended to make any substantive
change
for the worse to the rights of equal pay
claimants,
as it would do if Mr Jeans' submission were
correct.
Mr Jeans acknowledged that there was nothing in the White Paper or the Explanatory Notes – or indeed in any other travaux préparatoires – reflecting a
concern
of the kind which he suggested. In any event, I
can
see nothing surprising about the effect of section 1 (6) as interpreted in the
case-law.
On the
contrary,
it seems to me entirely
congruent
with the overall scheme. At this preliminary stage of the analysis it makes sense that the focus is only on
commonality
of terms between establishments: the time for
comparing
the terms of the
claimant
and her
comparator
is at the substantive stage, if a
cross-establishment
claim
is permitted.
- It is necessary nevertheless to address the actual language of section 79 (4) (
c).
I accept that as a matter of language both the reference to "A and B" and the phrase "as between" naturally suggest a
comparison
between the terms of the actual
claimant
and
comparator.
But I do not think that that is the only possible meaning, and I am satisfied that it
cannot
have been the intention here. That is not only for the reason given in the preceding paragraph. More importantly, such a
construction
simply does not make sense in the specific
context
of section 79 (4). The
condition
which head (
c)
prescribes is that "
common
terms apply at the establishments", i.e. the
claimant's
establishment and the
comparator's
establishment; and the parenthetical words relied on are subordinate to that requirement. It would make no sense for the question whether
common
terms apply at the two establishments to depend simply on whether A and B themselves have
common
terms. Such an approach would in practice restore the position which was explicitly rejected in Leverton, which would be an even more drastic
change
than the rejection of the North hypothetical. In my view it is quite
clear
that the draftsman has unthinkingly deployed the technique, used throughout the 2010 Act, of referring to
claimants
and other parties by letters of the alphabet and has failed to appreciate that it
could
be read as effecting a substantive
change.
I believe that it is possible to
construe
the statutory language, having regard to the legislative history and purpose, as
continuing
to refer to the existence of
common
terms for employees of A's
class
and B's
class
at the two establishments. If that were regarded as impossible on any natural use of language, in my view the
case
meets the requirements for an "amending
construction"
prescribed by the House of Lords in Inco Europe Ltd v First
Choice
Distribution [2000] UKHL 15, [2000] 1 WLR 586.
- In short, I do not believe that the
change
in the statutory language effects any
change
in the substantive law, and there is no basis for treating the North hypothetical as being unavailable under the 2010 Act. The new drafting may perhaps be inept but in
context
its meaning is
clear.
There have, regrettably, been several other instances of re-drafting effected by the 2010 Act unintentionally unsettling the previous law.[7]
- I reach that
conclusion
on the basis of ordinary domestic
construction
principles. But I would if necessary rely on a Marleasing approach. For the reasons given at paras. 60-62 above I believe that as a matter of EU law
comparison
should ordinarily be possible between establishments of the same employer, and a
construction
of section 79 (4) (
c)
which inhibits such
comparison
should be avoided if possible.
THE ISSUE WHICH THE ET HAD TO DETERMINE
- It follows from the foregoing that the questions for the ET were whether (broadly)
common
terms and
conditions
applied (a) for retail workers irrespective of where they worked and (b) for distribution workers irrespective of where they worked. Since no retail workers were in fact employed at depots, or distribution workers in stores, that question
could
be framed in terms of the North hypothetical as follows:
(a) if (however unfeasibly) retail workers were employed, in retail jobs, in depots, would they be on the same terms as retail workers employed at stores ? and
(b) if (however unfeasibly) distribution workers were employed, in distribution jobs, in stores, would they be on the same terms as distribution workers employed at depots ?
Although formally both questions were in play, before us – and, I think, in the ET – the focus was on (b), that is on
commonality
of terms for distribution workers.
- I should note one point recorded by the Employment Judge which removed a different potential issue. As noted at para. 9 above, there were some variations between the rates of pay at particular depots. Para. 88 of the Reasons reads:
"It was not suggested that
comparators
who work in a particular distribution
centre
had variations between themselves, although the respondents'
case
is that terms for pay
could
vary from depot to depot."
That is not perhaps
crystal
clear,
but Mr Short explained, without demur from Mr Jeans, that Lord Falconer had been expressly asked in the ET whether
Asda
was arguing that different regimes applied at different depots and had
confirmed
that it was not. The
concession
is not surprising, given that all that is required is "broad"
commonality
of terms and the existence of minor variations between establishments, as in Smith, is immaterial.
