Correction: Equal Pay

CORRECTION: Thanks to all the eagle-eyed readers who spotted this case involved Sunderland (not Sutherland) City Council. Our mistake transcribing the case summary; not the author's mistake. Amended version below.

Equal Pay

[Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary]

The EAT (Underhill P) has handed down a lengthy decision in Bury MBC v Hamilton and Sunderland City Council v Brennan, two appeals heard together about Genuine Material Factor defences to claims for bonuses and pay protection.

Women employed in female-dominated roles by both Councils claimed to be entitled to the benefit of bonus payments originally genuinely linked to productivity, but by the relevant time paid as a conventional supplement to wages - enjoyed by their comparators in male-dominated jobs. In Bury, the claimants also sought the benefit of pay protection provided to the predominantly male groups on withdrawal of their bonuses.

At first instance, both Councils' defences under section 1(3) of the Equal Pay Act 1970 that the differences in pay were genuinely due to a material factor (the existence of historic bonuses) which were not the difference of sex were rejected on the basis that by the relevant dates, any link between receipt of bonuses and productivity on the part of the comparators had been lost; and accordingly the Councils' explanation of the differential was not genuine. In Bury, the claims to pay protection were rejected on the grounds that the Council could not have been under an obligation to pay sums that were not susceptible to calculation at the time the obligation arose; and in any event, even in the absence of precise calculation, to extend pay protection to the claimants would be unaffordable. Both Councils appealed against the rejection of their section 1(3) defences, and the claimants in Bury cross-appealed on the pay protection point.

The Councils' appeals failed. The EAT held that the tribunal had been wrong to characterise their explanation for the bonuses as a 'sham' merely because the link with productivity had been lost: contrary to the tribunals' findings, the factor which they had identified as explaining the bonuses was genuine (¶¶18,25, 29,44-45). But showing that the bonus schemes had been non-discriminatory when first introduced did not establish that the differential was due to a non-discriminatory factor in the period to which the claims related (¶31). The difference in gender breakdown of the claimant and comparator groups gave rise to Enderby-type indirect discrimination, calling for justification; and the loss of the link between the bonuses and productivity meant that the Councils could not justify the differential (¶¶29-34, 49).

The Bury claimants' cross-appeal succeeded. The impossibility of determining, at the time the payments should have been made, the amount that should have been paid to the claimants by way of pay protection did not establish a section 1(3) defence (¶¶71-73); nor could the Council establish by mere assertion (which was as far as their evidence on the matter went) that extending pay protection to the claimant groups would have been unaffordable (¶¶75-79).

The judgment is notable for a discussion and restatement of the 'structured analysis' of equal pay cases formulated by Elias P (as he then was) in Middlesbrough BC v Surtees [2007] ICR 1644 and developed in later cases: see ¶¶14-25; and a caution against excessive focus on the requirement in section 1(3) that the difference in pay be 'genuinely' due to the material factor (¶8).