The House of Lords unanimously allowed an appeal by three female employees and restored an industrial tribunal's majority ruling that the employer, the council, had failed to show that the variation between the employees' contracts and the contracts of male comparators was due to a material factor which was not the difference of sex.
Section 1(3) of the Equal Pay Act 1979, as substituted, provides: "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 . . ."
Prior to 1987 the employees, three women, and 1,300 other women, were employed by the council as catering assistants in different schools in the council's area. Their work serving school dinners was done almost exclusively by women, who found the hours convenient. In 1988, after a job evaluation study, the council paid them the same rate as men employed by the council whose work had been rated as equivalent. When the provision of school meals had to be put out to tender under the Local Government Act 1988, the council set up a direct service organisation. In order to compete with the tenders put in by a commercial organisation, the council dismissed the women employed to serve school dinners and re-employed them with a lower hourly rate.
Three employees claimed they were treated less favourably than their male comparators. An industrial tribunal by majority decided that the rates were reduced in a market which was virtually exclusively female and in which the competitors employed women on less favourable terms than the council did previously and that was a material factor due to the difference of sex. The minority member decided that the reason for the difference in pay was due to some factor other than sex, namely compulsory competitive tendering.
The Employment Appeal Tribunal decided that the industrial tribunal had not properly directed itself and remitted the case for re-hearing. The Court of Appeal decided that the pay offered was due to the operation of market forces and the difference in pay in comparison to the male comparators was objectively justified.
Brian Langstaff QC and Dinah Rose (Brian Thompson & Partners) for the employees; David Pannick QC (Council Solicitor) for the council.
Lord Slynn said that by section 1 of the Equal Pay Act 1970 an equality clause was deemed to be included in a woman's contract of employment. The 1970 Act must be interpreted without bringing in the distinction between so-called "direct" and "indirect" discrimination in the Sex Discrimination Act 1975.
It was obvious that the council reduced the employees' wages in order to obtain contracts and that to obtain contracts they had to compete with the commercial organisation who employed women on less favourable rates.
The basic question was whether the council's organisation paid women less than men for work rated as equivalent. The reason it did so was that they had to compete. The fact, however, was that it did pay women less than men engaged on work rated as equivalent. The industrial tribunal was entitled to find that the council had not shown that that was genuinely due to a material difference other than the difference of sex.
The fact was that the council re-engaged the women at rates of pay less than those received by their male comparators and no material difference other than the difference of sex had been found to exist between the case of the women and their male comparators. Though there was a difficult problem facing the employer seeking to compete with a rival tenderer, to reduce the women's wages below that of their male comparators was the very kind of discrimination in relation to pay which the Act sought to remove.
The appeal would be allowed.
Ying Hui Tan, BarristerReuse content