THE STRUCTURE OF THE EMPLOYMENT TRIBUNAL'S REASONING
- The Employment Judge dealt with the position under domestic law at paras. 192-256 of his Reasons. He says at para. 192:
"
Common
terms need to be
considered
in three ways: first, whether there are (and were)
common
terms generally as between
claimants
and
comparators;
secondly, whether there were
common
terms, in the alternative, 'for employees of the relevant
classes'
under s. 1 (6) EPA 1970; and, thirdly, whether there are
common
terms 'as between A and B' under s. 79 of the EA 2010 …".
He proceeded to
consider
those three questions in turn. We are not
concerned
with the third, because it is disposed of by my
conclusion
at paras. 74-80 above.
- It
can
be seen that the Judge's
chosen
structure proceeds on the basis that the issues involved in deciding whether
common
terms applied "generally" were substantially different from those involved in deciding whether they applied "for employees of the relevant
classes".
That is reflected in his analysis under each: under the first (headed "
Common
Terms Generally") he addresses the extent to which the terms for retail and distribution employees were "broadly similar", whereas under the second (headed "
Common
Terms for Employees of the Relevant
Classes")
he
considers
the North hypothetical. That distinction is, with respect, misconceived. As noted at para. 73 above, the "generally" and "relevant
classes"
gateways are not real alternatives[8], and the essential question is the same in either
case
– that is, whether terms for the relevant
classes
apply irrespective of where they work.
- However, the fact that the Judge structured his approach to the issue wrongly does not matter if he nevertheless addressed the substance of the matter and reached a sustainable
conclusion.
I take in turn what he says under his two headings, but I substitute headings that reflect their actual
contents.
(1)
COMPARING
THE
CLAIMANTS'
AND
COMPARATORS'
TERMS
The ET's Reasons
- The Employment Judge
concluded
that
common
terms were observed generally at
Asda's
stores and depots. His reasoning is at paras. 194-217 of the Reasons. For reasons which will appear, I need not analyse it in detail. It is founded on an exercise which he had performed earlier, at paras. 88-112. In those paragraphs he painstakingly
compared,
with the assistance of tables provided by the parties, the terms and
conditions
of employment (both
contractual
and non-
contractual)
of, on the one hand,
Asda's
retail employees and, on the other, its distribution employees, identifying areas of similarity and difference. As regards similarity, at para. 99 he said:
"I find that there is no material difference between Retail and Distribution in the following matters: hourly pay[9], admission to the bonus scheme after 6 months service, eligibility to a discount
card
after 12 weeks in service, matched
contributions
of 2 or 3 percent to pension, death benefit scheme entitlement, admission to the share save plan, maternity pay, adoption pay, bereavement pay, jury service pay, mobility, dress requirement, deductions from pay by
Asda
and the right to search."
As regards differences, he identified at para. 100 a number of respects in which there were what he described as "less significant" differences between retail and distribution terms, and at paras. 102-110 a smaller number of "more substantial" differences: for example, retail employees are not entitled to overtime pay while distribution employees are.
- Having performed that exercise, at paras. 212-214 the Judge says (I quote only the points essential to show the nature of the reasoning):
"212. The analysis I have set out in the findings of fact show that there is a significant
correlation
or
comparison
in a broad way between the terms in Retail and Distribution. Although not determinative, the fact that these terms have all been set by staff within the same employer is reflected in the strong similarities in the Handbooks and is for that reason a material factor. The fact that there are similarities in the two
classes
both of which are hourly paid employees is also
capable
of supporting the
comparison.
… .
213. I reject the respondent's submission that because these terms were negotiated over periods of time in different ways for the different groups they
cannot
be
common
terms. …
214. I accept that there are some differences in terms but I do not
consider
that they are so extensive as to undermine the broad
comparison
which had to be made. …"
He
concludes,
at para. 217, that it follows from those findings that "
common
terms apply generally".
Discussion and
Conclusion
- I have to say that I believe that the Employment Judge was in this part of the Reasons
conducting
wholly the wrong exercise. The question he had posed himself at para. 192 was "whether there are (and were)
common
terms generally as between
claimants
and
comparators".
