Appeal No. EAT/0667/02/TM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 16 June 2003
Judgment delivered on 2 September 2003

Before
HIS HONOUR JUDGE J R REID QC
MR P A L PARKER CBE
MR A D TUFFIN CBE

AINTREE HOSPITALS NHS TRUST	APPELLANT

MR F M REYNOLDS	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR N GRUNDY
(of Counsel)
Instructed By:
Messrs Hill Dickinson
Solicitors
Pearl Assurance House
Derby Square
Liverpool L2 9XL	
For the Respondent	MR F M REYNOLDS
THE RESPONDENT
IN PERSON	

HIS HONOUR JUDGE J R REID QC:

1	This is an appeal from a decision of an Employment Tribunal held at Liverpool on 14 May 2002 by which the Tribunal unanimously decided that the Appellant, the Trust, had “breached the [implied] equality clause in the Applicant’s contract of employment.”  Mr Reynolds had claimed that he was employed on “like work”, as a theatre support worker, with three named female comparators but was paid less and that there was no genuine material factor other than sex to explain the difference.

2.	It was conceded on behalf of the Trust that Mr Reynolds was employed on like work with his comparators.  It was also conceded that those comparators were paid more than he was.  However, it was contended that that variation was genuinely due to a material factor which was not sex, so the equality clause did not operate.

3.	The facts found by the Tribunal were not in any substantial way in dispute. The Trust was formed in 1992 and took over the work and workforce of the South Sefton (Merseyside) Health Authority.  The employees within that Authority were paid according to rates laid down in a particular collective agreement, referred to as the “Whitley” agreement.	  Those employees in post at the time the Trust became their employer continued and continue to be paid the Whitley rates.  However, employees taken on after that date are employed on the Trust’s own terms and conditions.

4.	In respect of certain grades, those terms and conditions reflect the Whitley terms in relation to pay.  Accordingly the employees taken on under those terms (as well as those who were already in place in 1993) are entitled to payment at the Whitley rates.  They are also entitled to annual increments independent of their actual performance.  However for other grades of employees taken on after 1993, the provisions as to pay within their contracts do not reflect the Whitley rates.  Furthermore, increases in wages are dependent upon performance at annual review.

5	Theatre support workers were, before 1993, employed as Grade A or Grade B employees on the Whitley scales.  Those taken on after 1993 were employed on Grade HCA or HCA+ on the Trust’s scales.  The change was part of the institution of a completely new set of terms and conditions for all fresh employees.  The decision to take on those employees on different terms was one that was not made on the basis of the sex of the occupants (or potential occupants) of the relevant jobs. 

6.	Mr Reynolds and his comparators are all theatre support workers.  His employment began on 17 October 1994.  The three comparators all began their employment before 1993.  As a result the comparators are paid on the Whitley scales (A grade) and Mr Reynolds is paid on the Trust’s scale (HCA grade). 

7	The employment figures put before the Tribunal were as follows.  In March 2002 of the total staff of Aintree Hospitals there were 67 male and 261 female staff on the HCA grade.  There were no males and 2 females on the HCA+ grade.  There were 17 males and 167 females on grade A and no males and 1 female on grade B. These figures included all those on these grades, not just theatre staff.  The figures included, for example, catering management, computer staff, domestic service management and finance staff.  The figures for theatre staff were: HCA grade, 11 male and 13 female; HCA+ grade, no males and 2 females; grade A, 8 males and 19 female; grade B, no employees.  

8.	At the hearing before the Employment Tribunal Mr Reynolds, who represented himself, put his case on the grounds of direct discrimination between himself and the three comparators.  During final submissions for the Trust the Chairman for the first time raised the possibility of indirect discrimination.  On the basis that there was a requirement applied by the Trust equally to men and to women (ie employment pre-1993) which was such that the proportion of men who could comply with it was considerably smaller than the proportion of women.  It was pointed out that there was no evidence of objective justification. The Tribunal at paragraph 26 of the Extended Reasons record: “We were invited, should we reach the stage of concluding that there had been indirect discrimination, to hold a further hearing in order to give the Trust the opportunity of establishing objective justification. We were not inclined to do so. The determination of the genuine material factor of defence had always been the issue that would be canvassed and determined at the instant hearing. There was no explanation given as to why the Trust had not come prepared to deal with that aspect of the claim.” The Tribunal therefore refused that request.

