UNCERTAINTY REMAINS AS TO THE PROPER TEST FOR INDIRECT SEX DISCRIMINATION UNDER THE U.K. EQUAL PAY ACT

I.          Legal Background

The U.K. Equal Pay Act of 1970 required equal pay for work of equal value unless “the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor… must be a material difference between the woman’s case and the man’s…” Equal Pay Act, 1970, c. 41, § 1(2)-(3).  The EPA was repealed, and largely restated, by the Equality Act of 2010, and while section 69 effectively overrules Armstrong (discussed below), by requiring objective justification in all cases of indirect discrimination in pay, the issues discussed herein are very relevant to the many cases still governed by the historical Equal Pay Act.

The European Court of Justice, in Case C-127/92, Enderby v. Frenchay Health Auth., 1993 E.C.R. I-05535, held that the Equal Pay provision of the Treaty of Rome’s^[1] Article 141 (formerly Article 119) and the Equal Pay Directive,^[2] prohibited disparities in pay between equivalent-value jobs where one job is performed primarily by women and the other by men.  Significantly, this prohibition applies even when those differences are arrived at by collective bargaining processes which are, in themselves, non-discriminatory. Enderby also suggested that when statistics showed that predominantly female groups were paid less than predominantly male groups for same-value work, the employer must provide objective justification for the difference in order to escape liability.

The Enderby decision led to a flurry of activity in the U.K. as courts attempted to determine how it affected the Equal Pay Act. The most notable of the decisions during this period was Armstrong v. Newcastle Upon Tyne NHS Hosp. Trust, [2006] IRLR 124, [2005] EWCA (Civ) 1608. In Armstrong, Buston LJ added a “sophistication” to the holding in Enderby, stating: “if the employer proves the absence of sex discrimination [it] is not obliged to justify the pay disparity.”

Recently, it appeared that the U.K.’s new Supreme Court would have an opportunity to resolve some of the troubling questions regarding indirect discrimination in the case of Gibson & Ors. v. Sheffield City Council, [2010] ICR 708, [2010] EWCA (Civ) 63. However, Gibson settled shortly before a three-day hearing was scheduled before the Supreme Court. In light of this development, it appears that questions regarding indirect discrimination will have to wait for another opportunity to gain much-needed clarity. This article summarizes Gibson, and the questions which it raised.

II.          Facts of Gibson

Sheffield City Council employs individuals as “carers”, cleaners, and gardeners. Carers and cleaners are predominantly female, while gardeners and street cleaners are predominantly male. In the hearings before Judge Trayler of the Employment Tribunal in 2007 and 2008 the parties stipulated that individuals in these jobs do work of equal value. Crosby & Ors. v. Sheffield City Council, No. 2800460/07 & others, Appx. B. (the “Gibson Tribunal”). Prior to Gibson, street cleaners and gardeners were paid 33.3% and 38% respectively more than carers and predominantly female cleaners, despite the fact that all positions afforded the same “base pay.”  This disparity resulted from a “productivity bonus” that street cleaners and gardeners received in addition to their base pay, but which was not available to carers or predominantly female cleaners.  The predominantly female cleaners, led by Ms. Crosby, prevailed in Judge Trayler’s decision in Crosby & Ors. v. Sheffield City Council in 2008, and the case was subsequently re-captioned Gibson & Ors. v. Sheffield City Council.  The following discussion will accordingly focus on matters related to the pay of carers.

III.          Decisions of the Employment Tribunal

As an initial matter, Judge Trayler found that there was no evidence that bonuses were denied to carers on account of sex, stating:

 “…we believe the reason why the male comparators received a bonus is in return for productivity in relation to outcomes which are measurable. This productivity is achieved by more flexible efficient working which has been kept up to date by the various pressures on the part of the respondent employing the comparators. It is a genuine scheme. It is material in that it is there to provide efficiency of production. It is unrelated to the gender of the recipients.”^[3]

Relying on the reasoning of the Court of Appeal in Armstrong, Judge Trayler then found that this conclusion ended the inquiry, holding:

[t]he reason [for the pay differential] is the need to provide payments for increased productivity which [respondent] cannot and does not need to make to these claimants.