That is flatly
contrary
to the approach required by the authorities as summarised at paras. 67 and 72 above. What, in effect, he was doing was trying to assess whether there was, notwithstanding the differences which were the basis of the
claim,
some "substratum of similarity" between
claimants'
and
comparators'
terms: that is just what in Leverton Lord Bridge said should not be done (see the first paragraph in the passage quoted at para. 32 above). The
Claimants'
terms and the distribution workers'
could
be as different as anything, as long as terms for distribution workers were
common
as between the two establishments. Since no distribution workers were in fact employed at stores (or indeed retail workers in depots), the dispositive issue in the
case
was how the North hypothetical should be answered, which, as noted above, the Judge dealt with only in the
context
of his second heading.
- As I understand it, that point forms part of
Asda's
grounds of appeal 6 and 7, but it
comes
wrapped up with a number of other more particular points about the way in which the Judge
conducted
the exercise.
Asda
contends,
for example, that he wrongly took into account non-
contractual
as well as
contractual
terms, and there is an ancillary debate about which terms are indeed
contractual.
There were also issues about how similar various different kinds of term, e.g. relating to productivity targets, really were. Mr Jeans submitted that the Judge placed an undue emphasis on "broad" similarities which were in truth inevitable: one sick pay scheme, for example, will inevitably look much like another. Since the exercise was fundamentally misconceived I see no need to
consider
those questions. I would only say that the fact that the exercise required the lodging of nineteen files (
containing
over 10,000 documents) and the hearing of days of evidence and argument about the minutiae of retail and distribution terms, without any
conceptual
framework for measuring their similarity or otherwise, is a further powerful reason for
concluding
that it is not what the statute requires.
- Mr Short submitted that, whatever language the Judge might inadvertently have used, he was in substance performing the right exercise; but it seems to me
clear
that he was not. In the EAT Kerr J said at para. 90 of his judgment:
"Nor is there any bar to
comparing
the
content
of the respective sets of terms. To decide whether terms are
common
or not, it is useful to know what the terms are. The Judge was right to ascertain them and the parties were right to put them in evidence before him."
That needs some unpacking. There will in fact be
cases
where it is possible to decide that terms are
common
between two establishments without knowing what they are. If there is a document headed "Terms and
conditions
applying to employees [or, to
cleaners
and manual workers] at X and Y [or, at all establishments]" that will prove
commonality
by itself, whatever their
content
(subject only to
checking
that, despite the title, the document does not provide for different terms at different establishments). In the absence of such a document it may indeed be necessary to go through the actual terms at each establishment for employees in the relevant
classes
to see if they differ between the establishments; but that does not require
comparison
between the terms of the
claimant
and
comparator
classes.
- It seems that the Judge fell into the error that he did because he was a victim of the misunderstanding of the references in Smith to "broad similarity" which I discuss at para. 44 above. I would, however, be slow to
criticise
him for doing so since the
Claimants
submitted that such an exercise was required, and it is far from
clear
that the objections now raised by
Asda
were developed in the same way below.
(2) THE NORTH HYPOTHETICAL
The ET's Reasons
- As already noted, although the Employment Judge's second heading is "
Common
Terms for Employees of the Relevant
Classes"
the actual issue that he
considers
under it is the North hypothetical. At paras. 220-229 of the Reasons he summarises
Asda's
submissions, but I need not set them out because so far as they are relied on in this appeal I address them below. At paras. 230-235 he summarises the
Claimants'
submissions, which at para. 236 he says that he accepts. Since that therefore represents his
core
reasoning I should quote those paragraphs in full:
"230. The
claimants'
submissions were to the effect that Mr Stansfield had accepted in evidence that terms and
conditions
would be maintained if there was a hypothetical depot at the store. It was accepted by both witnesses that the hourly rate would not
change
upon a hypothetical relocation since the employees would be paid the rate for the job.
231. The
claimants
submit that there is no reason to suspect that other matters of detail would
change.
This, it is said is not such a
case
such that all employees who work in Manchester are on one
contract
and all those who work in London are on another. Mr Short pointed out that Baroness Hale in North accepted a submission that the tribunal 'should not speculate about the adjustments to the
comparators'
present terms and
conditions
which might be made in the unlikely event that they were transferred to the
claimants'
workplace'.
