Appeal No. UKEATS/0082/06/MT
& UKEATS/0083/06/MT

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF

	At the Tribunal
On 4 December 2007

Before
THE HONOURABLE LADY SMITH
(SITTING ALONE)

AMEY SERVICES LTD	APPELLANTS

MRS G CARDIGAN AND OTHERS	RESPONDENTS

and

CITY OF EDINBURGH COUNCIL	APPELLANTS

MRS C MARR AND OTHERS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellants	Mr I Truscott
(One of Her Majesty’s Counsel)
Instructed by:
Messrs Pinsent Masons Solicitors
123 St. Vincent Street
Glasgow
G2 5EA
&
City of Edinburgh Council  Corporate Services Legal Division
City Chambers
High Street
Edinburgh
EH1 1YJ
	
For the Respondents	No appearance or representation by or on behalf of the Respondents	

SUMMARY

Practice and Procedure – Case management

Equal pay claims.  Employment Tribunal had ordered Respondents, prior to section 1(6) hearings, prior to any Stage 1 Equal Value hearings and prior to Claimants having identified comparators, to answer questions to which they objected on the basis that it required them to disclose their defence to an extent that went beyond the Tribunal’s discretion. 

THE HONOURABLE LADY SMITH

Introduction 
1.	To say that there are a large number of equal pay claims ongoing and pending before the Employment Tribunals is an understatement.  In Scotland alone, there are thousands.  There are, as I understand it, many more in England.  A large number of them are at the instance of women employed or formerly employed by local authorities.  Some are against employers to whom local authorities had contracted out certain services, as in the case of Amey Services Ltd, the second set of appellants in these appeals.  

2.	These appeals are at the instance of a local authority and a contractor.  They involve many claims, the precise identity of which need not, for present purposes, be specified.  Five other sets of similar appeals on the same point, at the instance of other local authorities, have been sisted pending the outcome of this appeal. 

3.	Some of the  forms ET1 lodged on behalf of the individual Claimants  simply state that the claimant wishes to make a claim under the Equal Pay Act 1970 (“the 1970 Act”) that her employer discriminated against her in not paying her  pay that was equal to male employees. Some of them claim that they were paid less than “men in equivalent work”.  Some of them claim that they were discriminated against in respect that their job was of equal value or rated as equivalent to a list of other posts.  Some of them claim that their job was rated as equivalent to “other posts” but the female Claimants did not have the benefit of terms and conditions to which make members of staff were entitled.  Some of them simply assert that the Respondents have failed to provide them with equal pay for work of equal value and rehearse, verbatim, the relevant provisions of the 1970 Act.   None of the forms ET1 identify a specific comparator. 

Background 
4.	In 2006, the Vice President of the Employment Tribunals (Scotland), in an entirely laudable effort to achieve some consistency of case management in these claims issued standard orders for production of documents and orders to provide written answers to questions in all pending cases.  It is the latter order with which this appeal is concerned.  These appellants received the relevant orders on or about 15 June 2006.  The terms of the order were:

“In exercise of the powers conferred on the Chairman by Rule 12 of the Rules of Procedure contained in Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 you are hereby required to provide written answers to the questions set out in the attached Schedule.  You are required to provide the above answers within 42 days of the date of service of this Order to the Secretary of the Tribunals at the address shown at the top of this Order with a copy to the claimant or claimant’s representative.
In terms of Rule 12(2)(b) you may apply to the Tribunal to vary or set aside this Order. Any such application should be made in writing to the Secretary of the Tribunal immediately upon receipt of this Order and should set out the grounds for the application.
If the Order is not complied with a Chairman or Tribunal may at a Pre- Hearing Review or a Hearing make an Order in terms of Rule 13(1)(b) to strike out the whole or part of the response.” 

5.	The Schedule included the following question:
“2(a) 	Is it the respondent’s position that if there is found to be a difference in pay between the claimant and any of her male comparators that this difference is genuinely due to a material factor which is not the difference of sex?
(b) 	If so, what is this difference and why would it justify any difference in pay which is found to exist?” 

