Equal pay in the public sector

9 March 2009

We report another recent case relating to equal pay in the public sector.

In Coventry City Council – v – Mrs Nicholls & Ors, various equal pay claims were lodged against the Council.  The claimants had jobs whose occupants were predominantly female and the comparators, who were refuse collectors, were almost all male. The basis of the claim was, first, refuse collectors were subject to a productivity arrangement which provided them with a significant increase in their basic pay and provided for certain bonuses designed to reduce absenteeism and improve efficiency.  Second, they were receiving the benefit of pay protection arrangements as a result of implementation of the Single Status agreement which the claimants were not receiving.  Despite efforts by the Council to reach agreement with the Unions on implementing Single Status they unilaterally imposed it when no agreement could be reached. 

An employer can, however, set up a defence that the difference in pay had nothing to do with gender.  This defence is referred to as a GMF defence.  Those GMF defences advanced by the Council were referred to as “the bonus GMF”, “the supervening event GMF” and “the pay protection GMF”.  The Council lost on the first two and succeeded on the last.  It succeeded on the basis that it was justified in limiting the pay protection scheme to those who actually suffered a reduction in income when a new job evaluation scheme was introduced.  Both parties appealed and, in effect, all three GMFs were considered at the EAT.

For the bonus GMF, the Council contended that bonuses were awarded as part of a productivity agreement which was wholly unrelated to sex and, therefore, required no justification.  The Tribunal did not agree.  The Tribunal found that, even if bonus payments were based on achieving productivity, this ceased to be the case by 1999.  In effect, the continuation of the bonus was little more than a supplement to basic pay which ceased to be justified.  Agreeing with the Tribunal, the EAT upheld that decision. .

In the supervening event GMF, the Council argued that the Union had delayed the implementation of Single Status, which would have resolved pay inequalities, so it was the Union to blame for unequal pay.  The argument was rejected on the basis that it was wholly unsustainable and not capable, in law, of constituting a GMF defence.  The EAT upheld the Tribunal’s decision without offering any further reasoning. 

For the pay protection GMF, whilst the Tribunal had originally accepted the Council’s pay protection GMF, the EAT concluded that, in doing so, the Employment Tribunal had adopted an analysis of the decision in Middlesbrough County Council – v – Surtees which has since been overruled. The Tribunal has, therefore, been directed to look at this afresh.

Whilst this Judgment confirms that reliance upon historical bonuses which apply only to men is likely to be discriminatory, the key issue of pay protection for employers seeking to phase in a job evaluation scheme remains to be determined.  The claimants argued that to limit pay protection to those who actually suffered loss of income could not be justified.  Whilst no clear decision has yet been made on whether pay protection offered only to employees incurring an actual loss is lawful, the EAT firmly rejected the claimants’ argument that any justification for such schemes is bound to fail.