Court of Appeal finds against Sunderland in equal pay dispute

The Court of Appeal has ruled against Sunderland City Council in the latest round of a long-running equal pay claim

brought by a number of former and current female employees who claim to have been paid less than male colleagues doing equivalent jobs.

The cases date back to the 1970s and relate to bonuses paid to male manual workers, which the claimants say were not paid to female workers doing comparable jobs enabling the men to earn up to 50 per cent more. The lead claimants fall into five groups: caterers, cleaners, carers, school support staff and leisure centre attendants, while the male comparators were gardeners, road sweepers, drivers and refuse collectors.

The Court of Appeal's decision upheld a ruling of the Employment Appeals Tribunal (EAT) in February which found (with the exception of leisure centre workers) that, under the Equal Pay Act 1970, there was no genuine material factor (GMF) to justify why the workers in the male-dominated roles should be paid bonuses which were denied to the comparable female employees.

Sunderland Council had appealed against the EAT decision on two grounds. Firstly it claimed that the EAT had “missed out a stage” of the approach suggested by Armstrong v Newcastle upon Tyne NHS Hospital Trust [2006] when evaluating the strength of the council's GMF defence. Having agreed with the Council's explanation for the pay differential occasioned by the bonus scheme was not a "sham" (as the Employment Tribunal had ruled), the next question in the analysis should have should have been “whether the Council has established a non-sex discriminatory reason for the pay differential”.

Instead, the council argued, the EAT's analysis had gone straight to the question of “objective justification” before deciding whether the council was required to show objective justification of its bonus policy. This, the council said, was contrary to the approach taken by the Court of Appeal in Armstrong v Newcastle.

Secondly, Sunderland Council claimed that the original finding of the Employment Tribunal that by the material period of 1997-2003, the bonus schemes enjoyed by the predominantly male groups "had long ceased to have anything to do with productivity". This, the council argued, was a perverse finding, claiming that the bonus schemes were linked to performance right up to the point of their abolition in 2007, given weight by the fact that the EAT had agreed with the council that they were not a sham.

However, the Court of Appeal judges – Lord Justices Maurice Kay, Rime and Tomlinson – ruled that while there had been no attempt to fabricate the link between productivity and bonuses, it was also evident that by the latter years of the bonus schemes, that link had been largely broken due a lack of monitoring and evaluation and that the bonuses had become accepted by both staff and management as a regular part of the roles' salaries.

The judgment also added that the EAT's rejection of the employment tribunal's finding that the bonus schemes were a “sham” was made on the basis that the there had been no deliberate attempt to fabricate a productivity link to the bonus scheme. This did not, however, prove the council's argument that the schemes were genuinely linked to performance.

The judges said that the “hyperbole“ of the respondents' counsel's submission that the Council is "not within a country mile" of sustaining its perversity challenge “is not misplaced on this occasion”.

Having upheld the the EAT's rejection of the council's argument that the bonuses were linked to productivity, the judges then held that the EAT was correct to move directly to the “objective justification” stage of its evaluation. Having failed to prove the “perversity” of the EAT's decision, this part of the appeal was “wholly unsustainable now that that logically prior challenge has failed” the judgment said.

The ruling only applies to one part of a three-part case against the council.

The second tranche of the case has been appealed to the EAT and is expected to be heard in late 2012/early 2013. The third tranche has not yet been heard by the ET awaiting resolution of the second tranche.

In a statement, the council's Director of Human Resources and Organisational Development, Sue Stanhope said: "This Court of Appeal decision relates to only one part of an ongoing three part case called Brennan and Others. The City Council is now considering this judgement.

"The other parts of the employment tribunal case are ongoing. There is no final or definitive figure for any possible compensation that the City Council may have to meet. Any subsequent compensation will require a remedies hearing."

A copy of the judgment can be viewed at the following link: http://www.bailii.org/ew/cases/EWCA/Civ/2012/413.html