232. It was submitted there was no factual basis for
concluding
that there would be significant
changes
in terms and
conditions
because there are no Retail workers anywhere employed other than on Retail terms such that for example none receive premiums for hours worked between 2 and 10 pm nor for overtime. Similarly, no Distribution workers are employed other than on Distribution terms. Whilst there are differences to the enhanced rate paid after 2 pm, all receive a premium after that time and all receive overtime.
233. Where there is great similarity in relation to the terms as between Retail and Distribution they would
clearly
not
change.
The
claimants
point to holiday entitlements after the third year of service and pension arrangements.
234. Again the
claimants
submit that the terms do not need to be identical in this hypothetical situation but only broadly similar.
235. Whilst the
claimants
accept that the treatment of depot staff temporarily deployed to stores is not directly
comparable
they suggest it gives a better indication than witnesses' speculation."
- The Judge begins, as we
can
see, with what is said to have been a
concession
by Mr Stansfield. Mr Jeans submitted that what the Judge records does not reflect the totality of Mr Stansfield's evidence. He referred us to para. 117 of the Reasons, which reads:
"Both Mr Stansfield and Mrs Tatum [
Asda's
'Executive People Director'] were asked in evidence what would be the position in the event of Distribution employees, however unlikely that might be, performing Distribution work in stores. Both
clearly
answered that if the Distribution employees were
carrying
out Distribution work they would be paid the rate for the job they were actually doing. … Both witnesses also maintained their primary position that Retail terms would apply to Distribution employees deployed to work in stores and Distribution terms to Retail employees deployed to work in depots."
He submitted that the final sentence effectively removes any weight that might otherwise be placed on the second.
- I am myself wary about putting too much weight on an answer obtained in
cross-examination
of a lay witness on an issue which is not one of primary fact, and if the issue turned on what is said to have been the effect of Mr Stansfield's answer Mr Jeans' objection might be good. But in truth his evidence is relied on simply as an introduction to the
Claimants'
overall
case
as summarised in paras. 231-232. The summary is not quite as explicit as it might be, but the basic argument is straightforward. The starting-point is that there are
common
terms for all distribution workers at all depots (that is what the Judge means by saying that terms are the same in London and Manchester) and likewise for retail workers; that is not
contentious
(see paras. 8 and 82 above). The
Claimants'
case
is that, that being so, it is reasonable to
conclude
that if (however unfeasibly) a distribution worker was employed to do distribution work anywhere, including (however unfeasibly) at a store, he would be employed on distribution terms – and, again, the same for retail workers. They also emphasise that, as Lady Hale made
clear
in North, the exercise excludes any
consideration
of how the hypothesis might be achieved in actuality. I am not sure I understand all of the supporting points summarised at paras. 233-235, but they do not affect the
core
of the
case.
- In the following paragraphs the Judge addresses various particular points made by
Asda
in response to that
case.
I need to quote these because they are
challenged
in the grounds of appeal:
"238. I do not attach any weight to the suggestion that a worker moving between depot and depot takes the new depot terms as assisting in this analysis. If I am
correct
in excluding that then the fact that there are some depots on different terms to others is also not relevant.
239. Neither am I persuaded that the homogeneity argument is of great weight here. Recognising that this a hypothetical
comparison
it is a postulation that a depot worker is
carrying
out his depot work although located at a store. It does not seem to me that that necessarily means that it has to be postulated that he is
carrying
out that work in the
customer
facing part of the store. Indeed, recognising the factual hypothesis is inherently unrealistic, it seems to be much more likely that depot workers doing Distribution work would not be in physical proximity to Retail staff and
customers.
I therefore
conclude
that homogeneity is unlikely to be a safe basis for
concluding
that terms would
change
particularly in view of the evidence of Mrs Tatum and Mr Stansfield that
Asda
would pay the rate for the job that was being done.
240. I agree that the temporary redeployment of depot workers into stores, or hypothetically vice versa is not properly
comparable.
It provides some slight support for the
claimants'
case.
I do not
consider
that Mr Short's attempt to
construct
a hypothetical depot in a Retail
car
park is fatal to the
claimants'
argument.
241. In my judgment greater support is derived from the fact that the respondent operates what appear to be more favourable terms for the depot workers and it is inherently unlikely that depot workers would be willing to see those extended to Retail employees if hypothetical relocation of Retail employees occurred in that direction and equally unlikely that depot workers would be willing to give up their terms if there were hypothetical relocation of them into stores.
