Councils face major payouts after EAT ruling in equal pay cases

Two councils face payouts running into millions of pounds after failing to have equal pay rulings overturned at the Employment Appeal Tribunal.

The case of Bury Metropolitan Borough Council v Hamilton & Ors [2011] UKEAT 0413-5_09_2801 involved equal pay claims by female employees at Bury MBC and Sunderland over bonuses paid to male colleagues under purported productivity bonus schemes.

The employment tribunal had dismissed Bury and Sunderland’s defences under section 1(3) of the Equal Pay Act 1970 on the basis that by the relevant dates any link between the receipt of the bonus and productivity on the part of the comparators had been lost and that therefore the councils’ explanation of the differential was a “sham”.

The EAT dismissed the council’s appeals, save in respect of a particular group of claimants.

It ruled that the Tribunal had been wrong to characterise the explanations as a sham, but added that “the underlying finding that the link between productivity and receipt of bonus had been lost meant that the non-payment of bonus to the claimants could not be justified and that since the difference in gender break-down between the groups of employees who did and did not receive bonus gave rise (save in those groups) to Enderby-type indirect discrimination the councils’ defences under section 1(3) failed.”

Amongst the points made by the EAT were that:

• showing that the link between productivity and bonus had been lost did not mean that the councils had failed in limine to discharge the burden of proof under section 1(3). The authorities had sufficiently identified a ‘factor’ explaining the differential by referring to the existence of the bonus schemes, and the loss of the link with productivity was a matter going to justification.
• showing that the schemes had in their inception been non-discriminatory did not mean that the councils had shown that the differential during the period complained of was due to a non-discriminatory factor.

The EAT also ruled in Bury’s case that pay protection arrangements brought in after the productivity bonus was stopped were unlawful.

The tribunal had upheld the council’s section 1(3) defence in this respect. But this was overturned by the EAT, which said that “the practical impossibility of knowing at the moment that the claimed cause of action arose whether any sums were payable, and if so in what amount, could not give rise to a defence under section 1(3)” and that the council had “adduced no sufficiently particularised evidence of unaffordability” to found a defence under section 1(3).

Trade union Unison hailed the EAT decision as a “massive” victory for the 900 women at Bury who brought the claim. They include carers, catering assistants, domestic assistants and school crossing patrol attendants.

Unison’s regional manager Steve Stott said: “We are satisfied this judgement now paves the way for the council to pay all those affected staff the money they are legally entitled to. We will now be pushing the council to apply for capitalisations funds, which will allow them to spread the cost of the equal pay settlements over a longer period.”

Paul Doran of Stefan Cross Solicitors, which acted for the claimants in the Sunderland case, told the Sunday Sun: “This is yet another instance in which a local authority has spent hundreds of thousands of pounds in legal fees defending the indefensible.

“It is incredible that more than 40 years since the implementation of the Equal Pay Act, women still have to revert to the courts and tribunals to allow them to receive equal pay for equal work.”

A Bury Council spokesman warned that the EAT’s judgement could have “major ramifications, not least for the taxpayers of Bury”, adding that it would study the judgement closely with its legal advisors and decide what action to take.

The spokesman insisted that Bury’s decision to appeal was not taken lightly, but followed leading counsel’s advice and because the council believed its case was legitimate and strong.

He added: “The council has a duty to safeguard taxpayers’ money, a responsibility it takes seriously at all times. We faced claims from more than 1,400 people which, if upheld, could have cost the council – and local taxpayers – many millions of pounds. To try to minimise costs to the council, and the taxpayer, we made offers to 1,208 employees to settle their equal pay claim against the council, and 675 of them accepted our offer.

“It was always our argument that we had paid both men and women fairly for the jobs they were doing, and that any bonus payments in the past were legitimate and due to other factors, not the employee’s sex.”