Equal Pay; news from the North East
This review will concentrate on recent developments in Equal Pay and in particular the large number of Equal Pay decisions made in the Newcastle employment tribunal and on appeal in cases brought by some 6000 local authority employees. This has raised many issuers which have previously been little ventilated in the caselaw.

The key issues to be addressed are
a. The scope of the genuine material factor defence
b. How justification may be proved
c. The viability of protection of discriminatory terms
d. The overlap between Equal Pay and sex discrimination especially relating to remedy
e. The effectiveness of ACAS COT3s and the liability of ACAS in negotiating settlements
f. The liability of unions for discrimination
g. The ability of employees of community and voluntary aided schools to claim in respect of other local authority employees

1. I would stress these features about equal pay claims:
a. although described as equal pay, the Act bears on any contractual terms whether pay or otherwise; the somewhat artificial divide must be maintained between the 1970 Act and the Sex Discrimination Act 1975 (see eg Newcastle CC v Allen [2005] IRLR 504)
b. the equality operates by implying a contractual term unlike the discrimination provisions which provide for a statutory tort.

c. the law is not intended to be a fair wage provision but instead to address issues of sex discrimination; thus the male and female workers must be generally in comparable situations; eg Ostereichscher v Wirtschaftskammer [2004] ALLER (D) Jun 03;
d. the law is in a constant state of flux with decisions from the EAT and Court of Appeal which are difficult to predict and assimilate, and indeed are themselves based on the wildly vacillating view of the ECJ (this comment especially applies to the ongoing debate about the need for justification).

2. Under the Equal Pay Act 1970 , an employee may formulate an equal pay claim by reference by three different routes; like work, equality under a valid job evaluation scheme or equal value. The employer then has a defence by section 1(3) which provides as follows:-

“(3) An equality clause shall not operate in relation to a variation between the woman’s contract and the man’s contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor –

(a) in the case of an equality clause falling within subsection 2(a) or (b) above, [like work or work rated as equivalent] must be a material difference between the woman’s case and the man’s; and
(b) in the case of an equality clause falling within subsection 2(c) above [work of equal value], may be such a material factor.”

What needs to be proved?
3. This deceptively simple sub-section enables an employer to establish a complete defence to an equal pay claim where it can establish that the reason for the treatment was a material factor other than sex. It is at the heart of the scope and coverage of the Act. The House of Lords held in Glasgow City Council v Marshall that the scheme of the EqPA 1970 operates by way of a rebuttable presumption of sex discrimination. This rebuttable presumption arises only once the claimant has shown through the gender based comparison set out in sections 1(a), (b) and (c) that she is treated less favourably than her chosen male comparator. The burden then passes to the employer to establish the defence under section 1(3) . Where the requirements of s.1(3) have been satisfied there is no need for the employer to go further and show a “good reason for the pay disparity” (Marshall at 293a).

4. In order to discharge the burden under section 1(3) the House of Lords has held that the employer must show (at least) the following :-
a. That the reason given for the variation is indeed genuine in that it is not a sham or a pretence and this has been the focus of much of the north east litigation;
b. That the less favourable treatment is due to this reason. It is in this sense that it must be a material factor, i.e. a significant and relevant factor. It must be material in a causative rather than justificatory sense (see further below).
c. That the factor relied upon is or may be a material difference i.e. a relevant and significant difference between the man’s case and the woman’s case.
As to the factors explaining the differences between the man’s contract and the woman’s:
a. there may be several different factors ;
b. they may be purely historical ; and
c. some factors may overlap as issues of equal value and s1(3); Davies v Mc Cartneys [1989] ICR 705.

5. It is only necessary to show what the reason for the employer’s awarding a differential was and it is not necessary to go beyond that and show that the differential(s) was or were wholly explained by that difference: Calder v Rowntree Ltd [1993] IRLR 212 at para 32. The important point which was made in Byrne v FT Ltd [1991] IRLR 417 at para 10 that “it was impossible to attribute a particular weight to a particular factor when negotiating a wage…” should be borne in mind.

