Equal Pay - Potter v North Cumbria NHS Trust

I have received the following announcement from Naomi Ellenbogen and Andrew Clarke QC of Littleton Chambers, which will be of interest to those involved with equal pay litigation and which I reproduce below.

The Judgment of the EAT (Nelson J) in Potter v North Cumbria Acute Hospitals NHS Trust [2009] IRLR 176 has been the subject of an Order by Consent of the Court of Appeal (attached), allowing the appeal by the Appellant Trust which we represented. (Please note that, following the withdrawal of claims by Ms Potter, and a change to the Trust’s name, this appeal is now known as North Cumbria University Hospitals NHS Trust v Fox & Others.) Without any announcement, practitioners in this area might otherwise assume that the EAT’s Judgment is the final word on the relevant issue.

You may recall that Potter/Fox is the leading multiple in the mass NHS equal pay litigation, being litigated in the North East. For the purposes of the particular PHR giving rise to this appeal, the parties had agreed with the Tribunal a list of interrelated preliminary issues, to be determined sequentially, testing the validity of various comparisons as a matter of domestic and European law. These issues had arisen as a result of the identity of the Claimants’ and comparators’ respective employers from time to time and the respective sources of their terms and conditions.

It was common ground between the parties that, for claims which did not fall within the ambit of section 1(6) of the EPA 1970, the Claimants were required to demonstrate that the differences in pay were “attributable to a single source” i.e. a “body which is responsible for the inequality and which could restore equal treatment” (see the ECJ in Allonby v. Accrington & Rossendale College C-256/01 [2004] IRLR 224 at para. 46). In that context, one of the issues to be determined (“B4”) was framed in the following terms:

“If the claimant is employed on Whitley Council terms and conditions and the comparator is employed on local terms and conditions, or vice versa, [whether or not employed by the same employer] do Whitley Council terms and/or the Secretary of State for Health constitute a “single source”?”

Issue B4 therefore raised the closely related questions as to whether either Whitley Councils or the Secretary of State could provide the required “single source” of the terms and conditions of employment of both the Claimant and a particular comparator where:

1. One of the two employees was on Whitley Council terms and the other on local terms; and

2. Either (1) both were employed by the same employer, or (2) each was employed by a different employer.

Issue B4 was entirely overlooked by the ET in its Judgment. Whilst accepting that fact, the EAT held that such omission was immaterial because, at the date of claim, all Claimants were on Whitley Council terms and the relevant comparators either were or had been on such terms at a point in the past. It held that, in accordance with MacCarthys v Smith [1980] IRLR 210, ECJ, historical comparisons were permissible as there is no requirement for contemporaneous employment. In all cases of common employment, the Trust was, as found in the context of an earlier issue, the single source. The EAT’s finding (if any) as to the position where there was no common employment was unclear and/or inconsistent with its earlier findings.

The Trust’s appeal was limited to Issue B4. Before the Court of Appeal (but not below), the Secretary of State for Health was joined as an intervener. Allowing the appeal, the Court of Appeal has made an Order by Consent substituting the EAT’s finding as to issue B4 with an Order that the Trust was not the single source for any of those comparisons in which the Claimant and her comparator(s) were never in common employment.

The explanation which all parties to the appeal put before the Court of Appeal in explaining the form of Order sought, was as follows. On the EAT’s view, Whitley Council was merely the mechanism for determining pay adopted by each Trust rather than the source of the relevant employee’s terms and conditions: the employing Trust was the single source of terms and conditions for the purposes of the comparisons in which such a source was required. The fact that historical comparisons are permissible is irrelevant in this context. A Claimant in the employ of the Appellant Trust can rely, as a comparator, upon employees of that Trust whose employment ceased before hers began. She cannot rely upon employees of a different employer as comparators unless their terms and conditions of employment came from the same source. The fact that their respective terms are derived, in each case, from Whitley Council terms, does not establish that single source, given the EAT’s other findings.

Potter has been the subject of three EAT decisions and will visit the Court of Appeal again in April 2010, on appeal from the EAT (Slade J. [2009] IRLR 900). We therefore thought it might be helpful to identify the particular issues the subject of the attached Order.