Appeal No. UKEAT/0007/08/CEA
		UKEAT/0008/08/CEA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 10 July 2008
	Judgment handed down on 15 September 2008

Before
HIS HONOUR JUDGE McMULLEN QC	
MRS R CHAPMAN
MRS L TINSLEY

UKEAT/0007/08/CEA

1) HARTLEPOOL BOROUGH COUNCIL
2) HOUSING HARTLEPOOL LTD	APPELLANT

MRS M DOLPHIN & OTHERS	RESPONDENT

UKEAT/0008/08/CEA

MRS M DOLPHIN & OTHERS	APPELLANT

1) HARTLEPOOL BOROUGH COUNCIL
2) HOUSING HARTLEPOOL LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

UKEAT/0007/08/CEA
For the Appellant	MR JOHN BOWERS
(One of Her Majesty’s Counsel)
  and
MR SEAMUS SWEENEY
(of Counsel)
Instructed by:
Hartlepool Borough Council Legal Service
Civic Centre
Victoria Road
Hartlepool
TS24 8AY

For the Respondent	MR PHILIP ENGELMAN
(of Counsel)
Instructed by:
Messrs Stefan Cross Solicitors
Buddle House
Buddle Road
Newcastle upon Tyne
Tyne & Wear NE4 8AW	

UKEAT/0008/08/CEA
For the Appellant	MR PHILIP ENGELMAN
(of Counsel)
Instructed by:
Messrs Stefan Cross Solicitors
Buddle House
Buddle Road
Newcastle upon Tyne
Tyne & Wear NE4 8AW

For the Respondent	MR JOHN BOWERS
(One of Her Majesty’s Counsel)
  and
MR SEAMUS SWEENEY
(of Counsel)
Instructed by:
Hartlepool Borough Council Legal Service
Civic Centre
Victoria Road
Hartlepool
TS24 8AY	

SUMMARY
EQUAL PAY ACT:  Material factor defence and justification
An Employment Tribunal did not err when it found that bonus schemes created in the 1970s in order to improve productivity were a sham and could not be used in justification as a genuine material factor to a claim of equal pay.  The Tribunal erred in one respect when finding there was adverse disparate effect on women when they comprised 4 out of 28 workers in a relevant group and it had been submitted at the Employment Tribunal that this did not show a prima facie case of indirect discrimination.  Appeals dismissed save for the above.

HIS HONOUR JUDGE McMULLEN QC
1.	This case is about justifying unequal pay.  The judgment represents the views of all three members.  We will refer to the parties as the Claimants and the Respondent.

Introduction
2.	It is an appeal by the Respondent and a cross-appeal by certain Claimants in those proceedings against the reserved judgment of an Employment Tribunal chaired by Employment Judge Barton sitting at Thornaby on Tees, registered with reasons on 4 September 2006.  The substantial delay in coming to a hearing has been caused by applications for Review and illness.  No party takes a point on this but the Employment Appeal Tribunal is very conscious of the delays historically dogging equal pay claims and we do all we can to reduce them.  The Claimants and Respondent are represented respectively by Mr Philip Engelman, of Counsel and Mr John Bowers QC with Mr Seamus Sweeney, of Counsel. 

3.	The Claimants claimed equal pay.  They sought to compare themselves with men who were doing work of equal value, and/or work which was rated as equivalent, to theirs pursuant to two of the three gateways to equal pay under the Equal Pay Act 1970 (the third, like work was not argued).  Test cases were chosen as against the Respondent.  These were tried with two test cases against Housing Hartlepool.  Proceedings in respect of Housing Hartlepool have been compromised and it plays no part in these proceedings yet its name features in the judgment by reason of comparators and by the result of an application for review.  At the Respondent’s request the review was conducted and granted so that paragraph 27 of the original reasons is supplemented by the paragraph inserted in the reserved judgment on review sent to parties on 6 November 2007. Housing Hartlepool is a charitable company limited by guarantee and a registered social landlord.  Claims were made on 29 March 2004 so nothing turns on the fact that comparators now in the employment of Housing Hartlepool were cited by test claimants employed by the Respondent.

4.	The Tribunal also dealt at that time with a second application for review, this time by the Claimants engaged in leisure services.  It also forms part of the Claimants’ own appeal which we deal with below.

