Appeal No. UKEAT/0787/04/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 8 March 2005

Before
HER HONOUR JUDGE WAKEFIELD
MR J C SHRIGLEY
MS P TATLOW

SITA UK LTD	APPELLANT

MS K HOPE	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR DANIEL BARNETT
(Of Counsel)
Instructed by:
Messrs Andersons
Solicitors
Queen's Bench Chambers
42 The Rope Walk
Nottingham
NG1 5EJ	
For the Respondent	MR STEFAN CROSS
Solicitor
Messrs Stefan Cross
Solicitors
St Mary's Business Centre
Oystershell Lane
Newcastle Upon Tyne
NE4 5QS	

SUMMARY

Correct approach to issues under the Equal Pay Act.

HER HONOUR JUDGE WAKEFIELD

1.	This is an appeal by SITA UK Limited against part of a Decision of an Employment Tribunal sitting at Newcastle upon Tyne.  The reserved decision with Extended Reasons, sent to the parties on 17 August 2004, dealt with complaints by the present Respondent Ms Kim Hope, made in two separate Originating Applications, of contraventions of the Equal Pay Act 1970, of sex discrimination and of unfair dismissal.

2.	The appeal is now limited to the Tribunal’s findings that the Equal Pay Act was contravened by the Appellants as regard two successive periods of time and involving two different comparators and what is said to be a finding that the Respondent would have accepted an alternative job with the Appellant in Maidenhead, this latter matter being, the Appellant has argued, one for determination only at the Remedy Hearing which has not yet taken place.

3.	The Employment Tribunal hearing with which this appeal is concerned took place over two days in May 2004 and the panel had a further day in June for their deliberations.  The Extended Reasons for the Employment Tribunal decision are lengthy and very detailed.  The findings of fact alone run to sixteen closely typed pages.  For present purposes the following may suffice.

4.	The Respondent’s period of continuous employment with the Appellant commenced in November 1992.  By about May 1999, working in Gateshead, she was the Appellant’s Assistant Group Purchasing Manager, being deputy to Mr Philip Davies the Group Purchasing Manager.  In February 2003 Mr Davies moved to another post and the Respondent succeeded to the position of Group Purchasing Manager, although with some duties of the position removed.

5.	When Mr Davies was in the job, the addition of those same duties had brought about a re-grading of the post and an increase in his salary from about June 2001.  In February 2003 when the Respondent took over from Mr Davies and despite that being a promotion for her, her salary grade remained the same.  The Appellant also at that time created the new post of Head of Asset Management to which Mr Matthew McGeehan was appointed.

6.	In May 2003 a new Managing Director decided upon a major business reorganisation.  The Respondent’s post was to remain but the work was in future to be carried out at Maidenhead.  Mr McGeehan’s post would disappear.  As events turned out (of which more later) the Respondent was given notice of redundancy to terminate her employment on 30 September 2003.  Mr McGeehan was appointed Head of Procurement on the same relevant terms of employment, including grading and salary, which he had enjoyed previously.  The job title ‘Group Purchasing Manager’ ceased to exist.  

7.	By her first Originating Application presented on 18 November 2003, Miss Hope complained that she had been unfairly dismissed, discriminated against contrary to the Sex Discrimination Act by reason of Mr McGeehan being effectively appointed to her post and that the Equal Pay Act had been contravened by reason of Mr McGeehan being paid more in that post than had she.

8.	By the second Originating Application presented on 25 February 2004, Miss Hope complained of sex discrimination and breach of the Equal Pay Act both by reason of Mr Davies having in April 2000, before the attachment of new duties and the re-grading, being paid more than was she on her promotion to the post in February 2003.  The Employment Tribunal found in favour of the Respondent on both complaints of contravention of the Equal Pay Act, in her favour under the Sex Discrimination Act regarding the appointment of Mr McGeehan as Head of Procurement and that she had been unfairly dismissed.  As already mentioned, there is no appeal as regards the sex discrimination and unfair dismissal.  

9.	By the Notice of Appeal it is said that the Employment Tribunal made errors in law as regards the following: firstly, in determining that the Respondent undertook like work to that done by Mr Davies.  This criticism has two strands.  Firstly, the manner in which the Employment Tribunal dealt with Mr Davies’ ‘Club Pays’ activities and secondly that the Respondent was in fact doing more work than had Mr Davies as Group Purchasing Manager, since she had no deputy.  Secondly, it is argued, that in determining that there were no material factors which were not the difference of sex between the Respondent and Mr McGeehan, the Employment Tribunal wrongly concluded that the ‘red circling’ of the latter’s salary was tainted by sex discrimination since Mr McGeehan had been appointed to the position in circumstances in which it should have gone to the Respondent.  Thirdly, there is the issue as to whether the Respondent would, had it been properly presented to her, have accepted the position of Head of Procurement in Maidenhead, whether that is question going to remedy only and whether it was in any event determined on a wrong basis.