6.	The Respondents sought a review in respect of the third question, with which this appeal is not concerned, as they considered that their objections to that question could be dealt with in that way.  Their letter seeking a review was dated 17 July 2006.  They are still awaiting a response and it is to be hoped that the Employment Tribunal will provide one in early course. No doubt it has got lost sight of amidst the substantial paperwork burden that these claims have generated but it should be attended to now. 

7.	The penultimate paragraph of the covering letter issued with the Questions Order was in the following terms:
“While the Vice President appreciates that some of the information sought in this order might have been the subject of disclosure consequent upon the Stage 1 Equal Value hearing which will be fixed in due course, she considers there is merit in information being exchanged between the parties before such a hearing takes place in order to maximise the usefulness of that hearing and to assist in identifying at an early state where there are preliminary issues arising.  She trusts you will co-operate in that process.” 

The Relevant Law
Equal Pay
8.	Much has been written in recent years regarding the principles underlying equal pay claims in the jurisprudence of both this jurisdiction and Europe.  It is the result of detailed, careful and learned consideration of the topic and I do not propose or require to seek to add to those discussions of principle in resolving the issue that arises in this appeal.   It is sufficient to note that, at the heart of any woman’s equal pay claim lies the need to identify a male comparator.  That is evident from the terms of section 1(2) of the 1970 Act the terms of which have the effect of posing three questions: (1) is the woman employed in like work to a man in the same employment?  (2) is the woman employed on work rated as equivalent to a man in the same employment? and (3) is the woman employed in work of equal value to that of a man in the same employment?  If the answer to any of those questions is in the affirmative then the question that arises is that of whether any of the terms of her employment are less favourable than those of the man?  If they are then they are treated, in short, as though they were not.  The statutory provisions plainly envisage and require a comparative exercise to be gone through. Thus, the equal pay claim of the employee in Meeks v National Union of Agricultural and Allied Workers [1976] IRLR 198 failed because there were no men employed on like work to her.  In Collins v Wilkin Chapman [1994] UKEAT 945 the equal pay claim failed because although the claimant thought she was seeking to compare herself with a man, as it turned out, the comparator was, biologically, a woman and as the law then stood, that meant that the comparator was not a relevant comparator for the purposes of section 1(2).   Similarly, in both Macarthy’s Ltd v Smith [1980] ICR 672 and Diocese of Hallam Trustee v Connaughton [1996] ICR 860, the question of whether the comparator required to be employed contemporaneously with the claimant or not was discussed against a background of it being recognised that it was necessary to identify a comparator.  In Redcar & Cleveland Borough Council v Bainbridge & Ord [2007] IRLR 984, the discussion of whether or not a claimant could rely on a comparator who was in a lower grade of work began with Lord Justice Maurice Kay’s statement that:
“By its very nature, equal pay assumes a process of comparison.”  

9.	It is also for the claimant to identify her chosen comparator.  It is not for the respondent or for the Tribunal to do so.  Thus, in Ainsworth v Glass Tubes & Components Ltd [1977] ICR 347, the Tribunal’s judgment was set aside on the basis that they had not proceeded on the basis of the comparison advanced by the claimant but by reference to a comparator that was selected by them.  Kilner Brown J, sitting in the EAT, having observed that the majority in the tribunal took the view that they could select the person with whom to compare the claimant, said:
“... the industrial tribunal was choosing the person with whom to make the comparison as to whether or not there was like work and ignored the proposition put forward by the applicant that it was another person with whom comparison should be made in assessing whether or not there was like work.  This is so obviously a misdirection that it is unnecessary to deal with the matter in any further detail.” 

10.	The comparison requires to be a relevant one though and the terms of section 1(6) of the 1970 Act also have to borne in mind when a comparator is being identified.  Its provisions pick up on the terms of section 1(2) and include:
“… men shall be treated as in the same employment with a woman if they are men employed by her employer … at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions are observed either generally or for employees of the relevant classes.” 