5.	It is not clear to us what date was fixed by the Employment Tribunal for the testing of the preliminary issue.  It is the date of presentation of claims of any of the test claimants.  At a meeting for directions (9 July 2004), extensions were given to include claims up to 31 August 2004.  In the judgment itself and in its clarification given at the review, 29 March 2004 seems to be taken as the relevant date.  We will use that in preference to a suggestion of the Claimants that “most if not all predated 2004”.  That date has the merit of including all the Claimants before certain test Claimants went to Housing Hartlepool by reason of a relevant transfer under TUPE.

The issues
6.	The Employment Tribunal defined the issues as now relevant on appeal as follow:
“7	The case involves the payment of a variety of bonuses to the male comparators which are bonuses not received by the female test claimants or those they represent.  It is conceded by the respondents that such bonuses are paid but the respondents claim 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) Equal Pay Act 1970 must be a material difference between the women’s case and the men’s; and
	(b)	in the case of an inequality clause falling within subsection (2)(c) Equal Pay Act 1970 may be such a material difference.
8	The issues to be determined may therefore be summarised as follows:
	(i)	Are the bonuses a sham?
	…
	(v)	Assuming a difference in pay between the claimants and their comparators:
		(a)	What does the respondent say is the genuine cause of the differences?
		(b)	Does this constitute a genuine material factor which is not the difference of sex?
		(c)	Is the Respondent required to objectively justify the differences in the terms?
		(d)	Has the respondent made out its genuine material factor defence or, if appropriate, has it objectively justified the differences in issue?”

7.	The Claimants raise by appeal and cross-appeal the following question:
“Whether there was a disproportionate impact on pool attendants when one takes into account casual staff and/or whether the correct pool was those advantaged and disadvantaged by the receipt or non-receipt of bonuses?”

8.	It was common ground that if the bonus schemes were found to be a sham, further consideration was unnecessary and the Respondent’s defence would fail.  It was conceded by the Respondent that such a finding would be one of fact.

9.	The Employment Tribunal decided in favour of the Claimants on the preliminary issues holding that the bonus schemes were not genuine and were a sham.  As the genuine material factor was taken as a preliminary point rather than after specific findings, the hearing was conducted on the assumption that the test claimants were doing work which was rated as equivalent or as appropriate of equal value to that of comparators. With one exception the Claimants succeeded.  Directions sending the appeals of both the Respondent and the Claimants to a full hearing were given during substantial case management by His Honour Judge Peter Clark.

The legislation
10.	The relevant provisions of the legislation are not in dispute and are summarised by our citation from paragraph 7 of the Tribunal’s reasons above.

The facts
11.	The Respondent is the major local authority on Teeside.  At the relevant time it employed 4,500 workers.

12.	With the inclusion of the two test claims against Hartlepool Housing, the nine test claimants were employed respectively as an area scheme co-ordinator in the Housing Department, the scheme co-ordinator, an integrated care assistant providing services to elderly people in their own homes, an office cleaner, a school escort, a minibus driver for the Educational Department, a school kitchen assistant, a swimming pool leisure attendant and a swimming pool play worker.  Between them they compared their jobs with trade supervisors, that is a chargehand paviour, a joiner, an electrician, a painter, a driver labourer, a gardener, a roadsweeper and a refuse driver.  All of the comparators received a bonus.  None of the Claimants save for kitchen assistants received a bonus.  

13.	The Tribunal’s findings as to the bonus schemes applicable to all of them are correctly summarised by counsel as follows:

Refuse collectors
	(i)	The Tribunal concluded that the bonuses paid in that case, namely (a) £82 per week for the completion of the round and proffering help to other rounds, (b) £18 for service output, based on a number of collections and the amount of waste collected, and (c) £25 attendance bonus; were no more than “a bonus for completing the job the refuse collectors are paid to do.”  The £82 was increased annually without reference to success or otherwise.  There was no differentiation between the reduction in the number of employees and the effect of changes in technology.  See paragraph 10.11 of the Tribunal’s judgment.
Roadsweepers
	(ii)	33.5% was paid, provide the sweeper completed his allocated round.  See paragraph 10.12.
Gardeners
	(iii)	17.5% was paid based on work carried out in the summer months.  There was no evidence to show how productivity was alleged to have improved.  The bonus was paid during the holidays.  See paragraph 10.13.
Joiners
	(iv)	This was a threshold scheme.  Bonuses were paid if the relevant number of minutes per day were exceeded.  HH had a piecework scheme.  See paragraph 10.14.
Drivers / labourers
	(v)	This was a fixed rate scheme.  It was based upon the squad including the driver / labourers completing the job.  However the drivers / labourers had no influence on how that was achieved.  The Tribunal found that “as an incentive scheme, this seemed to be nonsense”.
Painters
	(vi)	This was an SMV scheme.  There was a fall back of 12.5% bonus guarantee under the Red Book.  The Tribunal observed the SMV scheme might operate to create an incentive, but not the 12.5% guarantee.  See paragraph 10.16.
Trade supervisors
	(vii)	A basic wage was paid for a 480 SMV target, which the Tribunal found to be a low threshold.  An average bonus of £87 was paid if measured work was not achieved.  The Tribunal observed that “it was difficult to see how if the job was completed at all the trade supervisor would not be paid a bonus.”  See paragraph 10.17.
Female bonuses
	(viii)	The only bonus was a 6% spot bonus paid as a result of the Cleveland Dinner Ladies litigation.  See paragraph 10.18.”