242. Furthermore the
claimants
rightly, in judgment, submit that weight
can
be placed upon the fact that there is significant similarity of
certain
parts of the
contractual
provisions and that these would be maintained in the hypothetical situation even if they are not sufficiently similar to amount to
common
terms generally."
Some of the points made in those paragraphs require elucidation, but I will provide that so far as necessary when I
consider
Asda's
criticisms.
- Two grounds of appeal – grounds 8 and 9 – directly address the ET's reasoning and
conclusions
on the North hypothetical. I take them in turn.
Ground 8: "Misapplication of 'North hypothetical' test"
- As developed in
Asda's
skeleton argument, this ground
comprises
two distinct points, as follows:
- Both
criticisms
are in my view flawed for the same reason. They are
concerned
with an attempt to work out how the necessary hypothesis might be realised in practice, and the
consequences
of it. That is a wholly irrelevant exercise: see para. 69 above. It might be said that in that
case
the Judge should not have engaged in it. But it is, again,
clear
that he was led down this route by the parties; and in any
case
the fact that he engaged with some unnecessary questions does not undermine his
conclusions
on the
central
argument.
Ground 9: "Perverse
conclusion
that North hypothetical test passed"
- As developed in the skeleton argument, this ground
comprises
three distinct points, which I take in turn.
- The first point reverts to the fact that
Asda's
witnesses had given evidence that distribution terms would not apply to those doing depot jobs in a store (see para. 93 above) and
contends
that the Judge had no basis, and gave no sufficient reasons, for rejecting that evidence. But the question raised by the North hypothetical is not a simple question of primary fact on which the relevant manager's evidence might be expected to be dispositive. It
can
only be answered by inference based on how terms for actual workers in the relevant
class(es)
are applied, and what a lay witness says about that is of limited, if any, value: it is a matter on which the tribunal has to reach its own
conclusion.
- The second point relies on a finding made earlier in the Reasons to the effect that, if a distribution worker moved from one depot to another where the terms differed, the terms applying at the new depot would apply to him. It is said that the Judge's statement at para. 238 of the Reasons that that was irrelevant was plainly wrong, because the finding demonstrated that the employee's terms would
certainly
change
if he went to work at a store, even doing distribution work. I do not accept this. It was
common
ground that such variations as there are between different depots are not sufficient to prevent there being
common
"distribution terms" applying at all depots (see para. 82 above). The question raised by the North hypothetical is whether "distribution terms" would apply at all.
- The third point depends on what are said to be the ET's findings "that store terms are specific to stores and depot terms are specific to depots", and it is said that it necessarily follows that a distribution worker doing distribution work (however unfeasibly) at a store would not enjoy distribution terms. I do not accept that. On one view, saying that "depot terms are specific to depots" is saying no more than that distribution workers only work at depots, which is precisely why the North hypothetical
comes
into play in the first place; it does not help to answer it. Even, however, if what is meant is that at least some aspects of distribution terms reflect the specific
characteristics
of distribution work, that is not inconsistent with the proposition that distribution terms apply to distribution workers wherever they are employed: the hypothesis is of
course
(however unrealistically) that even if working in a store the worker in question will be
continuing
to do distribution work.
Conclusion
- I do not, therefore, believe that either of the pleaded grounds, as developed in the skeleton argument and Mr Jeans' oral submissions, impugns the
conclusion
reached by the Employment Judge on this issue.
- It may be worth stepping back from the specifics of
Asda's
challenge
and taking a broader view. The essential reason why in my view the Judge's
conclusion
was open to him – indeed I believe right – is that for both
classes
(i.e. retail workers and distribution workers)
Asda
applied
common
terms and
conditions
wherever they work. The effect of the
case-law,
and of North in particular, is that in such a
case
"wherever they work" extends even to a workplace where they would never in practice work because the nature of its operations is so different, as it was in both Leverton and North itself. The
contrast
is with a situation where there were no
common
"distribution terms", so that what terms a distribution worker enjoyed would depend on where they worked. If that had been the
case
here (as it may have been pre-2003) the outcome would be different, because it would be impossible to say "if a distribution worker worked in a store these are the terms that would apply to him".