Historical reasons
6. Further, (and irrespective of any requirement to objectively justify the reason), it is suggested that when the reason giving rise to the pay differential ceases, so does the defence under section 1(3). Therefore it appears that an employer must also establish that the relevant reason persisted during the relevant period, unless other reasons come into play. Otherwise there can be no continuing basis for the pay differential ie it would not any longer be material . In Benveniste v. Southampton University the claimant was recruited at a time when the university was experiencing severe financial restraints. She was appointed (by agreement) at a reduced salary. It was argued that this was a material difference, i.e., the fact that she had been appointed at a time of financial constraint. It was further argued that although those financial constraints no longer applied, the material difference persisted: the circumstances of 1981 threw their shadow forward so that she remained in a different position from that of the comparators. This argument was rejected. The Court of Appeal held that “once it is accepted that the financial constraints came to an end in 1981, or at any rate in October 1982, the special factors which justify the lower salary disappear … There was no justification for the lower rate of pay other than the circumstances existing at the date of her appointment.”

7. There is some ambiguity about what precisely is meant by the term “historic”. There is however an issue now being litigated in the North East about what reasons are truly historic and what although arising as a matter of history throws its force forward to the present. Thus in Rainey v Greater Glasgow Health Board [1987] ICR 129, the House of Lords found that there was a gmf arising from the need to attract people from the private sector when the NHS prosthetic service was set up many years before. The arguments in Rainey did not appear to focus on whether the reason was historic so that it is difficult to read too much into this, but I think that it must be the case that if a reason has some current validity it is not a decisive objection that it originated some time before and this may include productivity bonuses which were originally introduced to avoid prices and incomes policy under the 1960s Wilson Governent with its pay restraint policies but have continued to encourage some (perhaps not much) extra productivity. As indicated above, if there were to be a sex taint, the employer would not only have to show that there was a gmf but that the approach was justified in the strict sense in which that term is used in this area of law.

Is justification required in each case?
8. The question of what precisely an employer must establish in such circumstances has been the subject of considerable debate. This focusses on the following tension. S1(3) on its face simply requires the employer to show that there was a material reason for the disparity and that that was causative of the disparity. It does not expressly require the employer to objectively justify that reason which is a higher hurdle for the employer to surmount. Therefore, for example, a subjective but mistaken belief as to why the disparity exists may be sufficient, so long as that there is no evidence that that reason is ‘tainted’ by sex discrimination. The rationale for this position has consistently been stated to be that the EqPA 1970 and Article 141 are concerned with equality of pay and treatment on grounds of sex: the provisions do not seek to establish “fair” treatment on more general grounds, or even to achieve fair wages . Consequently, under section 1(3) an employer may be able to defend an unfair disparity in wages as long as it is not tainted by sex.

Does a non sex based differentiation require justification
9. Where the s1(3) reason however is ‘tainted’ by sex discrimination, the employer must go on and objectively justify the disparity in pay by reference to factors unrelated to sex. The controversy however is whether this limited approach to justification is consistent with the ECJ’s interpretation of Article 141. There are clear statements in the ECJ’s jurisprudence also that Article 141 is only concerned with discrimination on the grounds of sex but there is also authority which tends to suggest that once a claimant has established the fact that they do work of equal value and the differences of gender and pay between themselves and their comparator, the employer can only escape liability where it can objectively justify the pay differential by reference to factors unrelated to sex and by objectively justify is meant that there is a good reason for the differentiation.

10. The authorities which most encapsulate this tension is the ECJ’s decision in Brunnhofer v. Bank Der Osterrichischen Postparkasse AG and the EAT’s decision in Parliamentary Commissioner for Administration v. Fernandez . Both of these decisions were considered by a differently constituted EAT in Sharp v. Caledonia Group Services Ltd and Villalba v Merrill Lynch [2006] IRLR 437. In Fernandez the majority held that the ECJ Brunnhofer decision did not lay down “any requirement that in a case where the factor relied on by the employer is not tainted by direct sex discrimination, and where no suggestion of prima facie indirect sex discrimination is raised, that it is nevertheless necessary for the employer to objectively justify the pay difference in the Bilka sense.” The differently constituted EAT in Sharp came to the opposite conclusion, preferring the minority view in Fernandez. Sharp held that the Brunnhofer case did set out a, “clear requirement … which precludes unequal pay as between men and women for the same job, or work of equal value whatever the mechanism unless the difference in pay is justified by objective factors unrelated to any discrimination linked to the difference in sex.” The EAT decided along the same lines as Fernandez in Villalba v Merrill Lynch [2006] IRLR 437. Unless the Fernandez line of authority is overturned in due course by the Court of Appeal or ECJ , the position must therefore be taken as follows: in the absence of sex discrimination, an employer is not obliged to objectively justify the pay difference beyond showing a material factor defence.