14.	The reference to Cleveland is to a previous equal pay claim before Cleveland was disbanded.  SMV means standard minute value. The Tribunal described its task as to look at the nature of the jobs the Claimants were doing as against their comparators and then to consider “the history of the development of the various bonus schemes and the nature of the schemes in question”.  On the latter subject, the Tribunal relied heavily on the evidence of the Respondent’s witness Mr Stubbs.  His experience with the Respondent dated back to 1971.  Extracting his evidence the Tribunal said this:
“10.10 … I was around at the time of the government’s standstill on introduction of all incentive schemes.  I think it was Barbara Castle who stopped payments.  The way the local authorities and others dealt with this was to introduce bonus schemes.”

15.	He produced a document describing the objective of all work study based incentive schemes within the Respondent as being:
“10.10 …. (a)	To regulate pay to output in a manner satisfactory to both men and management.
  (b)	To facilitate planning of work and maintenance of a uniform flow of work to all operatives.
  (c)	To facilitate the establishment of satisfactory work standard methods routines for the performance of work.
  (d)	To make the most effective use of vehicles, plant, tools, buildings and other equipment provided.”

16.	The relationship between gender and bonus schemes was fully described by Mr Stubbs and also by another Respondent witness relied on by the Tribunal, Mr Stagg.  His evidence as to the Respondent’s perception of the problem in 1997 is important and consisted of the following:
“10.10… It was accepted that there were no pay freezes after 1979 but that the trade unions would not want the schemes to be taken away.  The only bonus scheme that had ever applied to women employees was a 6% spot bonus paid to caterers who were providing a satisfactory service.  The trade unions did not push for any higher increase.  There was no reduction in numbers of staff or hours worked despite new technology and other changes.  Doreen Wilkinson, catering manager for the first respondent previously employed as Cleveland and County Council’s quality, training and personnel liaison manager confirmed that the spot bonus was paid after the Cleveland County Council split up.  It was not productivity related as such but was as a result of the Cleveland dinner ladies case.  In cross-examination Mr Stagg who was employed by the first respondent as Organisational Development Manager and had worked in the personnel department for over 20 years, agreed that traditionally bonuses were payable to men in manual occupations and not to women and that this was something which concerned him.  He admitted to concerns that bonuses payable to roadsweepers, joiners and refuse collectors etc were not justified and had to be objectively justified.  He agreed that the report of the Bonus Technical Working Group in 1997 (page 1620) recognised the problem.  At page 1630 this states as follows:
‘5.2.8	Productivity is the main reason for bonus schemes.  It may be a genuine material factor to support differences in pay between men and women.  However when using such a factor, the employer must be able to demonstrate through evidence that the productivity bonus actually reflects higher levels of productivity.
5.2.9	Furthermore, if female groups are not given access to productivity bonus, because they were already fully productive, the employer is unlikely to be able to justify:
•	male groups who in practice receive bonus irrespective of their productivity levels or
•	not giving female workers the same bonus for doing work of equal value and at equivalent levels of productivity.’ ”

17.	Statistical evidence was also important, for figures were produced for manual workers nationally which were said to be replicated substantially to the same effect in the Respondent’s workforce.  This was the evidence for 1996 (para 10.18):