11.	It is, accordingly, open to a respondent to resist an equal pay claim on the ground that the comparator(s) advanced are not men “in the same employment” within the meaning of section 1(6).  Before they can do so, however, they require to know who it is that the claimant is advancing as the relevant comparator in her case.  If a section 1(6) objection is well founded then that is enough to defeat the claim. 

12.	If a claimant overcomes the sections 1(2) and 1(6) hurdles of showing that her job was of like work, work rated as equivalent or work of equal value to a relevant chosen comparator then a presumption of discrimination on the grounds of sex arises.  It will, by then, be evident whether the claim is one of direct or indirect discrimination.  At that stage, the employer may advance a defence under section 1(3) and if he does, the burden is on him to establish it.  Section 1(3) enables an employer to displace that presumption if he shows that the variation in pay between the man and the woman is:
“genuinely due to a material factor which is not the difference of sex”. 

13.	 In a direct discrimination case (such as where woman A compares herself to man B who is employed alongside her to carry out the same job) he only has to go as far as credibly explaining that the difference is due to such a factor but in an indirect discrimination case (such as where women who work part time are paid at a lesser hourly rate than full time employees in circumstances where the vast majority of part timers are women who experience more difficulty than men in meeting the conditions for full time working), he will be required to provide objective justification for it:  Villalba v Merrill Lynch & Co Inc and others [2007] ICR 469.   For the purposes of the present appeal, the intricacies of the differences of approach to the section 1(3) defence as between cases of direct and indirect discrimination do not require to be considered.  What is important is to observe that the scheme of the 1970 Act is that the onus is on the claimant at the outset.  If she can establish a prima facie case of the difference in pay between her and a relevant comparator being due to discrimination on grounds of sex, she is to be regarded as having set up a rebuttable presumption to that effect.  If the employer cannot displace that presumption, she will succeed.  However, it is only at that stage that the burden of proof passes to the employer.  It is only then for him to show, if he can, that sex discrimination is not the cause.   As was said by Elias P in Villalba:
“104. 	It will be seen from the structure of the equal pay legislation that the principle is that once a woman demonstrates that her job is either like work of work of equal value to that of her male chosen comparator, there is a presumption of discrimination on grounds of sex.  It is then for the employer to rebut that presumption.” 

Interfering with the Tribunal’s Exercise of Discretion 
14.	Notwithstanding that some of what was said in the case of British Library v Palyza and another [1984] ICR 504 might be thought to support the proposition that where an Employment Tribunal has exercised its discretion on an interlocutory matter such as in the present case, it is open to this tribunal to proceed by way of review, substituting its discretion for theirs, that does not appear to me to be correct.  British Library was a decision which was special on its facts concerning the recovery of confidential reports and parties were agreed that the Employment Appeal Tribunal should proceed by way of review; the issue of whether they were restricted in their power to interfere was not debated.  As against the indication in that case, there is a consistent line of authority to the contrary, namely that there are restricted circumstances in which this tribunal can interfere with the tribunal’s exercise of its discretion (Bastick v James Lane (Turf Accountants) Ltd [1979] ICR 778 at 782, Carter v Credit Change Ltd [1979] ICR 908 at 918, Medallion Holidays Ltd v Birch [1985] ICR 578, Ashmore v British Coal Corporation [1990] ICR 485 and Adams and Raynor v West Sussex County Council [1990] IRLR 215.  As was explained in Adams, when the Employment Appeal Tribunal has to examine a tribunal Chairman’s exercise of discretion at an interlocutory stage, it requires to address three questions:
“(a) 	Is the order made one within the powers given to the tribunal?  (b) Has the discretion been exercised within guiding legal principles? … ( c) Can the exercise of the discretion be attacked on the principles in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223?” 

15.	Only if one or more of those questions can be answered in the affirmative is it open to this tribunal to interfere even if it is the case that this tribunal would have exercised the discretion differently.
 