‘Tainted’ by sex discrimination
11. Where the s1(3) reason itself is ‘tainted’ by sex discrimination however the duty to objectively justify a pay differential certainly arises. A s1(3) reason may be said to be ‘tainted’ in at least the following situations:-
a. Where the reason is directly discriminatory.
b. Where the reason relied upon is indirectly discriminatory within the meaning of the SDA 1975.
c. Where the reason relied upon adversely and disproportionately impacts upon one sex more than another as (for example) per Enderby.
d. Where the employment market itself in which the employer operates is tainted by discrimination.
e. Where there is a total lack of transparency in the pay system giving rise to the pay differential.
In Villalba v Merrill Lynch [2006] IRLR 437, Elias J said
where cogent, relevant and sufficiently compelling statistics demonstrate that women suffer a disparate impact when compared with men, there is an irrebuttable presumption that sex has indirectly tainted the arrangements even though it may not be possible to identify how that has occurred, and the differential needs to be objectively justified.

12. A Tribunal must thus carefully scrutinise the employer’s evidence in order to satisfy itself that the reason for the disparity is neither gender based nor tainted by gender discrimination. In this context it is relevant to note the wide comments of Cox J. in MoD v. Armstrong :-

“In determining whether sex-related pay discrimination exists in any particular case it is important to bear in mind that whilst the Equal Pay Act 1970 focuses on the contracts of each individual applicant and her named comparator, pay discrimination is frequently systemic in character, arising as a result of gender job segregation or from discrimination in pay structures and grading systems, rather than from the terms of individuals’ contract of employment.”

13. Employers seeking to establish that the genuine material factor (“gmf”) reason is not tainted by discrimination need to set out evidence as to how the disparity came into existence. For example in Glasgow City Council v. Marshall the Local Authority put forward a historical explanation for a difference in pay. The practice was of unexplained origin and continued through inertia. However given the finding that that explanation was untainted by sex discrimination, it was sufficient to satisfy section 1(3).

14. The underlying concept behind this finding as explained in Strathclyde Regional Council v Wallace [1998] IRLR 146 HL, is that the object of s.1 EPA was to eliminate sex discrimination in pay, not to achieve fair wages. If a difference in pay is thus explained by genuine factors which were not tainted by sex discrimination then that is enough to satisfy the s.1(3) defence. There is then no further burden to justify anything. In Strathclyde, Lord Browne-Wilkinson said at page 149:
“It follows that the words “not the difference of sex” where they appear in s.1(3) of the Equal Pay Act 1970 must be construed so as to accord with the Sex Discrimination Act 1975 and Article 119 of the EC Treaty, ie an employer will not be able to demonstrate that a factor is “not the difference of sex” if the factor relied upon is sexually discriminatory whether directly or indirectly. Further a sexually discriminatory practice will not be fatal to a subsection (3) defence if the employer can “justify” it applying the test in the Bilka-Kaufhaus case [1986] IRLR 317.”

Justification
15. If and in so far as the employer is required to show objective justification by reason of discrimination infecting the reason, it must demonstrate that the means chosen to achieve its objectives are proportionate, and this means no more than that it is ‘appropriate and reasonably necessary’ (Barry v Midland Bank per Peter Gibson LJ at 336b – 337b ). Further, in order to prove that a requirement is justifiable it is not essential to prove that it is absolutely necessary for the survival of the business. If a person produces good and adequate reasons for doing something then he has justified his conduct: see Ojutiku v Oburoni and Manpower Services Commission [1982] IRLR 418 CA per Stephenson LJ at page 423, para 54 where he says that the test of justification works by:
“requiring the party applying the discriminatory condition to prove it to be justifiable in all the circumstances on balancing its discriminatory effect against the discriminator’s need for it. But that need is what is reasonably needed by the party who applies the condition; and the question here is: have the Commission good and adequate reasons for requiring managerial experience from those whom it sponsored with financial support.” (approved by CA in Hampson v Department of Education and Science [I989] IRLR 69)