•	“The workforce covered by the former NJC for manual workers of 651,669 according to the 1996 survey breaks down as follows
(1)	136,467 and 515,202 women.
(2)	22.5% were employed full-time of which 61.2% were men.
(3)	Of the 77.5% of the workforce who work part-time, 90.8% were women.
•	57.3% of full-time men receive bonus compared with 6.9% of full-time women (4.8% of part-time men and 2.6% of part-time women).
•	Average hourly bonus earnings for full-time men receiving bonus were 159p compared [to] 94p for full-time women.
•	The bonus “league” is topped by the almost exclusively male dominated refuse collection and roadworker groups (over 93% of both groups on bonus).  By comparison the next biggest group is full-time male gardeners (81% on bonus), dropping away to male drivers (42% on bonus).  The total number of full-time male employees in these 4 groups is 43,000 by comparison there are 222,000 part-time female catering staff, 1.6% of whom are on bonus.
•	Of those receiving bonus, 46% of full-time mean have bonus earnings of less than 10% of basic pay, while over 95% off full-time women and part-time men and women earn less than 10% bonus.
•	Almost 25% of full-time men have bonus earnings of 40% or more of basic pay.
10.19	Locally current figures produced in evidence suggested that the drivers were predominantly male but with leisure attendants 2 there was no significant difference and that leisure attendants 3 were predominantly male.  All other claimants were predominantly women whereas their comparators were all male.”

18.	The Tribunal examined in depth evidence given to it by way of cross-examination which indicated that the Respondent’s perception was that a bonus was paid to male manual occupations and not to women’s, these occupations were strongly represented by trade unions and that they contributed firmly to the negotiating process.  The Tribunal held this:

“10.25	On analysing all of this we have come to the conclusion on the facts that the Hartlepool Borough Council proportions of men and women were broadly the same as those nationally and that the same considerations applied in terms of bonus payments namely that with the exception already referred to in relation to the dinner ladies there were no bonus schemes which applied to women and that the schemes that did exist were occupations where positions were predominantly held by men.  We also conclude as a fact that whatever difficulties might have been expressed in terms of arranging bonus schemes which would have applied to women no one was suggesting that it was impossible to do this.  Rather, it had not been given consideration.

10.26	We also conclude as a fact that the bonus schemes all emanated out of wage pay freeze requirements of the 1970s and that particular reason for their existence disappeared many years ago.  The fixed or spot bonuses, attendance bonus and unmeasured work elements were either for simply turning up for work or for being part of a team or for carrying out none [sic] productive work or even on holiday and could in no sense be said to constitute an incentive.  In relation to measured schemes, save for the possible exception of priced worked schemes where there was constant downward revision of the targets, the basis of such schemes was carrying out of the work a reasonably competent worker could do acting with due diligence for example in relation to street cleaning and refuse collectors.  We were unable otherwise to see how the targets for such schemes were decided.  There was little evidence of reviews and reviews were, where they did take place, event driven such as the introduction of new systems or technologies like plastic bags and then wheelie bins in refuse collection and the updating of manual handling regulations in relation to road workers.  While certain of the respondent’s witnesses suggested that there had been an increase in productivity there appeared to be no way of separating out increases in productivity that might have arisen for quite different reasons namely increased efficiency as a result of better equipment or increased mechanisation or improved systems of work.  The one element of the bonus scheme which was retained by Housing Hartlepool namely a cash incentive did involve proper monitoring and recording.  There had been no consideration given as to whether any of the bonuses could be applied to the claimants.  We could see no reason why a bonus could not be applied to cleaners and kitchen assistants as the respondent’s witnesses appeared to accept.  We could see no reason either why bonus could not be introduced on an unmeasured basis or qualitative basis as suggested by the claimants through customer surveys or appraisals where measured work would be inappropriate such as the case of a care assistant.”

19.	Having addressed itself to the written submissions made by Counsel on the law, the Tribunal set out its conclusions, which we include in full for they have been the subject of minute examination before us.

“28.	We have concluded as a matter of fact based upon our primary findings of fact above that the bonus schemes with the exception of the cash incentive bonus retained by Hartlepool Housing were not the genuine reasons for the difference in pay and served to disguise the true reason which itself was tainted by sex.

29.	The schemes were introduced as a result of Government Pay Policy which prevented Hartlepool Borough Council from providing pay increases to strong union based employees except under the guise of incentive schemes.  The schemes, however, in many respects obviously did nothing of the sort.  The attendance allowances, spot bonuses, unmeasured payments all clearly come into this category.  To the extent to which performance was measured it was not measured on any basis which would improve productivity, but was rather tailored to the work already being done.  Reviews and reassessments took place on the introduction of new technology, or new systems of work and it is impossible to conclude from them that the schemes had provided incentive at all despite what was, in some cases, quite a complicated arrangement.

