In this article...

• The background
• Impact of TUPE on equal pay time limits
• No discrimination by union
• Pay protection scheme was justified
• What does this mean for me?

The background

The Equal Pay Act 1970 provides for equal pay between women and men in the same employment where the claimant and her (or his) comparator are employed on like work, work rated as equivalent or work of equal value.

An employer can defend an equal pay claim by showing that any difference in pay is due to a genuine material factor (GMF) that is not the difference of sex. Where the GMF itself has a discriminatory impact, the employer must go further and show that the difference in pay is objectively justified.

The EAT has recently given judgment in three important equal pay cases, the implications of which are discussed below.

Impact of TUPE on equal pay time limits

In UNISON v Allen and ors the claimants were originally employed by the trade union NUPE. In 1993, NUPE transferred to UNISON by way of a trade union amalgamation.

The claimants subsequently issued equal pay claims in respect of their exclusion from NUPE’s occupational pension scheme prior to the merger. The issue was whether their claims were in time. The Equal Pay Act provides that claims must be brought within six months of the last day on which the woman was “employed in the employment”. Did this refer to employment with NUPE or with UNISON?

The Employment Appeal Tribunal (EAT) held that the claimants’ contracts of employment had transferred to UNISON under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). However, occupational pension rights are specifically excluded from the rights that transfer under TUPE. Applying the analysis adopted by the House of Lords in Powerhouse Retail Ltd and ors v Burroughs (now referred to as Preston and ors v Wolverhampton Healthcare NHS Trust and ors (No. 3)), the EAT concluded that the equal pay claims should have been brought within six months of the end of the claimants’ employment with NUPE, and were out of time.

Although it was not strictly necessary to decide this point, the EAT added that the Powerhouse analysis – i.e. that the six-month time limit for equal pay claims runs from the date of the transfer where the alleged breach pre-dates the transfer – is not restricted to claims in respect of occupational pension rights, but applies generally.

No discrimination by union

In GMB v Allen and ors the EAT overturned a tribunal decision that the GMB union indirectly discriminated against some of its female members who had brought equal pay claims against their local authority employer when it reached a low back pay settlement.

Bearing in mind the employer’s limited financial resources, the GMB had struck a deal whereby the female claimants would receive a settlement which amounted to 25 per cent of the value of their claims. Its objective was to prioritise future pay protection for other union members who faced salary cuts as a result of a job evaluation exercise.

Although the GMB’s decision to prioritise pay protection had a disparate impact on women, who comprised the majority of the equal pay claimants, the EAT held that it was justified as a proportionate means of achieving a legitimate aim and therefore did not give rise to indirect sex discrimination.

The EAT also overturned the tribunal’s finding that the GMB had victimised the women by failing to support their equal pay claims. There was no evidential basis for this finding, particularly since, once the members had instructed solicitors to pursue their claims, the GMB was not in a position to continue to act for them.

 

Pay protection scheme was justified

In Middlesbrough Borough Council v Surtees and ors a local authority employer introduced a pay protection scheme to assist employees who would otherwise have suffered a sudden drop in pay following a job evaluation exercise. A group of female employees subsequently established in an equal pay claim that they would have qualified for pay protection had the employer been paying them at the correct rate.

The EAT held that the pay protection scheme was objectively justified, despite the failure to include the women retrospectively within its scope. The employer was entitled to limit the benefit of the scheme to those who were in receipt of higher pay at the time when the scheme was introduced, even if other employees ought to have been in that group. It could not have been expected to speculate as to whether the women might eventually succeed in their equal pay claims.

The EAT also held that the existence of separate collective bargaining arrangements did not in itself defeat the women’s equal pay claims. In principle, it was capable of providing a non-sex-based reason for a difference in pay but the employer must show that there was no sex discrimination in the operation of the bargaining arrangements. Provided the employer could show this, no further justification was required.

What does this mean for me?

		Where a potential equal pay claim arises prior to a TUPE transfer, a recent EAT decision suggests that the six-month time limit for lodging tribunal proceedings runs from the date of the transfer, whether or not the claim relates to occupational pension rights (which are excluded from the rights transferred under TUPE).
		In another recent case, the EAT held that a union did not discriminate against its female members when it negotiated a low settlement in respect of their equal pay claims in order to prioritise the interests of its other members. This decision removes some of the obstacles to negotiated settlements in equal pay cases and is likely to be welcomed by both unions and employers.
		The EAT has also decided that an employer did not have to extend the benefit of a pay protection scheme retrospectively to a group of women who established that they would have benefited from the scheme had they not been underpaid at the relevant time.