16. The concept of objective justification was considered by the European Court of Justice in Bilka-Kaufhaus v. Weber Von Hartz . That case concerned the right to access an occupational pension scheme. Part time workers could only access the relevant scheme if certain conditions were met. The Applicant in the case claimed that this was indirectly discriminatory. In its judgment, the ECJ stated that the scheme would not be in breach of Article 141 if the employer could show that the practice was explained by objectively justified factors unrelated to any discrimination on grounds of sex. It held that in order to do that the employer would have to show:-

a. That the measures chosen by the employer serve or correspond to a real need on the part of the undertaking
b. That the measures are appropriate to achieving the objectives pursued
c. That the measures are necessary to achieve the objectives pursued.
d. That the difference conforms to the principle of proportionality.

17. In Barry v. Midland Bank Lord Nicholls in the House of Lords described what he understood to be required by the principle of proportionality (albeit in the context of justifying indirect discrimination):-

“In other words, the ground relied upon as justification must be of sufficient importance for the national court to regard this as overriding the disparate impact of the difference in treatment, either in whole or in part. The more serious the disparate impact on women, or men as the case may be, the more cogent must be the objective justification. There seem to be no particular criteria to which the national court should have regard when assessing the weight of the justification relied on.”

What will qualify as material differences?
18. These may qualify as material differences. These include:
a. level of qualifications;
b. level of experience;
c. level of service;
d. degree of skills acquired;
e. responsibilities undertaken;
f. regional pay variations;
g. different economic circumstances affecting the business itself where the comparator was working at a different time from the complainant;
h. that the individuals are in differing levels in the grading structure;
i. that market forces have dictated that a later applicant is paid more (or less) than someone who is already established in the job;
j. part-time working - but this can only be a justification if the differential between part-time and full-time rates is justifiable on economic grounds, for example, if short-time working costs more because machinery is lying idle for longer, and provided too that part-time workers of both sexes are paid the same;
k. the comparator is a ‘red circled’ worker (i.e., where the comparator has been demoted but his pay has not been reduced) although the differential in pay should be phased out over time, and there should be no outsiders within the ‘red circle’.
19. I now address two of the most controversial features under the gmf rubric:
a. Protections
b. “red circle”.

a. protections; general
20. A key recent case on protection is Redcar & Cleveland Borough Council v Bainbridge [2007] IRLR 117 which is being appealed to the Court of Appeal (no date has yet been fixed for the hearing). The EAT held in outline that if pay protection maintains or preserves past discriminatory practice, it is impermissible as a gmf under the EPA. There “as frequently occurs when a new job evaluation scheme is introduced, it was agreed between the employer and the unions that such workers should not immediately suffer a reduction but should be cushioned from that effect” (para 118). The issue was formulated (para 131) as “in circumstances where the pay protection principle has the effect of continuing a historic but at the time of implementation uncorrected pay discrimination, can it properly be described as a genuine material factor?” The EAT considered the previous authorities of Snoxell v Vauxhall Motors [1977] ICR 700; Outlook Supplies Ltd v Parry [1978] IRLR 12; MOD v Farthing [1980] ICR 705; Home Office v. (1) Bailey (2) Martin and (3) Beachcroft [2005] IRLR 757; Cross v BA [2005] IRLR 423; and Ratcliffe v North Yorkshire County Council . They then held that “sex discrimination was a direct and significant cause of the difference in treatment” so that it could not qualify as a gmf however long it continued for. In para 163 of the EAT Judgment as obiter dicta, Elias J suggests that pay protection may not always be unlawful if the employer was not challenged about unequal pay before the protection was put into place. However, it is hard to imagine a situation in which it would fall outside the principles of the main part of the decision.

b. “red circle”
21. A “red circle” operates where an employee is moved from one position to another and maintains terms and conditions from the old position. This may occur because the employee was ill or redundant and is often a legitimate approach in industrial relations terms. In Outlook Supplies Ltd v. Parry in 1978 Philips J made the following points when “red circle” has lasted over a period of time:-
a. The protection of wages, even when done for good reason, gives rise to much misunderstanding and upset, which increases as time goes on and it is accordingly desirable that where possible such arrangements should be phased out;
b. For the same reason, joint consultation is desirable where it is intended to introduce such a practice, or to continue it;
c. In such cases, when determining whether the employer has discharged the onus upon him under s.1(3), it is relevant for the Tribunal to take into account the length of time elapsed since the “protection” was introduced, and whether the employers have acted in accordance with current notions of good industrial practice in their attitude to the continuation of the practice.
There is no definitive statement as to the maximum length of time for preservation of a red circle; it all depends on the circumstances. In Home Office v. (1) Bailey (2) Martin and (3) Beachcroft [2005] IRLR 757 the Home Office failed to prove as a gmf a twelve year retention. The other point to note is that each person in the circle must be considered separately: United Biscuits v Young [1978] IRLR 145.