30.	The schemes created a disproportionate impact on women in all cases except the pool attendants and their introduction was therefore tainted by sex.  We do not accept that this was mere accident, but was related to bonuses being paid to the powerfully union supported male dominated groups.  There is significance in the fact that the only bonus paid to women was that paid to dinner ladies following the Cleveland case.  The schemes were discriminatory when introduced, remained discriminatory and are still discriminatory on grounds of sex.  These are not the same facts as found in Armstrong.

31.	To the extent that the bonuses do provide a genuine material factor this relates solely to the cash incentive scheme.  This requires to be justified objectively and the respondents have satisfied the Tribunal that they are reasonably necessary, although of limited application.

32.	As we believe the detailed consideration of the nature of the work carried out by the claimants serves to show there are many aspects of their work which would be capable of as objective an assessment as is the case for the male dominated groups and while certain witnesses expressed difficulty in relation to bonus schemes for workers who were carers none suggested that it was impossible to arrange such a scheme.”

(It is accepted that the first line of paragraph 30 should be read as “The schemes had a disproportionate  … ”).

Discussion and conclusions
20.	We will take the arguments and our conclusions on them together.  

The meaning of sham
21.	A threshold issue for the Employment Tribunal to determine was whether the bonus schemes were a sham.  It correctly posed itself the question (see paragraph 18) “Whether the bonus is a sham or is genuine”.  The Tribunal noted that Mr Bowers’ submission was that it was incorrect to apply the standard definition by Diplock LJ in Snook v London & West Riding Investments Ltd [1967] 2 QB 786 at p802 
“ … It is, I think, necessary to consider, what, if any, legal concept is involved in the use of this popular and pejorative word.  I apprehend that if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations … ”

In argument before us Mr Bowers withdrew that criticism and there is now no dispute as to the nature of the word “sham” which HHJ Peter Clark defined in Kings College London v Clark (EAT/1049/02) at paragraph 22: 
“a sham or non-genuine explanation is a false one, designed to disguise the true reason for the difference in pay, itself tainted by sex”

22.	Although no longer an issue, Mr Bowers maintained until halfway through the appeal that the Employment Judge conducted an unfair hearing by relying on this phrase without the authority being cited to him.  That criticism was expressly withdrawn in open court.  In the light of that, it is difficult to see why there can be a legal challenge, as continues to be maintained, against that precise formulation when the Tribunal uses it again in paragraph 28 of its conclusion.  In any event Mr Engelman submits that the use of “tainted by sex” is not necessary once it has been found that the bonus scheme is a sham.  

23.	Lord Diplock always went to great lengths to search the English and classical dictionaries to find the precise word to convey the legal concept with which he was concerned.  He said that “sham” is a popular term. We think it is easy for ordinary people, employment tribunals and judges alike to know one when they see one.  

The approach to Section 1(3)
24.	The term also comes into play when applying s1(3), the existence of a genuine material factor.  The starting point is the speech of Lord Nicholls in Glasgow City Council v Marshall [2000] IRLR 272 at 274:
“The scheme of the Act is that a rebuttable presumption of sex discrimination arises once the gender-based comparison shows that a woman, doing like work or work rated as equivalent or work of equal value to that of a man, is being paid or treated less favourably than the man. The variation between her contract and the man's contract is presumed to be due to the difference of sex. The burden passes to the employer to show that the explanation for the variation is not tainted with sex. In order to discharge this burden the employer must satisfy the tribunal on several matters. First, that the proffered explanation, or reason, is genuine, and not a sham or pretence. Second, that the less favourable treatment is due to this reason. The factor relied upon must be the cause of the disparity. In this regard, and in this sense, the factor must be a 'material' factor, that is, a significant and relevant factor. Third, that the reason is not 'the difference of sex'. This phrase is apt to embrace any form of sex discrimination, whether direct or indirect. Fourth, that the factor relied upon is or, in a case within section 1(2)(c), may be a 'material' difference, that is, a significant and relevant difference, between the woman's case and the man's case. 
When section 1 is thus analysed, it is apparent that an employer who satisfies the third of these requirements is under no obligation to prove a 'good' reason for the pay disparity. In order to fulfil the third requirement he must prove the absence of sex discrimination, direct or indirect. If there is any evidence of sex discrimination, such as evidence that the difference in pay has a disparately adverse impact on women, the employer will be called upon to satisfy the tribunal that the difference in pay is objectively justifiable. But if the employer proves the absence of sex discrimination he is not obliged to justify the pay disparity.”