10.	Dealing first with the arguments as regards the findings in relation to equal pay between the Respondent and her comparator Mr Davies.  The findings of fact of the Employment Tribunal included the following with reference to Mr Davies’ ‘Club Pays’ activities:
“6.7  In December 1999, Mr Davies played a leading role in the founding of an organisation known as Club Pays the members of which were and continue to be the parent company and its subsidiaries and the purpose of which is the negotiation of supply agreements by, as Mr Davies put it “leveraging the UK specific purchasing volumes” (in other words, making use of the improved bargaining position created by the size of the various companies’ total orders).  Mr Davies then and ever since chaired this group and this has required his attendance at monthly meetings and conferences in addition to the conducting of various programmes and contract implementation.  Within Mr Davies’ written statement, this matter appeared almost as an afterthought but in the evidence and submissions the respondent sought to ascribe to it a much more pivotal role.  He told us, and we had no reason to doubt, that “in the early days” this work took up 15 to 20% of his working time although the clear inference was that the proportion has greatly decreased since then.  However, it was clear to us that this work was not one of the duties of his post.  With at least the full agreement, and perhaps at the request, of the respondent he undertook it but it was entirely personal to him.  Accordingly, when in February 2003 he left the respondent to take up a post with the parent company based in Paris, he continued to chair Club Pays precisely as before.  Moreover, we were not informed of any basis on which Mr Davies might be required to carry out this role.  It was entirely personal to him, was not a part of the contractual duties of his post and on the evidence before us was not even a contractual obligation at all.  In fact, whilst he was employed by the respondent, the applicant as his deputy and as the respondent’s representative also performed a significant amount of work in relation to Club Pays including regular attendance at meetings.  However, that too would not have been a part of her contract of employment.  Having said that, to the extent that Mr Davies might have had to spend additional time on work related to Club Pays that would have increased the amount of work which the applicant as his deputy would have had to perform in relation to her and his usual contractual duties.”
We then go on to part of paragraph 6.10:
“6.10 …Before us, the applicant compared her duties on promotion in February 2003 with those of Mr Davies not as at June 2001 but as at April 2000.  In our judgment, in this regard they were substantially the same.  Of course, he was the chair of Club Pays but that had never been a duty of the post.  She took over responsibility for such strategic planning as was required and the implementation of such proposals as were outstanding.  The extent to which Mr McGeehan participated in such matters is an issue to which we shall return but at this stage we would record our finding that this was negligible and his role purely nominal.  We were satisfied that in practice the applicant did in and after February 2003 that which Mr Davies had done in and for about fifteen months after April 2000.”
Finally we turn to part of paragraph 7 of their reasons:
“7.…On the basis of the evidence placed before us, we were satisfied that the work undertaken by Mr Davies from April 2000 until the addition of further responsibilities in about June 2001 and the work undertaken by the applicant in the months after about February 2003 were the same or at least were broadly similar and if there were any differences between them – and in our judgment there seemed very little if any at all other than the chairing of Club Pays – they were not of practical importance in relation to the terms and conditions of employment.  On that basis, we found that the applicant and Mr Davies, at the times to which we have referred, were employed on like work.  Since it was common ground that Mr Davies had a higher grade and commensurately greater salary in addition to more favourable benefits, it followed that on the face of matters there had been a breach of the equality clause on the part of the respondent.  The respondent did not contend that the variation was genuinely due to any material factor.  That was an entirely proper position and certainly on the facts placed before us we were unable to identify such a factor.  This complaint was well founded.”

11.	We have not been persuaded by the Appellant that the approach to this aspect of the case by the Employment Tribunal was wrong in law or in any way contrary to the Equal Pay Act 1970 Section 1(4).  That subsection was fully and correctly set out in the Decision.  It provides as follows:
“A woman is to be regarded as employed on like work with men if, but only if, her work and theirs is of the same or a broadly similar nature, and the differences (if any) between the things she does and the things they do are not of practical importance in relation to terms and conditions of employment; and accordingly in comparing her work with theirs regard shall be had to the frequency or otherwise with which any such differences occur in practice as well as to the nature and extent of the differences.”

That subsection clearly requires an Employment Tribunal to undertake a two stage enquiry.  This was recently analysed in the judgment of Mr Commissioner Howell QC in this Employment Appeal Tribunal in the case of Angela Morgan v Middlesborough Borough Council in a judgment delivered on 22 November 2004.  In paragraph 7 of that judgment speaking of a two-stage inquiry, he said:
“First, is the work of the same, or, if not, of a broadly similar nature?  Secondly, if on a general consideration of the type of work involved and the skill and knowledge required to do it, the answer is that the work is of a broadly similar nature, it is then necessary to go on and consider the detail and inquire whether the differences between the work being compared are of practical importance in relation to terms and conditions of employment.  At both stages a minute examination of detail and trivial differences not likely in the real world to be reflected in the terms and conditions of employment ought to be avoided.  Furthermore, in considering the second question a difference between duties the man and woman being compared are contractually required to perform is relevant only insofar as it results in an actual difference in what is done in practice:  It is the actual activities involved in the individual’s job not the notional paper obligations that are important in ascertaining any relevant differences.  In these two stages of the inquiry under section 1(4) the legal burden of proving that she is employed on like work with a man rests on the woman claimant, but if the first question is answered in her favour a practical and evidential burden of showing differences of practical importance lies [rests] upon the employers.  It is only if she does manage to establish that the two questions are to be answered in her favour so that she is employed on like work with a man, that the third question on her Equal Pay Act claim arises under section 1(3), namely whether the employer can then prove that any variation between her contract and that of the male comparator is genuinely due to a material difference (other than the difference of sex) between her case and his.”