- I appreciate that it may seem artificial to say that
common
terms and
conditions
apply between depots and stores on the wholly hypothetical basis that if a distribution worker worked (as a distribution worker) in a store distribution terms would apply to him; but the Supreme
Court
in North
confronted
that very issue and explained why its
conclusion
was justified, both on the language of the statute and in policy terms (as to which see in particular para. 34 of Lady Hale's judgment).
- One
consequence
of this
conclusion
is that much of the detailed evidence and argument in the ET was in my view beside the point. The preliminary issue
could
have been decided on the straightforward basis that
Asda's
terms for retail workers and for distribution workers both applied wherever they worked. It would in truth be no
credit
to the law if the kind of elaborate and
confusing
exercise which the Judge was encouraged to undertake were required in order to establish whether
comparison
were permitted.
"Single Source"
- I reach that
conclusion,
as the Employment Judge did, without seeking any support from EU law. I am, however, prepared to say that I believe that the
Claimants'
and the
comparators'
terms did in fact have a single source, within the meaning of Lawrence, because they were set by the same employer, which had the power to equalise them. It follows that it would be a breach of EU law if a
comparison
between them were not permissible; and, like the Supreme
Court
in North, I regard that as an additional reason for upholding the ET's finding that the
cross-establishment
comparisons
on which the
Claimants
rely are permitted by section 79 (4) (
c)
(and section 1 (6)). Since the point is not
central
to my
conclusion
I will give my reasons briefly.
- The
case
advanced by
Asda
in the ET was that there were different "sources" for retail and distribution terms because they were arrived at by wholly different processes within
Asda,
reflecting the
complete
managerial separation between its retail and distribution operations. Retail pay was set by a
committee
of
Asda's
board, and distribution pay by "depot management", principally (though, as we have seen, not wholly) through
collective
bargaining. No doubt formally the ultimate responsibility lay with the
Asda
board and/or Wal-Mart, who inevitably exercised budgetary oversight; but they were not the effective decision-makers as regards actual terms. As regards Distribution in particular Mr Stansfield gave evidence of the high degree of autonomy he enjoyed.
Asda's
case
was that its effective delegation of responsibility to different internal structures was analogous to the delegation by the
Crown
of responsibility for pay to the different government departments, which was held in Robertson to preclude inter-departmental
comparison.
- That
case
was rejected by the Employment Judge, who held, at para. 190 of his Reasons:
"The Executive Board of
Asda
and the members or subcommittees of that Board had and exercised budgetary
control
and oversight over both distribution and retail at all material times. The Executive Board was responsible for the differences in pay and
could,
or
could
subject to the overarching
control
of Wal-Mart, have introduced equality."
He observed (at para. 184) that the devolution of responsibility in Robertson was wholly different from the delegation of responsibility within a
company
or
corporate
structure.
- Kerr J in the EAT upheld that reasoning. I quote paras. 56-59 of his judgment in full:
"56. For all the intensity of
Asda's
attack on the Judge's reasoning and
conclusions,
far from
considering
them perverse I find them unassailable. This was an ordinary
case
of a large organisation delegating the setting of pay to separate internal organs. The Judge avoided the mistake made by the Tribunal in the Glasgow
City
Council
case
(see, in particular, paragraph 69 in Lord Brodie's opinion) of treating [Robertson] as
creating
a
category
of dual source
cases
where power to set pay is delegated and then not interfered with on a regular basis.
57. In my judgment, [Robertson], if as I assume it is
correctly
decided, was wholly exceptional and turned on the unique position within the
civil
service, where the setting of pay and most other terms of
civil
servants on a departmental not national basis, was enshrined in statutory and other instruments that would have to be expressly revoked if the power was to be reclaimed by the Treasury and exercised
centrally.
58. Here, by
contrast,
Asda
or Wal-Mart
could
interfere at the stroke of a pen or, more likely, the
click
of a mouse. The Industrial Relations Board ("IRB") included senior employees including the
Asda's
CEO,
with an interest in pay across both retail and distribution staff. Moreover, the IRB received regular updates on distribution staff pay negotiations, while retail pay was signed off by the executive board.
59. It would be unjust and little short of absurd if the presence of a single source turned on whether
Asda's
or Wal-Mart's board happened to have overruled Mr Stansfield, or the
CEO
or the board happened to have overruled Ms Tatum. It was quite enough to justify the Judge's
conclusion
that the evidence showed that they regularly scrutinised the work done to set pay in, respectively, retail and distribution, and
could
overrule their decisions at any time."