25.	Applying that judgment, a structured approach was taken by Arden LJ in Armstrong v Newcastle-upon-Tyne NHS Trust [2006] IRLR 124.  She said:

“32…That passage sets out a step by step guide to proving a genuine material factor defence.  For the purposes of this appeal, the steps can be summarised as follows:
(1) the complainant must produce a gender-based comparison showing that women doing like work, or work rated as equivalent or work of equal value to that of men, are being paid or treated less favourably than men.  If the complainant can produce a gender-based comparison of this kind, a rebuttable presumption of sex discrimination arises.
(2) the employer must then show that the variation between the woman’s contract and the man’s contract is not tainted with sex, that is, that it is genuinely due to a material factor which is not the difference of sex.  To do this, the employer must show each of the following matters:
(a) that the explanation for the variation is genuine.
(b) that the more favourable treatment of the man is due to that reason, and
(c) that the reason is not the difference of sex.
(3) if, but only if, the employer cannot show that the reason was not due to the difference of sex, he must show objective justification for the disparity between the woman’s contract and the man’s contract.
33 It follows from the Marshall case that there is no need for an employer to provide justification for a disparity unless the disparity is due to sex discrimination…
34  In the Marshall case, Lord Nicholls uses the words ‘disparately adverse effect’.  He held that evidence that a difference in pay had such an effect on women could be evidence of sex discrimination.  He did not, however, hold that the mere fact that there was a disparately adverse effect was itself sex discrimination.  In the Marshall case, Lord Nicholls used the phrase ‘disparately adverse effect’ to denote the trigger at which the rebuttable presumption of sex discrimination would arise under step 1 mentioned above.”

26.	Mr Bowers contends that the Tribunal erred in not taking a structured approach.  He accepted that the Tribunal had found that the reason for the disparity in pay was not a genuine reason but that finding was affected by the Tribunal’s consideration of an irrelevant factor.  The factor is that the Tribunal relied for its conclusion on the absence of review, measurement or monitoring as to the continued effect of the bonus schemes.  He further contends that it is sufficient if the Respondent has a perception that the schemes are in place to achieve a permissible objective.  

27.	Productivity was first described by the National Board for Prices and Incomes, Report no. 36 paragraph 134 in the following way:

“We have encountered wide scope for increasing the pace of economic growth by the more effective utilisation of manpower and the existing capital equipment …”

It is a useful definition and was accepted by Lord Donovan’s Royal Commission on Trade Unions and Employers Associations 1968 (paragraph 295), which also noted this:

“With productivity as one of the main grounds for pay increases under incomes policy, there has been great pressure to develop productivity bargaining.  Not all the agreements made under such pressure will necessarily be satisfactory.”  (paragraph 325)

28.	The Respondent’s objective was set out in its document above (paragraph 15).  It reflects those defined by the Donovan Commission.  The key finding of the Employment Tribunal is: 
“The schemes were discriminatory when introduced, remain discriminatory and are still discriminatory on grounds of sex.”

In coming to that conclusion it paid attention to the submissions and evidence led by the Respondent as to the extent of monitoring, measurement, assessment, checking, supervision – they come to the same thing – said to be in place in order to ensure that the schemes were doing what they were supposed to do.  It was the Respondent who urged this upon the Tribunal.  We are mystified by the submission that the Tribunal erroneously considered the absence of proper monitoring when it came to that factual conclusion.  Time and time again, the Tribunal cites those phrases and draws attention to the establishment of the Contract Management Unit designed to see that there was compliance.  It held that these measures were not enough to satisfy it that the schemes were and continue to be genuinely intended to achieve improvements in productivity.  Further, it demonstrated the correctness of its approach, by reference to one bonus scheme as to which it did uphold the Respondent’s case, cash incentives, as they did involve proper monitoring and recording (see paragraphs 10.26 and 10.27).

29.	In our judgment, the Respondent’s assertion that all that needs to be shown is an explanation cannot be accepted.  This is how it is put:

“31.	The incentive bonus schemes were at all material times and are agreed with the relevant trade unions.  They vary in their nature and as to the level of payment achievable according to the nature of the work being undertaken.
 32.	The use of such incentive/bonus schemes to meet the objectives of the Respondent in providing an efficient service to the public in the areas of work in which the comparators are involved was at all material times and is objectively justifiable, if the same needs to be justified which is denied.  The justification is as follows:
a.	The difference in pay between the relevant Claimants and the above comparators is explained by the fact that the comparators enjoy the above incentive bonuses whereas the Claimants do not.
b.	The incentive schemes under which the comparators derive an additional element to their pay were and are aimed at enhancing productivity and efficiency and improving standards in those areas where they exist in return for increased earnings.”