The Appeal 
16.	The Respondents lodged the present appeal on 17 July 2006.  It is an appeal against part of the Questions Order.   Paragraph 7 of the notice explains the principal ground, which was the only one argued before me:
“... the Employment Tribunal erred in law in exercising its discretion in ordering the Appellants to disclose their defence under section 1(3) of the Equal Pay Act to the claimant’s equal pay claim in circumstances where neither the comparators nor the basis of claim have been established.  In doing so, they have acted in a way no reasonable tribunal properly instructing itself would act.  Having regard to South Tyneside Council v Anderson & Ors EAT/0002/05 albeit addressing a Documents Order rather than a Questions Order. The proper exercise of discretion would have been to issue Orders stage by stage, thus only when the comparators and a basis of claim are identified should a defence be required, particularly as this might vary from case to case depending on the comparison.”   

17.	Mr Truscott QC, for the Respondents, explained that question 2 caused the Respondents serious concern.  Those concerns could not be allayed by seeking a review, as they had done in respect of question 3.  Their concerns were fundamental.  The inclusion of question 2 in the order meant that they were being faced with a requirement to provide answers which they simply could provide, under warning of the risk of their responses being struck out if they did not do so.  The reason they could not provide the answers was that the relevant comparators had not been identified by the Claimants.  Even in those cases in which there were lists of jobs against which the Claimants sought to compare themselves, comparator identification was not adequate.  In the case of Amey, for instance, the list included a post which did not exist in their employment.  Further the lists were so varied and wide ranging that it was not possible to identify, within them, employees who were representative of the group as a whole. 

18.	It was not for the Respondents to identify comparators for the Claimants. 

19.	I was advised that progress towards comparator identification has been made since June 2006.  Comparator lists were in the course of being put together on behalf of the Claimants.  The process has involved the Claimants determining which comparator posts they seek to found on, then seeking an order from the Tribunal requiring the Respondents to identify the relevant employee or employees (information which, due to data protection restrictions, the Respondents do not disclose without a court or tribunal order requiring them to do so) and the Respondents then providing the required details in response to those orders.  That process has not yet been completed in all claims.  It appears though that the Respondents have been able to ascertain that there are claims of both direct and indirect discrimination and also that they will seek to rely on section 1(6) as indicating that certain comparators on which Claimants seek to rely in their claims against the first Respondents are not relevant and that the claims fall, therefore, to be dismissed.  To that end, what is referred to as a “Section 1(6) hearing” has been fixed for February 2008, following a continued Stage 1 “Equal Value” hearing in claims against the first Respondents, at Edinburgh, on 2 October 2007. 

20.	Mr Truscott submitted that until the stage is reached at which claims have survived the section 1(6) challenge and the Claimants have advanced their claims by reference to specific comparators, the question of whether or not the Respondents are able to discharge the section 1(3) burden will not arise.  Until then there is nothing that the Respondents can properly be called upon to explain or, in the event of an indirect discrimination claim, objectively justify. A stage by stage approach, as recommended in the case of South Tyneside Council v Anderson, ought to have been adopted by the Tribunal.  Only by doing so could the Tribunal properly recognise the underlying principles. 

21.	There was no appearance on behalf of any of the Claimants.  Mr Stefan Cross had, however, submitted a written argument for some of the Claimants on the basis that he was unable to attend.  He deals firstly with the appellants’ objections to question 3, which, as I have indicated are the subject of their application for review and were not argued in this appeal.  As regards the point that was argued, he asserts that comparators have now been identified.  He adds:
“The council has also been invited to plead their GMF defences but again refuses to do so. Instead the council says that the Claimants must apply for new orders from the tribunal rather than themselves seeking an extension of time to now plead their case.
In accordance with Grundy v BA in the Court of Appeal (England) the burden of proof in respect of any GMF is on the respondent council. If they accept that they have no GMF then all the better for the Claimants but they must state their position. 
It appears that the council are now putting all their eggs into a basket marked ‘establishment’ and seeking to rely on an argument based on section 1(6) of the 1970 Act. Again if that is their position then we are entitled to know that, If not they should plead their case properly. 
The tribunal was within their powers to make the original order … The original orders were not perverse.  The comparator jobs were identified from the start and the council must know the reason why it pays the additional sums to the comparator groups.  The payments are fixed and unrelated to the identity of individuals in any event. 
The council initially refused to provide the names of the comparators.  I trust it is not being argued that the council has both the right to withhold this information and then demand the Claimants provide this information.  In any event the council has now provided this information and they should now comply with the orders.”