- I agree entirely with that passage, save only that I doubt whether it was necessary even to show that the
Asda
or Wal-Mart boards "regularly scrutinised" the relevant pay: it should in my view be enough that the board as a matter of ordinary
company
law had the power to set or
change
the terms. I agree that Robertson turns on its particular facts (by which I mean what I say – it is not a euphemism for saying that I think it is wrongly decided.)
- Mr Jeans advanced before us essentially the same arguments as he did in the EAT, but Kerr J's reasoning is sufficient to show why I do not accept them.
CONCLUSION
ON DOMESTIC LAW
- For the reasons given I would uphold the decisions of both the ET and the EAT that the
Claimants
are entitled under section 79 (4) (
c)
of the 2010 Act (and section 1 (6) of the 1970 Act as regards the earlier period) to
compare
themselves with distribution workers in other establishments. That
conclusion
is supported by the fact that the result avoids any inconsistency with EU law, but I would reach it in any event.
(B) DIRECT EFFECT
- It is of
course
well-established that article 157 of the TFEU and its predecessors, articles 119 and 141, afford employees a directly enforceable right to equal pay in
cases
where their
comparators
are doing the same or similar work or work which has been rated as equivalent: that has been
clear
since Defrenne. But the authorities do not establish definitively whether the same is true in a
case
where the
claimant's
work is different from the
comparator's
and has not been rated as equivalent but where she
claims
that it is of equal value. There is a question as to the effect of the distinction articulated at para. 18 of the judgment in Defrenne between "discrimination which may be identified solely with the aid of the
criteria
based on equal work and equal pay referred to by [article 119]", in respect of which the article has direct effect, and "discrimination which
can
only be identified by reference to more explicit implementing provisions of a
community
or national
character",
in respect of which it does not: some authorities, both domestic and EU, appear to say that equal value
claims
fall into the latter
category.
The authorities, and the arguments both ways, are
carefully
and lucidly reviewed by Kerr J at paras. 13-35 of his judgment in the EAT. He regarded the issue as difficult and held (at para. 16) that the point was not acte
clair,
observing (at para. 36) that he would have referred it to the
CJEU
if the parties had asked him to do so. Since they did not, however, he held (at para. 37) that the better view was that article 157 does have direct effect in an equal value
case.
That
conclusion
is in line with Lady Hale's obiter view in North though Kerr J does not in fact rely on it.
- It is not necessary for us to decide this issue in order to determine the appeal, and on balance I prefer not to do so. If the point were in truth determinative my provisional view is that the right
course
would be to refer it to the
CJEU:
we are not bound to do so, since we are not the final
court,
but I agree with Kerr J that it is hard to say that the issue is acte
clair,
and it would simply
cause
delay to leave it to the Supreme
Court
to refer. But it would not be right to make a reference where the point is not determinative; and it will achieve little of value for us to embark on a further elaborate analysis with a view to deciding the point at this level where only a reference will achieve
certainty.
- I do not think that our declining to pick up this particular baton will
cause
any practical problems for tribunals. Although it is possible to
conceive
of
cases
where the issue will be
crucial
– essentially, where the requirements of section 79 (4) (
c),
even as I have
construed
it, are not satisfied on the facts of the particular
case
– it remains to be seen whether such
cases
arise in practice; and if they do the issue of direct effect is determined at EAT level by Kerr J's decision (and reinforced by Lady Hale's judgment in North). I am prepared to say, however, that despite the undoubted difficulties presented by some of the authorities, my provisional view at the end of the argument was that Kerr J's
conclusion
was right.
DISPOSAL
- I would dismiss
Asda's
appeal.
Lord Sales:
- I agree that the appeal should be dismissed for the reasons given by the Vice-President. I should, I think, register that I am more doubtful than he is in para. 116 above that the equal value limb of Article 157 has direct effect. We are in agreement that the point is not acte
clair
either way.
Lord Justice Peter Jackson:
- I also agree that the appeal should be dismissed for the reasons given by the Vice-President. I only add that I note the provisional views expressed by him and by Lord Sales on the subject of direct effect. As the appeal does not turn on this point, which is in any event not acte
clair,
it is unnecessary for me to say anything about it.