12.	It is clear to us that in the present case the Appellants failed to bring forward any or any sufficient evidence before the Employment Tribunal to prove that the difference between the grading and pay of the Respondent and that of Mr Davies was related to his activities for Club Pays.  On that basis alone the appeal on this aspect must fail.  In addition we have not been persuaded that the Employment Tribunal finding that the Club Pays activities were personal to Mr Davies was perverse.  There was quite sufficient material before the Tribunal for such a conclusion to be reached and we bear in mind that the hurdle to surmount to prove perversity is now a very high one.

13.	We are similarly unimpressed by the Appellant’s argument that because the Respondent did not have a deputy in the post of Group Purchasing Manager and therefore did more, or more responsible, work in that post than had Mr Davies, it was not like work.  The principle of equal pay for men and women outlined in Article 119 of the Treaty of Rome was to outlaw discriminatory practices which primarily disadvantage women.  The Equal Pay Act 1970 is the domestic legislation treated as implementing the Council Directive regarding equal pay.  On any purposive construction of the Act, the fact that a promoted woman undertakes more duties than her male predecessor cannot result in a conclusion that the two are not undertaking like work in order to justify her being paid less.

14.	We turn then to the issue under the Equal Pay Act where Mr McGeehan is the comparator.  There is no appeal against the finding that Mr McGeehan ended up doing like work to that which the Respondent had done nor is there an appeal against the finding that his appointment to her old role was tainted by sex discrimination.  The Appellant contends that the Employment Tribunal erred in failing to recognise that the Appellant had established a credible non-discriminatory reason for Mr McGeehan’s higher salary, namely that his terms and conditions of employment had been preserved ‘red circled’ upon the move between the two positions of Head of Asset Management to Head of Procurement.  We accept that ‘red circling’ is capable of being a genuine material factor which is not the difference of sex, provided the male comparator’s previous high wage was not the difference of sex.  
 
15.	Our reading of this Employment Tribunal decision does not lead us to conclude that there was a finding of fact that Mr McGeehan’s terms and conditions of employment were ‘red circled’ in the sense in which that expression is normally used.  The label attached to the situation does not, however, matter.

16.	By subsection 3(a) of Section 1 of the Equal Pay Act 1970 it is provided as follows:
“	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 and that factor –
(a)	in the case of an equality clause falling within subsection 2(a) or (b) above, must be a material difference between the woman’s case and the man’s;”

The Appellant argues that the Employment Tribunal failed to ask and to answer the question: was the setting of Mr McGeehan’s grade and salary in his original post a breach of the Act?  If not, and if the reason for preserving those terms on transfer to the new post was “genuinely due to a material factor” which was not the difference of sex, the fact that the appointment to that position was discriminatory cannot, it is argued, taint the preservation of the terms.
 
17.	We are satisfied that before the Employment Tribunal the Appellant presented no evidence to justify the variation between the Respondent’s contract and Mr McGeehan’s.  There was simply the fact that his terms had been preserved.  That was manifestly insufficient to prove that the variation was genuinely due to a material factor which is not the difference of sex within the meaning of Section 1(3)(a).

18.	In none of the cases in the extract from Harvey to which we have been referred by the Appellant has the appointment of the comparator to the relevant post itself been an act of sex discrimination against the subsequent Applicant.  In our view the Employment Tribunal was right to regard that discriminatory appointment as tainting the subsequent preservation of the comparator’s salary.  The appeal on both points on the Equal Pay Act is therefore dismissed.

19.	Mr Barnett, on behalf of the Appellant argued as a  final ground of appeal that the Tribunal erred in making a finding that the Respondent would have moved to Maidenhead if she had not been discriminated against or treated unfairly.  He challenges this finding on the dual grounds that (1) it had not been identified as an issue for determination at the liability hearing and (2) the correct approach is ‘loss of a chance’ rather than a finding on balance of probabilities.  Having reviewed the Tribunal’s decision we do not think that they made or indeed intended to make a finding of fact on this point.  They simply express the view (at paragraphs 6.19 and 10 of the Extended Reasons) that as at the date of the liability hearing they had not heard sufficient evidence to make a decision.  The question of whether Ms Hope would have moved to Maidenhead remains a live issue for decision at the Remedies Hearing and we have therefore not needed to hear detailed submissions from the parties on this ground of appeal.  In the light of agreement between the parties on this point, we dismiss this aspect of the appeal.