The North East local authority cases
22. I now want to talk about some issues arising out of North East local authority cases. In 2004/2005 the largest proportionate increases are recorded as being in sex discrimination and equal pay claims. A vast swathe of equal pay claims have engulfed North East of England in particular some 5000 claims on behalf of local government workers. Many hundreds of millions of pounds are at stake. The claims are brought not by the unions but by solicitors operating on a contingency fee basis.

23. To have several mass equal pay cases going on at the same time poses particular logistical problems for the tribunals both in accommodating all the claims (including equal value experts), case management and in dealing with a large number of appeals proceeding at different paces. At virtually the same time the tribunals were deluged with
1. Prison officers claims culminating in Home Office v. (1) Bailey (2) Martin and (3) Beachcroft [2005] IRLR 757;
2. claims against Local authorities over the single statusa agreement and satellite claims against ACAS, unions and individual councillors;
3. latterly over 10000 NHS cases now centralised in Newcastle arising out of the new collective bargain, Agenda for Change.
These cases have revealed many hidden (or at least under litigated) issues on equal pay.

24. The background is that all local authorities introduced a job evaluation scheme (known as the ‘White Book Scheme’) in or about 1988 in relation to manual workers, whose terms and conditions were governed by the NJC (Manual Workers) Agreement (‘the White book’) . The White Book allowed for local agreements with regard to certain payments including bonus and attendance allowances.
25. Other staff (“white collar workers”) whose terms and conditions of employment were governed by the National Agreement for APT&C (‘the Purple Book’) did not have their work submitted to job evaluation.
26. Unions and local government employers negotiated and agreed a new national agreement intended to replace the White Book and Purple Book, the intention being to harmonise terms and conditions of employment in respect of workers covered by both agreements.
27. In or about April 1997 unions and local government employers agreed a national level ‘single status’ agreement designed to combine terms and conditions of employment for manual and white collar workers in local government. The new agreement is known as the Green Book at least I n most parts of the country. A new NJC was created: the NJC for Local Government Employees. With effect from 10 July 1997 the White and Purple Books were replaced by the Green Book. Part of the Green Book envisaged that local authorities would carry out a fresh job evaluation exercise in respect of jobs done by former manual and white collar workers. Job evaluation was to be conducted at a local level.
28. No time limit was at the time imposed or set by which job evaluation had to be completed although now there is a time limit by subsequent collective agreement of 1 April 2007. Upon completion of job evaluation it was envisaged that local authorities and the unions would agree a new pay structure including grades, pay bands and rates of pay.
The cases primarily but not entirely concentrate about men’s jobs have bonuses; women’s do not and seek to recover back pay for six years.

29. I will concentrate on these issues
a. The overlap between Equal Pay and sex discrimination especially relating to remedy
b. The effectiveness of ACAS COT3s and the liability of ACAS in negotiating settlements
c. The liability of unions for discrimination
d. The ability of employees of community and voluntary aided schools to claim in respect of other local authority employees

A Overlap between SDA/Eq Pay Act
30. The policy of the legislature as reflected in the shape and context of the two Acts is that there is a clear firewall between them in terms of causes of action. There is a dividing line between the implied contractual term of equal pay and the statutory tort of sex discrimination. S 6(6) and s. 8(3) Sex Discrimination Act 1975 provides that sex discrimination does not apply to payment of money regulated by the contract of employment. Injury to feelings and aggravated exemplary damages are not available in the former jurisdiction (although they may be very large in the latter); the remedy being restitutio in integrum, not compensation as though it were a tort which is the explicit basis of remedies under the Sex Discrimination Act 1975 The EAT in Newcastle CC v Allen [2005] IRLR 504 held that there could be no recovery of non economic loss in a claim under the Equal Pay Act.