30.	Take a simple illustration.  A man and a woman are paid differently because the man’s contract includes a bonus for shift working.  He does no shift working.  The explanation for the difference is the existence of the shift work bonus.  It is not genuine.  Similarly, a payment for his readiness to work shifts cannot be genuine if there was no intention ever to call upon him.  It is right that the Tribunal is not required to pass judgment upon whether the scheme introduced by the Respondent is a good scheme or a bad scheme, for its task simply is to see whether it is genuine.  Were the schemes intended to and do they in fact achieve productivity improvements?
31.	The Tribunal condemned the schemes from the outset, but it was necessary only to look at them as at the time the claim was made.  An explanation based on the history of pay freezes in the 1970s would not give a genuine reason for the continued reliance upon them in 2004.  This approach is consistent with Benveniste v University of Southampton [1989] IRLR 122, CA and British Coal Corporation v Smith [1996] ICR 515 HL.  The latter, referred to by the Employment Tribunal by reference to Mr Bowers’ submissions to it, albeit on a different point, is authority for the proposition stated by Lord Slynn (page 524 para 8), that a genuine material factor defence, in that case different collective bargaining pay structures for claimant and comparator work groups, can become discriminatory:
“Whilst accepting that differences in rates of pay historically were due to separate bargaining processes, which themselves were untainted by sex, the question remained whether at the relevant date (January 1986) the difference between workers had been shown by the Corporation to be objectively justified on grounds other than sex.  

32.	It was not contended that the Judgment of the Employment Tribunal was perverse.  There plainly was evidence before the Employment Tribunal from both sides from which it could draw its conclusion on the central issue which is fact sensitive.  The Respondent therefore failed to show what it was required to show under paragraph 2(a) of Arden LJ’s analysis in Armstrong.  It follows from the Respondent’s case that the difference in pay was “due to” the non-genuine reason and thus fails to satisfy paragraph 2(b) of the test.  In those circumstances, Mr Engelman is right that it was not necessary for the Employment Tribunal to make the additional finding that it was tainted by sex.  However, the statistics and the history set out by the Employment Tribunal make that conclusion permissible.  We reject the contention that there was no basis for the Tribunal’s conclusion that collective bargaining was conducted on behalf of male dominated groups who were densely organised in trade unions.  Having looked carefully at the agreed notes of cross-examination, that conclusion, too, was one which was open for the Tribunal to make.  We have already rejected the contention that the decision was Wednesbury unreasonable because the Tribunal paid attention to the absence of proper monitoring.  This was a factor urged upon it by the Respondent in its favour and the Tribunal rejected it.  

Education drivers and leisure attendants
33.	The Respondent contends that the Employment Tribunal erred in law when it concluded that the bonus schemes could not be relied upon because they had a disproportionate effect on education drivers and was correct in respect of leisure pool attendants. See para 7 above.

34.	It is convenient to deal with symmetrical appeals in respect of both these groups together.  On behalf of the Respondent it is submitted that the finding in favour of education drivers was incorrect and the Tribunal should have decided in the same way as it decided against the leisure attendants.  For the Claimants, the opposite submission is made i.e. the Tribunal was right on education drivers and wrong on leisure attendants.  For the latter, we will take the Review reasons as part of the substantive reasons. Each side says the judgment is mutually inconsistent, but in different ways.  

35.	In order for Mr Engelman to succeed in his claim for leisure attendants, he had to put forward sufficient figures relating to the gender breakdown in that work group.  This case was dismissed by the Employment Tribunal and again at the Review. He placed reliance on an obligation by the Respondent to provide disclosure of the relevant figures but there was no order in place for this and the Tribunal on Review decided this was not a case which it was in the interests of justice to reopen.  We think Mr Engelman accepts that without the statistics showing in this work group a predominance of males, his claim would fail.  This could be done only by adding casuals, most of whom were female, to the permanent work group who were “a mixture of male and female staff”. The finding is cited in para 10.19 of the reasons above. It was open to him to take a broader approach to the selection of a pool for the leisure (pool) attendants, based upon the judgment of Sedley LJ in Grundy v British Airways plc [2007] EWCA Civ 1020 where this was said:

“28.	Possibly the most helpful exegesis we have been shown is that of Cox J in the EAT decision in Armstrong v Ministry of Defence [2004] IRLR 672. Having explained why, in the EAT's judgment, "the concept of indirect discrimination under the Equal Pay Act, when read together with European equal pay legislation and case law, is broader than that which applies under the Sex Discrimination Act 1975",  Cox J held (§46): 

‘The fundamental question for the tribunal is whether there is a causative link between the applicant's sex and the fact that she is paid less than the true value of her job as reflected in the pay of her named comparator. The link may be established in a variety of different ways, depending on the facts of the case. It may arise, for example, as a result of job segregation or from pay structures or pay practices which disadvantage women because they are likely to have shorter service or to work less hours than men, due to historical discrimination or disadvantage, or because of the traditional social role of women and their family responsibilities.’