9.	The Tribunal concluded that the operation of the equality clause implied in Mr Reynolds’ contract by section 1 of the Equal Pay Act 1970 should ordinarily mean that he be paid at the same rate as his three comparators.  However it noted that under Section 1(3) of the 1970 Act, an equality clause does not operate in relation to a variation between a man’s contract and a woman’s contract if the employer proves the variation is genuinely due to a material factor which is not the difference of sex and that factor is a material difference between their cases. The Tribunal held that the decision to take on post-1993 employees on different terms was one that was not made on the basis of the sex of the occupants (or potential occupants) of the relevant jobs. It concluded:  “In other words, there was a genuine and material factor causing the variation which was not tainted by direct sex discrimination.”

10.	The Tribunal went on to say that the difficulty in the case was the possible existence of indirect discrimination.  Their decision continues:

“19 .	Such discrimination will have occurred if the Trust has applied a requirement equally to men and women but that requirement is such that the proportion of men who can comply with it is considerably smaller than the proportion of women who can comply with it (and which cannot be shown to be justifiable and which is to the detriment of the applicant).	

20.	We considered the appropriate pool for determining the relevant proportions was the current employees in Grades A, B, HCA and HCA+. It seemed reasonable to infer that the decision that they should not be tied to Whitley rates was a discrete one made specifically in relation to those grades (the position clearly would have been otherwise if it had been determined that all employees taken on after 1993 would be denied the benefit of the Whitley terms but that was not the case here).

21.		The requirement for the right to claim payment under the Whitley rates is simply that an employee should have been in the employment of the Trust in 1993. There are168 women who can comply with that requirement and 17 men, within those grades.

22.	 The total number of women in those grades is 430 (in fact 431) and the total number of men 84 and it follows that the 39% of women can comply with the relevant requirement and only 20% of men. (We should add that although the figures presented to us might well amount to a “snap shot” at this particular moment, they were the only figures we had. The burden rests with a respondent to establish the appropriate defence and it was not suggested these numbers were unrepresentative).

23.	 In other words, the proportion of women who can comply is almost twice that of the proportion of men.

24.	In those circumstances we concluded that the proportion of men who can comply was considerably smaller than the proportion of women who can comply.

25.		It is open in those circumstances to the respondents to claim objective justification for that state of affairs. No evidence was called before us in relation to that matter”.

11.	On this basis the Tribunal concluded that “the requirement [ie to have been in the employment of the Trust’s predecessor in 1993] was indirectly discriminatory and that although there is a genuine factor accounting for the variation, the factor itself is tainted with sex and therefore does not satisfy section 1(3) of the 1970 Act.”

12.	Against this finding the Trust appeal. In essence the grounds of appeal are:
(1)	The Tribunal was wrong to hold that there was a “requirement or condition” that had been applied to the theatre support workers from 1993 onwards that in order to have Whitley Council terms they should have been in the Trust’s employment in 1993.  There was no requirement or condition, simply a historical fact that new terms and conditions were offered to employees after the creation of the Trust in 1993.
(2)	 The Tribunal failed to answer the correct question, whether the Trust had applied a requirement for new staff which was a discriminatory barrier, when in fact the post-1993 conditions applied equally to men and women
(3)	In any event the Tribunal adopted the wrong pool.  The correct pool was theatre support workers pre- and post-1993.
(4)	The Tribunal failed to answer the correct question, namely whether the difference in pay between the two groups of theatre workers had a disparately adverse effect on men (ie whether Mr Reynolds’ group was predominantly male and the other predominantly female).
(5)	The Tribunal was wrong not to allow the calling of further evidence when the indirect discrimination point had been raised for the first time during closing submissions.

13.	Mr Reynolds made no submissions on the law but invited us to take into account the length of time the proceedings had taken and that the Trust were pursuing the appeal to save money.

14.	In our judgment the appeal is well-founded. After the Trust was created it employed all new employees on its own new terms.  It did not seek to alter the terms of those already employed.  The new terms applied equally to all new employees.  It seems to us an abuse of language to describe the effect of the historical fact that persons employed after the creation of the Trust were employed on different terms to those employed by the Trust’s predecessor as the application of a requirement or condition. 

15.	In our judgment the problem for the Tribunal arose because the Tribunal was not comparing like with like.  The relevant circumstances between the pre-1993 and the post-1992 employees were not the same nor were they “not materially different” as required for the purposes of any comparison under the Act by section 5(3). The Tribunal should have compared the position of Mr Reynolds with the position of his fellow post-1992 workers. 

16.	In this case both groups of workers i.e. pre- and post-1993 were predominantly female and the sexes within each group were treated the same.  It is difficult therefore to see how there could be discrimination on the grounds of sex.  The gender make-up between the two groups pre- and post-1993 was similar.  If the Tribunal had compared the make-up of the gender of the two groups of theatre support workers pre- and post-1993 and asked the question whether the difference in pay had a disparately adverse impact on men between the two groups, the answer to that question would have been “No”.  Within each group male and female employees were treated the same, and that there was no discriminatory barrier between the sexes.   

