Law Report: Market forces justify lower pay for women: North Yorkshire County Council v Ratcliffe. Court of Appeal (Lord Justice Balcombe, Lord Justice Evans and Lord Justice Roch). 28 April 1994.

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An employer's need to be able to bid for tendered-out contracts at a rate competitive with rival bidders was a 'material factor which is not the difference of sex' within the meaning of section 1(3) of the Equal Pay Act 1970 such as to justify paying a mainly female workforce less than their chosen male comparators.

The Court of Appeal allowed an appeal by North Yorkshire County Council from the decision of the Employment Appeal Tribunal in a complaint by three applicants, Mrs Dorothy Ratcliffe, Mrs Susan Crosby and Mrs Marjorie Collinson, who had been employed by the council as 'school dinner ladies', but who now worked for North Yorkshire County Caterers, a direct service organisation (DSO) providing school meals under contract to the council, and who claimed, under section 1(2)(b) of the 1970 Act, that they did work which should be 'rated as equivalent' to the work done by various men employed by the council, including roadsweepers, gardeners, cleaners, refuse collectors, school crossing patrol and leisure attendants.

Their Lordships held the women and their male comparators were 'in the same employment' for the purposes of section 1(6) of the Act, but that the council, as (directly or indirectly) their common employer, had established the defence under section 1(3) that the variation in pay was 'due to a material factor which is not the difference of sex', namely market forces.

David Pannick QC and Pushpinder Saini (Council Solicitor) for North Yorks; Lord Lester of Herne Hill QC, and Brian Langstaff QC, (Brian Thompson and Partners, Leeds) for the applicants.

LORD JUSTICE BALCOMBE, giving the court's judgment, said North Yorks accepted, following a job evaluation study in 1988, that the applicants did equivalent work to their male comparators, and had then paid them the same. But the situation changed when the Local Government Act 1988 introduced compulsory competitive tendering.

The council set up a DSO, North Yorkshire County Caterers, to compete with commercial organisations bidding for school-dinner contracts. Under the 1988 Act, the DSO had to be self-financing and commercially competitive. In order to be so, it had, in effect, to cut its employees' pay in line with the lower rates paid by its competitors. But the male council employees, with whom the applicants had previously been compared, were paid the same as before.

The council accepted that the dinner ladies were still doing work of equal value to that of their comparators but argued that the variation was due to a material factor which was not the difference of sex, namely the commercial requirements of competitive tendering imposed by the 1988 Act.

Their Lordships agreed. If the rates of pay offered to the applicants had involved discrimination against women, then the fact that they were adopted in order to compete with a commercial rival would not prevent them being regarded as discriminatory. Nor, if they were directly discriminatory, would any question of justification arise.

But the council did not discriminate directly between men and women. The need to compete with a rival bid was unconnected with the difference of sex between potential male and female employees. That the terms were 'genuinely due to' the operation of market forces could not be doubted.

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