Equal pay update: three new cases you need to know about
The BBC has recently received a firestorm of criticism both internally and externally when it was required to publish details of its top earners.
The BBC has recently received a firestorm of criticism both internally and externally when it was required to publish details of its top earners, revealing that two thirds of its highest paid stars are male. There is therefore no doubt that equal pay issues continue to receive significant media attention. This stems not only from the mass litigation that has occurred in the public sector, but also due to such claims filtering into the private sector with claimant lawyers targeting large organisations (such as supermarkets) and claimants being recruited through newspaper adverts and social media. In addition, organisations with more than 250 employees are now subject to the obligation to report gender pay gap statistics and to publish their figures annually.
It is easy to assume that a large gender pay gap indicates an equal pay issue in that organisation. However, in practice, equal pay claims are extremely complex, as is the law that underpins them. Below is a summary of the issues that arose in three recent equal pay rulings.
Armstrong & others v Glasgow City Council
Employer failed to prove that job evaluation scheme complied with Equality Act
In an equal pay claim, a claimant must show that they did like work, work rated as equivalent, or work of equal value to their comparator (who must be of the opposite sex). Where an organisation has implemented a job evaluation scheme which has evaluated both the claimant’s job and the comparator’s job and ranked the comparator’s job higher than the claimant’s, the claimant is bound by the results and cannot claim their work is of equal value. That is, however, unless the claimant can show that the job evaluation scheme does not comply with the relevant sections of the Equality Act 2010 in that it is not a thorough and objective analysis of the jobs.
In the Glasgow case the claimants challenged the validity of the Council’s job evaluation scheme. The issues have been considered at numerous complex hearings over a number of years.
The Court of Session looked specifically at which party has the burden of proof and also the evidence required in such cases. In brief, the Court of Session held that it is for the employer to prove that their job evaluation scheme complies with the law and to explain how a decision regarding an individual’s grade was arrived at. That said, it is still for the claimants to initially point to something which raises a reasonable suspicion in the Tribunal’s mind. However, that threshold is quite low.
In this case, the fact that the scheme put forward was unusual and was not supported by any expert evidence, meant that the Council had failed to prove that the scheme was compliant with the law. This may ultimately mean that the Council cannot rely on the grading outcomes of its job evaluation scheme as a defence to equal pay claims and the claimants could potentially point to any comparator of their choosing.
So, what do you ultimately need to know?
In simple terms, it is for the organisation introducing a job evaluation scheme to ensure that it is objective, analytical and fair, and that there is an audit trail showing how decisions were reached and why.
Asda v Brierley
Staff in different locations doing different work could compare their pay
This appeal arose from equal pay claims brought against Asda by about 7,000 employees. The claims were brought by members of the predominantly female retail workforce, alleging that they are paid less whilst doing work of equal value to some employed in the predominantly male distribution centres.
In order to bring such claims, the claimants need to get over the hurdle of showing that they are in the ‘same employment’ as their comparators. In this context, ‘same employment’ means the claimants and comparators are employed by the same or an associated employer, either at the same establishment, or at different establishments where common terms apply. Alternatively, ‘same employment’ can be established by demonstrating that the pay inequality is attributable to a ‘single source’ which can restore equal treatment.
Asda argued that the comparison should not be legally allowed to progress as the groups of staff worked in different establishments and they didn’t have common terms. It highlighted that the two groups worked in geographically different locations, and the terms which applied were historically and qualitatively distinct. The retail staff terms applied at stores only and were set by the board (or a subcommittee), whereas the distribution staff terms were set mainly as a result of collective bargaining with the Unions by a different part of the organisation.
The Employment Appeal Tribunal held that these differences did not undermine the fact that the pay ultimately came down to a single source and, as a result, their pay could be compared as part of an equal pay claim.
Practically, this Judgment highlights that, within large private sector organisations, claimants can potentially cast their net very widely when choosing who to compare their pay with.
In truth, the EAT’s judgment was not groundbreaking. However, this case is likely to go on to be heard by the Court of Appeal and some issues may even need to be referred to the European Court. While interesting, this is just one step in what will inevitably be very long running litigation.
Farmah v Birmingham City
Multiple equal pay claims could not be brought on a single claim form
Thankfully, this ruling is a bit easier to digest. It relates to the rules which govern Employment Tribunal claims, which say that two or more claimants can make their claims on the same claim form if their claims are ‘based on the same set of facts’. Where multiple claims are wrongly included on the same claim form, this will be treated by the Tribunal as an ‘irregularity’. Irregularities do not necessarily render proceedings void, but the Tribunal can take any such action as they consider just, including (but not limited to) waiving or varying the requirement, striking out the claim, or awarding costs.
In the set of claims brought by Birmingham City Council employees, 48 claimants brought claims on the same claim form. Of these, 23 shared the same job title. The rest undertook a variety of jobs such as lunchtime supervisor, teaching assistant, support manager or work in HR. An Employment Tribunal found that the claims of the 23 were based on the same set of facts and should be allowed to proceed, but the other claims did not comply with the Tribunal rules and were struck out.
However, on appeal, the Employment Appeal Tribunal disagreed with this approach, holding that that it is not possible to save some claims that are based on the same set of facts and strike out the others. It also held that if claims are put on different legal bases (e.g. ‘like work’ or ‘equal value’ claims) they will not be considered to be on the same set of facts. If some claims are not based on the same set of facts, the claim form will be ‘irregular’ for all the claimants and all should be struck out. The EAT said that is important to ensure that there is a common factual basis for the claims, rather than merely a common cause of action before combining them.
While large multiples in Employment Tribunals tend to be equal pay claims, the same principle may apply in other contexts too (for example where multiple claimants wish to make claims for holiday pay or for unfair dismissal following a redundancy exercise).
Understandably, over the last few years, claimants and their solicitors have tended to shoehorn as many claims as possible onto the same claim form in order to reduce the cost of Tribunal fees. However, the recent abolition of fees has now removed this incentive. With the abolition of Employment Tribunal fees, we have already seen an increase in equal pay claims. As the above cases demonstrate, this is a multi-faceted and complex area of law where expert guidance is essential. Fortunately, we have specialists who can advise your organisation on all aspects of equal pay, including compliance with gender pay gap reporting obligations. Please do not hesitate to contact us.
Sam Harris (firstname.lastname@example.org) is a Solicitor in the Employment Pensions and Immigration team based in Birmingham. If you have any questions please get in touch with Sam or speak to your usual Weightmans advisor.