17.	We further take the view that the Tribunal, having decided that there was a requirement or condition applied and that it was appropriate to include both pre- and post-1993 employees as comparators, adopted the wrong pool of employees. The identification of the appropriate pool is “a matter neither of discretion nor of fact-finding but of logic”:  see Sedley LJ in Allonby v Accrington & Rossendale College [2001] IRLR 364 at para 18.  When the Trust introduced its own terms and conditions of employment for new employees some of those new workers were employed in posts where the new terms were governed by the Whitley scales.  Some were in posts where the new terms were governed by the Trusts own pay scales.  The Tribunal took the view that “ It seemed reasonable to infer that the decision that they [the post-1992 employees whose grades were not tied to the Whitley scale] should not be tied to Whitley rates was a discrete one made specifically in relation to those grades.”  From there the Tribunal went on to express the view that this made the appropriate pool all the current employees on grades A, B, HCA and HCA+.  We do not think that this is the logical conclusion.  Those grades cover workers performing very disparate tasks. We do not see any logical reason for including in the same pool catering management, computing staff and theatre support workers merely because they are “graded according to common grading definitions”:  see clause 4 of the Trust’s conditions of service.  As clause 5 states “These grading definitions are applicable to the posts of all staff undertaking mainly clerical, secretarial, administrative, health care assistant and care support assistant duties, whatever their function or special expertise.”  In our view, assuming there was to be a pool comprising pre- and post-1993 employees, the appropriate pool would have been a pool comprising the Trust’s theatre staff.

18.	On this basis the appropriate pool, therefore, would have comprised 19 males and 34 females, of whom 11 males and 15 females were on the Trust’s terms, and 8 males and 19 females on Whitley terms.  On these figures 36 per cent of the pool are male and 64 per cent female.  Of the “disadvantaged” (ie post-1992 employees) 58 per cent are female.  Of the “advantaged” (ie pre-1993 employees) 70 per cent were female.  Over all 44 per cent of the female employees are “disadvantaged” (15 out of 34), and the proportion of females “advantaged” 56% (ie 19 out of 34).  Against this 58 percent of the males were “disadvantaged” (ie 11 out of 19 are “disadvantaged” and 8 “advantaged”).  These figures will, of course, change as time goes by because all new theatre staff will be on the Trust’s terms but those who leave may come from either the “advantaged” or the “disadvantaged”.

19.	In our view if it were necessary to decide the case on the basis of these figures, it would be misleading simply to look at the percentages:  the numbers are too small.  When one looks at the absolute figures, it is difficult to say that they reveal a requirement or condition which is such that the proportion of men who could comply with it is considerably smaller than the proportion of women who could comply, rather than simply a historical fact that fewer men do in fact comply at the moment.  In those circumstances (if it had been necessary to do so) we would have held that no case of indirect discrimination had been made out by the use of a pool of all the theatre staff.  

20.	So far as the “further evidence” point is concerned, the Tribunal noted that at the directions hearing one of the possible issues noted was “whether the respondent has a section 1(3) of the Equal pay Act, 1970 as amended defence.”  It stated that the issue “had always been the issue that would be canvassed and determined at the instant hearing” and refused an adjournment because there was “no explanation as to why the Trust had not come prepared to deal with that aspect of the claim.”  On a review the Tribunal stated “It must have been known to the respondents (and if it was not, it certainly should have been) that if the Tribunal were to conclude that the proportions did establish indirect discrimination, then the only basis upon which the defence could succeed was if the respondents could establish objective justification. Unless it had been their intention not to rely on justification, that was the occasion on which they would have to call the relevant evidence.”

21.	It is a matter for the discretion of the Tribunal whether or not to grant an adjournment and the Employment Appeal Tribunal will only interfere with the decision of the Tribunal if it was a decision which was not one which could properly have been made. In the instant case the problem that faced the Trust was that its representatives had not appreciated from the way in which the case was put that by Mr Reynolds in person that the question of indirect discrimination might arise. It was open to the Tribunal to take the view (particularly in the light of the unsuccessful attempt to take a rather similar indirect discrimination point for the first time in the House of Lords in Glasgow City Council v Marshall and others  [2000] IRLR 272) that the Trust should have been aware of the possibility of the point being raised and have dealt with it in its evidence.  Whilst the decision was a harsh one and not necessarily the one to which we would have come, we do not think that we can say that it was a decision which the Tribunal was not entitled to reach.    

22.	It follows that in our view this appeal should be allowed and Mr Reynolds’ claim dismissed.