What Is the Equality Act?

Introduction

The Equality Act 2010 (EqA) came into force on the 1st October 2010, replacing the earlier Equal Pay Act 1970, with the aim of offering greater certainty. Despite this, there is largely a replication of the terms of the 1970 Act and there remain difficulties in enforcing the fundamental rule of equal pay for equal work, which is set out in Article 157 of the Treaty on the Functioning of the European Union (TFEU). This has several elements which can potentially be argued by employers looking to discriminate against women, two of which areas will be looked at here, in order to confirm or deny the statement made at the outset that employers are using the legal argument to dodge their obligations. For the purposes of arguing this point, two issues will be considered, in more detail: the need for a comparator and the material justification defence.

Comparator

The sex equality requirement prohibits pay discrimination based on sex and therefore a woman looking to bring a claim of this nature will need to be able to compare her contractual terms with a comparable or sufficiently similar male comparator. This notion of a comparator is used across the whole area of discrimination however it is treated somewhat more stringently in the case of equal pay. In accordance with the EqA, it is necessary for the comparator to be actual. Unlike other areas of discrimination where the comparator can be hypothetical, it is necessary for the woman in this situation to find an actual comparator. It is also necessary for the comparator to be in the same employment, i.e. employed by the same employer or at least an associated employer. The comparator must also be a current or former employee, but cannot be a successor and the comparator is fundamentally the claimant’s choice. Bearing in mind all of these requirements, it is possible to see that there are several options available to the employer, when it comes to arguing the validity of a comparator.

In the case of Macarthys in 1980, it was held that there needed to be an actual comparator with the judge stating: “Comparisons are confined to parallels which may be drawn on the basis of concrete appraisals of the work actually performed by employees of different sex within the same establishment or service”. It is noted that this is not the case with a direct pay discrimination claim, where a hypothetical comparator may be allowed for the purposes of evidencing sex discrimination and less pay for the same work.

A similar difficulty emerges in the area of working in the same establishment. In the case of the City of Edinburgh Council, 2012, where the Inner House of the Court overturned the previous decision of the EAT that had previously argued that the terminology “establishment” could have a broad meaning. Instead, the Inner House restricted this substantially by saying that the comparator had to work at an establishment that was largely in the same geographical area. An employee looking to claim that they are being paid less will also need to find a comparator who is broadly employed on common terms (as stated in Section 1(6) of the 1970 Act and restated in EqA). For example, in the case of Leverton (1989), it was possible for female nursery nurses to argue that they were being paid less than their comparators who were male clerical staff. All staff had a “purple book” of terms and conditions and this was sufficient to argue that they had common terms.

Finally, there is the time frame over which the comparator has worked, with the ability of the claimant to look at a predecessor but not a successor. This was supported by the case of Walton, 2008, where it was held that a successor could not be used, as this would require the courts to hypothesise as to whether the comparator would have been treated differently, had they been employed at the same time. This is based on the argument that by looking into the future this would be hypothetical situation and impossible to consider how the employer would act in the future. It can therefore be seen that there are multiple issues involved in locating a comparator, which can potentially make it easier for an employer to escape their obligations and to allow them to look at ways of paying female employees less, either directly or indirectly, or at the very least making the matter difficult for an employee to prove, in the absence of an obvious and exact comparator.

Material Justification

Another area which presents a real opportunity for the employer to look at escaping liability is the use of the material factor defence contained in both the EqA and the 1970 Act. This defence allows an employer to pay an employee less than a comparator for whom they would otherwise be required to ensure equal pay, due to some non-discriminatory reason. There is non- specific requirement to deal with the notion of material defence, after the issue of equal pay has been discussed and it may be that the tribunal will in fact consider the material justification defence, at the outset, when looking at whether the jobs were of equal value.

The material factor defence is dealt with in Section 1(3) of the 1970 Act, where it is stated that the employer would have a defence, if they could show that the difference in salary “is genuinely due to a material factor which is not the difference of sex”. This is a genuine requirement and allows for employers to have a distinction between pay where it is required for the business need.

An employer can show that they have a material factor defence where they can prove the following. Firstly that the explanation is genuine, secondly that the reason for less favourable treatment was down to that explanation, thirdly that the reason was not considered to be the difference of sex and finally that the reason is a significant and relevant difference between the man and woman in the instance. When looking at the genuineness of the situation, the House of Lords stated in Bury Metropolitan Council that tribunals should not become too concerned over the issue of genuineness and should instead simply look at the facts surrounding the situation. In this case, it was also stated that the difference will only be a sham, if it “has been deliberately fabricated in order to present things otherwise than as they are”.

Crucially, it is also necessary for the factor to be material meaning, in accordance with Rainey, 1987, where the difference is significant and relevant, but this could be with reference to external factors, such as the market and not necessarily simply down to the skills and knowledge of the individuals in question. When it comes to material justification, the burden of proof shifts from party to party in such a way that offers a real opportunity for the employer to escape liability. Once the employee has shown that there is a prima facie case for an equal pay claim, the employer then has the burden of showing a material factor defence, before the burden then travelling back to the employee to show that this was not genuine or in error in some way.

For example, it may be argued, as was the case in Cooksey and Others (2011), that the use of an on call allowance had the impact of men getting paid more than women, due to men being typically more available to undertake such work; this was sufficient to constitute a material factor defence and the case was allowed, with the employer being culpable.

Conclusion

It is concluded here that the original statement made that employers have been able to use legal argument and loopholes as a key way of escaping liability under the equal pay legislation is not merely a theoretical argument, but one that is supported and shown time and time again through the tribunals and court system. It is argued here that by just looking at the area of identifying a comparator and the area of a material factor defence, there is a multitude of complexities that can be used by the employer to evade liability. This area needs to be revisited carefully, if there is to be sufficient protection offered to women, in the future. As it stands, all but the most obvious of discriminatory scenarios are likely to evade the full extent of the legislation and this matter requires review, as a matter of urgency. Practicality is such that there are a variety of factors which may lead to a discrepancy of pay yet this needs to be addressed to ensure that any differences are materially justifiable and are appropriate in all circumstances so as to reduce the overall pay gap as far as possible.

Bibliography

1. Bury Metropolitan Borough Council v Hamilton and other cases [2011] IRLR 358
2. City of Edinburgh Council v Wilkinson and others [2012] IRLR 202,
3. Cooksey and Others v Trafford Borough Council and others UKEAT/0255/11
4. Equality Act 2010
5. Equal Pay Act 1970
6. Forex Neptune (Overseas) Ltd v Miller [1987] ICR 170,
7. Glasgow City Council v Marshall [2000] ICR 196 (HL)
8. Treaty on the Functioning of the European Union
9. Leverton v Clwyd County Council [1989] IRLR 28 (HL).
10. Macarthys Ltd v Smith [1980] IRLR 210
11. Prentis D, Unison. 2013. commenting on North and ors v Dumfries and Galloway Council 2013 SC 45
12. Rainey v Greater Glasgow Health Board [1987] ICR 129
13. Walton Centre for Neurology & Neuro Surgery NHS Trust v Bewley [2008] IRLR 588