22.	In response, Mr Truscott again indicated that whilst details of comparators were now being provided, the process was not complete and comparators had certainly not, as was asserted, been clearly identified from the outset.  As regards the references to the council refusing to supply names, Mr Cross appeared to misunderstand the position.  The council could not do so without orders from the tribunal due to data protection restrictions.  They were not and had not suggested that they should not be required to provide the names although they had resisted, rightly in Mr Truscott’s submission, any suggestion that it was for them to identify the Claimants’ comparators for them and had sought clear specification from the Claimants.  Regarding the “GMF” (“genuine material factor” as per section 1(3)) defence, Mr Cross had misunderstood the position.  As Mr Truscott had already submitted, the time for them to plead that defence had not yet arisen.  The Claimants first required to set out a prima facie case, identifying the comparator on which each of them sought to rely.  Regarding the references to section 1(6), Mr Truscott responded by commenting that whilst the Respondents had been able to ascertain that there were cases in  which a section 1(6) issue arose, they could not tell how many “eggs” there were until the process of identification of comparators was complete.  Mr Cross was well aware that the issue had been raised.  

23.	Nothing advanced by him altered the fact that, in Mr Truscott’s submission, the terms of question 2 failed to have regard to the underlying legal principle.

Discussion and Decision 
24.	I have approached my considerations by asking whether or not the appellants have shown that the tribunal failed to have regard to a relevant guiding legal principle as it seemed to me that that was the only one of three bases on which the decision to include question 2 in the order could possibly be attacked.  Having done so, I have no hesitation in accepting that the appeal is well founded. 

25.	Whilst fully appreciating the pressures on the Employment Tribunals that these claims have brought to bear and understanding the desire to find a way to minimise the number of hearings required and to encourage the clear identification of issues between parties at as early a stage as possible, their keenness to do so here has led them to ignore certain fundamental principles of equal pay claims.  It may be that the bulk of paperwork facing the tribunal was such that at the time the questions order was drafted it was not appreciated that the Claimants had not identified their chosen comparators.  It is though plain on the material before me that, as at June 2006, they had not done so.  The Respondents could not, accordingly, tell which comparators the question was referring to in part (a).  Yet, as a matter of law, the claims could not get past the first stage without the Claimants doing so, something which the Tribunal, in framing question 2 of the order, appears to have overlooked. 

26.	Further, in proceeding to include part (b) of question 2, the Tribunal also appears to have overlooked that, as a matter of principle, the employer cannot be asked to address the section 1(3) issue until the claimant has overcome the hurdle of establishing her prima facie case.  If she does not do so whether because she does not identify a relevant comparator or a relevant disparity in pay, her claim fails and the issue of whether or not the employer can establish or has established a section 1(3) defence will never arise.  Even if she does do so, it is only when the nature of her case in terms of the comparator being relied on by her, is known, that the employer can be expected properly to address the section 1(3) issues.  That being so, to include part (b) in question 2 at the stage these claims had reached was plainly premature.  It remains premature to require the appellants to do so and their concern that notwithstanding that, absent success in this appeal, they were facing the risk of strike out for non compliance if they did not provide an answer, is understandable.

27.	I have considered the points advanced in Mr Cross’ written argument but agree with Mr Truscott that nothing said is such as should persuade me against granting his motion.  I note, in particular, that Mr Cross does not point to any prejudice that would arise if the appeal were granted.  The Claimants’ position is fully protected in that if they discharge the onus of establishing a prima facie case so that discrimination is presumed, then the burden of proof will be on the Respondents to rebut that presumption by establishing a defence under section 1(3) and the granting of this appeal in no way assists them in discharging that burden.  If they cannot, in that event, establish their defence then the claims will succeed. 

Disposal 
28.	In these circumstances, I will pronounce an order allowing the appeal and revoking question 2 of the tribunal’s order received by the Respondents on or about 15 June 2006.