This is a reason which is not the gender of the recipients of the bonus or the claimants. In our view, the respondent has proved that the reason is not the reason of the sex of the group of workers.^[4]

The carers appealed Judge Trayler’s decision to the Employment Appeals Tribunal, which dismissed their appeal.  The Employment Appeals Tribunal agreed with Judge Trayler that, since the Sheffield City Council had “negatived” the taint of sex discrimination, it was not required to objectively justify the pay differential between carers on the one hand, and street cleaners and gardeners on the other.^[5]

IV.          Decision of the Court of Appeal

The carers were granted leave to appeal to the Court of Appeal, where they raised three issues:

1.      Where jobs performed predominantly by women are equivalent to jobs performed predominantly by men, but the predominantly female jobs are compensated at a lower level, does this, of itself, amount to prima facie sex discrimination which requires the employer to objectively justify the pay differential to avoid liability, or may the employer also avoid liability by proving that the difference in pay is not sexually discriminatory?

2.      If the employer is entitled to prove the absence of discrimination, is it enough to establish a gender neutral explanation for the higher payments to the male employees or is something more required?

3.      On either analysis, on the ET’s findings, had the Council proved sufficient to avoid the requirement to provide objective justification?

The parties’ arguments on appeal centered largely on the validity and applicability of Armstrong, both as a general matter and with regard to the specific facts of the case.  Appellants argued that the Armstrong “sophistication” which allowed an employer to prevail upon showing the absence of sex discrimination ran contrary to Enderby and several other decisions of the Court of Appeal.  Appellee contended that Armstrong was rightly decided and binding on the Court of Appeal.

On February 10, 2010, The Court of Appeal attempted to split the baby by declaring that Armstrong was consistent with Enderby but refusing to apply it on the specific facts presented in Gibson.  The Court of Appeal unanimously concluded that the Employment Tribunal and Employment Appeals Tribunal had erred in finding that the reason for the differential treatment between claimants and comparators was free from sex discrimination and remanded the case to the Employment Tribunal to determine whether the difference in pay could be objectively justified. In so doing, the majority held that Armstrong had been correctly decided and that it was open to an employer to establish that a difference in pay was not discriminatory, notwithstanding statistics which show an adverse gender impact. Lord Judge Pill, however, noted that it was difficult to reconcile Armstrong with Enderby as well as the second paragraph of Directive 97/80/EC,^[6] though he concluded only that Armstrong was inapplicable “given the clear and compelling statistics.”

The City Council was granted permission to appeal to the Supreme Court of the United Kingdom, and a three day hearing was scheduled before the Supreme Court on both the council’s appeal and the workers’ cross-appeal.

V.          Unresolved Questions

The central issue that remains for future resolution is whether, once so-called “indirect” sex discrimination is established by showing that a group predominantly composed of women is placed at a disadvantage as compared to a group predominantly composed of men, the employer can escape liability by showing that the pay difference resulted from an ostensibly gender-neutral policy, or whether the employer must show that the pay difference is “objectively justified” as serving a legitimate purpose.

The decision in Gibson also did little to reconcile the inherent tension between Enderby and Armstrong.  With little to guide lower courts as to when Armstrong ought to be applied, clarity in the many cases based on the historical Equal Pay Act must await future pronouncements by the Courts.

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* Mr. Fitzpatrick would like to acknowledge and thank Mr. Ben Patrick, in-house Solicitor with the trade union UNISON, who represented the carers in Gibson and who provided assistance and insight in the drafting of this article
[1] Treaty Establishing the European Economic Community, 25 March 1957, 298 U.N.T.S. 3.

[2] Council Directive 75/117, art. 1, 1975 O.J. (L045) 1 (EC).

[3] Gibson Tribunal, Paragraph 5.26.

[4] Gibson Tribunal, Paragraphs 5.8, 5.9.

[5] Gibson & Ors. v. Sheffield City Council, [2010] ICR 708, [2010] EWCA (Civ) 63, Paragraph 34.

[6] Gibson & Ors. v. Sheffield City Council, [2010] ICR 708, [2010] EWCA (Civ) 63, Paragraph 49 (Lord Justice Pill); Paragraph 57 (Lady Justice Smith); Paragraph 74 (Lord Justice Kay).

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