31. There are other significant differences:
a. there are different limitation periods. A claim may be brought at any time during employment or within 6 months after it has terminated for equal pay (and then the damages may go back normally for six years); whilst the limitation period is 3 months for sex discrimination
b. there is a need for an actual comparator under the 1970 Act; whereas there may be a hypothetical comparator in the SDA.
This is not only a national difference: There is also a line of difference at European level between the European Equal Treatment Directive and the Equal Pay Directives. They are however to be read as a single code .

Compromise agreements
32. Compromise agreements or contracts are to be distinguished from those negotiated with the involvement of ACAS known as COT3s after the form which they commonly use under s77(4)(a) Sex Discrimination Act 1975 or s203 (2)(e) Employment Rights Act 1996 (“ACAS conciliated agreements sections”). s.77(3) SDA provides:
“a term in a contract which purports to exclude or limit any provision of this Act or the Equal Pay Act 1970 is unenforceable by any person in whose favour the term would operate apart from this subsection.”
However, by virtue of subsection (4) the above restriction does not apply to:
“a contract settling a complaint to which section 63(1) [discrimination] of this Act or section 2 of the EqPA applies where the contract is made with the assistance of a conciliation officer.”
Several issues about the contents and enforceability of COT3 forms arose in Williams v Redcar & Cleveland BC Case No 2504420/03. This primarily involved the extent to which the ACAS Conciliation Officer has to be involved in procuring a settlement for the agreement to be effective under the Employment Tribunals Act 1996 s18(2) & (3). The important appellate cases on ACAS conciliated agreements are Moore v Duport Furniture Products Ltd [1982] ICR 85; Slack v Greenham Plant Hire Ltd [1983] ICR 617 and Hennessy v Craigmyle Co Ltd [1986] ICR 461. In Moore Lord Russell said that “the Conciliation Officer has [no] responsibility to see that the terms of the settlement are fair on the employee”. The term “promote a settlement” used in both ACAS conciliated agreements sections were according to Lord Brandon at 98a “to be given a liberal construction capable of covering whatever action by way of such promotion is applicable in the circumstances of the case”.

33. He went on to outline the unusual types of circumstances which might lead to an agreement being overturned as the Conciliation Officer “acting in bad faith or adopting unfair methods”. In the Williams case, the tribunal found that the ACAS Officer had acted sufficiently to give proper sanction to the settlements even though her activity appeared relatively minimal (see para 13.3) and the tribunal had some direct criticisms of her conduct (para 13.5) in particular that she did not tell employees to seek independent legal advice if they were unsure of their legal rights. The tribunal said that it was not the duty of ACAS itself to provide legal advice (para 13.6). This was upheld on appeal under the name Clarke v Redcar & Cleveland BC [2006] IRLR 324. The ET had also found that the COT3 was apt to settle only the respective claimant’s equal pay claim but only in respect of the period leading up to the date on which she signed. The appeal tribunal also held that the COT3 had achieved a change in terms and conditions and to draw a line under the old regime by making payments to reflect the council’s admission that there was inequality.

The union’s duties to its members
34. A very significant decision was reached in the tribunal case of Allen v GMB just argued in EAT; This arose indirectly from the North East cases but the union were found to have rushed headlong into an ill considered back pay deal accepting Middlesbrough Council’s plea of poverty without question. They key findings of the tribunal were that they did not assess capital assets or possibility of savings in other areas; relatively unsophisticated union members were manipulated into accepting the employer’s offer or doing nothing by alarmist information causing real fear (para 7.66); it would make them seem like traitors; the union were not prepared to change by giving away previously won rights and having losers (para 7.69); and they were not prepared to press councils to comply with its obligations

community school and voluntary aided schools
35. Many of the North East claimants are employed in community schools but seek to compare themselves with comparators working throughout the local authority. These questions arise
i. Can an employee in a community school compare herself to any employee of the LA?
ii. Can an employee in a voluntary aided school compare herself to any employee of the LA?
iii. Can an employee on green book terms and conditions compare herself to any employee on red book terms and conditions?
36. Each of these issues has either been considered (or is in the process of being considered) by the higher courts respectively in the following cases :-
a. South Tyneside MBC v Ms A Anderson & others (EAT 684/05 on appeal to the Court of Appeal – listed for hearing on 21/22 May 2007)
b. Dolphin v Hartelpool MBC (heard by the EAT with the Hartlepool case – it is not being appealed)
c. Shepherd v North Yorkshire CC (first instance decision by Leeds ET – it is on appeal to EAT but no date has yet been set for the hearing)

b. The same employment
37. The first two matters require consideration of the phrase ‘in the same employment’ which is found in s.1(2)(a), (b) and (c) EPA . It is then defined in s.1(6) as follows:

“Subject to the following subsections, for purposes of this section –
…men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes.”