	Carrying this broad methodology into the assessment of adverse impact, the tribunal will be concerned to make a comparison which illuminates such of these questions as seem to them potentially critical (here, for instance, the need for female cabin crew with childcare responsibilities to have shorter and more flexible working hours), and to find a pool which best helps them to do this. A pool so narrow that no comparison can be made at all is unlikely to serve this end; nor a pool so large that the comparison is no longer of like with like; though in rare cases the nature of the claim may drive the tribunal to one of these extremes and make the claim self-defeating.
35.	In my judgment the pool taken by the employment tribunal in the present case passes this test. It has to be kept in mind, as I said earlier in this judgment, that the test is being applied in a case like the present one not in order to see if a complaint of indirect discrimination is made out but in order to see whether a disparity in pay is explained by a material and non-discriminatory factor. The tribunal's task, subject to what the exercise will logically bear, is to identify a cohort within which the defence can be objectively tested. The Watford tribunal did this, looking at both the advantaged and the disadvantaged groups but focusing on the latter, and found systemic discrimination with the result that the defence failed. Mr Jeans' case is that the reverse process would – as Ms McNeill accepts – show no systemic discrimination; but unless he can demonstrate an error of law in the tribunal's choice, he faces a finding of fact which, like many findings of fact, may be debatable but is legally impregnable. In my judgment no such error can be shown. Contrary to Mr Jeans' unqualified submission, there is no principle of law which requires the fact-finding tribunal always to base its test of disparity on the advantaged cohort. British Airways must live with the finding of disparate impact.

36.	We agree that it was open to Mr Engelman at first instance to run this case on the basis of work group comparisons, alternatively on the broader basis of all those groups which received bonus as against those which did not.  He cannot now reopen the point in respect of leisure attendants.  It would require remission to the Employment Tribunal but we will not do this when the Employment Tribunal has reviewed the case on this issue. A long line of EAT jurisprudence countenances against this as I explained: Secretary of State v Rance [2007] IRLR 665. It was for the Claimants to produce the statistics they relied on as showing disparate impact on women: Nelson v Carillon Services Ltd [2003] IRLR 428. They could have been adduced before the substantive hearing and were not. The Employment Tribunal correctly refused to reopen the issue and so do we.

37.	Logically, the same approach must apply to the education drivers. Mr Engelman’s written submissions to the Employment Tribunal expressly acknowledge that there was unlikely to be disproportionate impact on female drivers (see paragraphs 146, 150 and 151).  Given that he accepted that there was possibly no prima facia case of indirect discrimination in respect of the drivers, because the breakdown in the group was 24 male / 4 female, the Tribunal should have so concluded.  To allow the broader comparison to be made would be to raise a new point on appeal which was not before the Employment Tribunal in the light of the written submissions we have cited, and would require further findings by the Employment Tribunal.  As we explained in Rance (above), it will be in highly exceptional cases that a new point requiring further findings by an employment tribunal will be allowed to be made at the Employment Appeal Tribunal.  This is not one of them.  This point can be made by reference to paragraphs 10.19 and 30 of the Tribunal judgment, which can best be understood by rewording them to say:
“10.19 … the drivers were predominantly male… All other Claimants were in work groups predominantly female whereas their Comparators were in all male work groups.
30 … the schemes had a disproportionate impact on women in all cases except the pool attendants”

38.	Given the finding on leisure attendants cannot be disturbed on appeal, by parity of reasoning the judgment in respect of education drivers is an error of law and cannot stand.  The absence of bonus for this work group disadvantaged 24 men and 4 women. This was proportionately more men than women or at the very least, men and women alike were shut out of bonus. On that evidence, the Claimants cannot refute the Respondent’s defence.

Painters
39.	Although pursued in a skeleton argument, this point did not form part of the Notice of Appeal and on objection by Mr Engelman, Mr Bowers withdrew it.  It is dismissed.  

Disposal
40.	With the exception of the Respondent’s successful appeal on education drivers, all grounds of appeal by the parties are dismissed.  We would very much like to thank all three Counsel for their very helpful submissions.