38. It is a fundamental requirement under the EPA that the claimant and comparator must be employed by
a. the same or an associated employer and
b. at the same establishment or
c. at a different establishment but one which is observing common terms and conditions.
It is thus necessary to consider in more detail who is the employer in relation to both types of school and whether the employer is observing common terms and conditions at different establishments.

c. Voluntary aided schools; the employer as a matter of domestic law
39. The cross comparison here fails for a reason more fundamental than in respect of Community schools namely that the actual contractual employer is different (see para 10 above).

40. Section 36 Education Act 2002 (EA) governs the staffing of voluntary aided schools and provides as follows :

(1) This section applies to-

(a)……
(b) voluntary aided schools, and
(c) …….

(2) Except as provided by regulations under subsection (4), any teacher or other member of staff who is appointed to work under a contract of employment at a school to which this section applies is to be employed by the governing body of the school.

41. Regulations have been made pursuant to ss.35 and 36 EA and they are the School Staffing (England) Regulations 2003, SI 1963 (‘The School Staffing Regulations’). These came into effect on 1 September 2003.

42. Part 3 of those regulations deal with voluntary aided schools and regulation 24 provides:
Any appointment of support staff must be made by the governing body unless the governing body and the authority agree that the appointment should be made by the authority.
Thus although the Governing Body of a voluntary aided school may agree for the LEA to employ support staff directly, this is the exception to the rule and requires agreement between the Governing Body and the LEA “that the appointment should be made by the authority”.

43. In Dolphin v Hartlepool Borough Council ET 2506112/03, the claimants engaged in voluntary aided schools argued also that although normally they would be employed by the school as a body (strictly the Governing Body of the School), that presumption was displaced on the specific facts because much of documentation they actually received in terms cited Hartlepool Borough Council as the (only) employer. This included their P60s, the citation under the local government pension scheme and a compensation offer to settle equal pay claims (paras 80). The ET said “it was clear that the job evaluation exercise which the LEA took up was only after invitation to the schools and that any resultant exercise would have to be discussed by the Governing Body as to whether it was implemented” (Para 82). The ET found that “As to the compensation offer from the Council it is perhaps not unusual for discussions to be organized centrally with the unions but it was quite clear on our findings of fact that the sums would come out of the individual schools budgets and that the ultimate decisions were for the respective Governing Bodies” (para 83).
44. Claims by employees employed in voluntary aided schools comparing themselves with employees elsewhere should thus be struck out under the domestic EPA. The EAT upheld in the Dolphin v Hartlepool BC the tribunal that such employees cannot compare themselves to employees of the Local Authority and this is not being appealed further.

45. If the true position is that a particular Claimant in a Voluntary aided school is employed by the Governing Body and any of her comparators by the Council, she cannot bring herself within the scope of the EPA. Her claim may then only be “rescued” from failure by consideration of wider EU legal principles which I turn to below.

d. Community schools; different establishment
46. In the case of community schools, the claimants and their comparators are clearly employed by the same body the local authority and they are engaged at different establishments but on the facts, a rescue operation in favour of the claimants may be made by reason of different establishment but observing common terms and conditions as a matter of domestic law under s1(6) EPA (already extracted above). The issue in the case arises from the principle that a Claimant can only compare herself to an employee in a different establishment when there are “common terms and conditions of employment.” Even though the employment is by the Council in the case of the community schools the claimants based at the community schools are at different establishments and cannot compare themselves with comparators not employed at the particular school because there is autonomy between the schools and Council. This requires consideration of funding and control within community schools in order to test the commonality or otherwise of the decision making process. The fundamental question is who decides the terms, Governing Body or LEA.

47. The functions of a Governing Body for community schools are set out in the School Staffing Regulations reg 15 . These provide for the appointment of teaching and support (non-teaching) staff and the role of the LEA. The current position is that the Governing Body has overall responsibility for staffing matters at a school and may appoint support staff to their posts. Where it does so, for community schools only the Governing Body must consult the Head Teacher and the LEA. The Governing Body recommends to the LEA as to the duties, grade and specific salary point on which the employee will be appointed (para 20 Schedule 16). However, the ultimate decision will be taken by the Governing Body since the LEA must appoint a person recommended by the Governing Body unless he does not meet staff qualification requirements which is an objective question not calling for the exercise of discretion by LEA or Governing Body (para 21). Power of suspension and dismissal is also effectively vested in the Governing Body. There is special provision for the school meals service where the power of appointment discipline suspension and dismissal vest in the LEA but it must consult with the Governing Body before exercising its powers (reg 18).

48. The consequence of the freedom given to Governing Bodies under the legislation is such that the LEA does not impose rates of pay on the schools. Rather it recommends those rates. The Governing Body is not compelled to accept those recommendations.

49. In the Anderson v South Tyneside in the ET and EAT South Tyneside argued on this basis that this meant that there could not be comparison because of the involvement of the Governing Bodies of community schools in reaching decisions on the actual terms on which support staff would be appointed and that since each Governing Body could decide on the terms there was no sufficient commonality of terms. The ET however decided against the Respondent because (para 25.8) “the LEA still controls the rate of pay…because any recommendation as to grade had to be on the scale of grades currently applicable in relation to employment with the authority”.

50. The reasoning of the South Tyneside tribunal was this:
a. the establishment is where the employee actually works notwithstanding the existence of a mobility clause; para 25.3 ;
b. the requirement to show a common source of pay responsible for the alleged inequalities and capable of restoring equality is a necessary but not sufficient requirement; para 25.7;
c. the local authority has a sufficient degree of control over the pay of school claimants to make it a single source of pay for EU purposes; para 25.8;
d. the claimants and comparators are not in the same service; para 25.9;
e. the claimants may rely upon white book but not red book comparators: para 25.10.

51. Where employees are employed under the same collective agreement ie the green book, the EAT in Anderson found that there were “common terms and conditions of employment”. As a matter of fact in South Tyneside only in a few out of approximately 1000 cases on this issue were Governing Bodies paying differently to the green book. The EAT decided on the general point of common terms however that (para 36)
“Counsel [for the employees] is correct in submitting that on their findings of fact as to the common application of the white book by STC as employer to both the schools support staff claimants and their male comparators at other establishments the ET’s conclusions at para 25.6 is unassailable in law”.

52. Leave to appeal was given by the Court of Appeal because of the importance of the point and this will be heard in May.

53. This is partly because in British Coal Corporation v Smith [1996] IRLR 404 the House of Lords held that ‘common terms and conditions’ means that the terms and conditions must be substantially comparable on a broad basis, rather than a requirement that the same terms and conditions be applied, subject only to de minimis differences (which was the alternative contention put forward in Smith). In Smith at paragraph 35 Lord Slynn said:

“It is plain that from the beginning, although the woman had to show that her comparator or comparators (‘men’) was or were employed by her employer or by an associated employer of her employer, and that she could not point to higher wages being paid by other employers, yet she was not limited to selecting male workers from the place where she herself worked. The reason for this is obvious, since otherwise an employer could so arrange things as to ensure that only women worked at a particular establishment or that no man who could reasonably be considered as a possible comparator should work there. A woman can thus point to men employed in her own establishment or in other establishments of her employer in Great Britain. But the other establishments which include her establishment must be ones at which common terms and conditions of employment are observed generally or for employees of the relevant classes. The words ‘which include that one’ may at first sight be puzzling since she can under the earlier words point to men employed at the same establishment as hers. The words are, however, to be read with the following words: ‘at which common terms … are observed’. Those common terms must thus be observed not only at other establishments but also at the establishment at which the woman works if employees of the relevant classes are employed there .”
He went on
“What therefore has to be shown is that the male comparators at other establishments and at her establishment share common terms and conditions.” (paragraph 39)
f. meaning of ‘same service’; voluntary aided schools
54. In respect to the voluntary aided schools there is a case directly on point in the EAT to the effect that voluntary aided schools and community schools are not in the same service: Blessed Edwards Jones v Rawlinson EAT 776/02 (see esp para 9) and this was reiterated in Dolphin.