Separating out supplements in equal pay claims

Under the Equal Pay Act 1970 and now under the Equality Act 2010, a woman can pursue an equal pay claim where any term of her contract was less favourable than a term of a similar kind in the contract of her male comparator.

 

This provision was considered in the case of Degnan v Redcar and Cleveland Borough Council where the Court of Appeal determined that the salary package (including basic pay, attendance allowance and fixed bonus payments) should be looked at as a whole and considered as a single term governing remuneration.  The motivation was to stop employees cherry picking benefits from other comparators to service a significantly higher package.

 

The matter was reconsidered in the recent case of St Helens & Knowsley Hospitals NHS Trust v Brownbill.  The Claimants were female health care assistants and receptionists working for the NHS.  They brought equal value claims relating to the unsocial hours payments prior to the implementation of the Agenda for Change (the job evaluation scheme) in October 2004.  All employees were entitled to an uplift for out of hours work, however the male comparators received a higher uplift.  For example; on Saturdays the Claimants were entitled to time and one third, the comparators were entitled to time and a half.

 

At first instance, the Tribunal considered that it was possible for the unsocial hours terms to amount to distinct terms which could be independently compared.  However, it considered that the unsocial hours supplements were part of the remuneration package in accordance with the decision in Degnan.  When looked at as an overall package, the Claimants had a better overall hourly rate than their comparators.  The Tribunal concluded that the Claimants should not be able to compare the unsocial hours terms in isolation.  The Claimants appealed.

 

The Employment Appeal Tribunal (EAT) allowed the appeal, concluding that the unsocial hours terms could be considered separately.  In particular, it considered that, having reached the decision that the terms could amount to distinct terms, it was perverse for the Tribunal to amalgamate the terms into a general salary provision.  It considered that allowing the Claimants' claims would not automatically mean that the Claimants achieved a higher salary package as it was open to the employer to show that the difference in pay was not due to sex.  Finally, it concluded that the Degnan decision was the exception, rather than the rule.  The general rule is that there should be a term by term comparison.  The employer appealed.

 

The Court of Appeal upheld the EAT's decision.  The Court of Appeal reiterated that the more recent decisions demonstrated that the focus in these cases should be on equality of terms, not on equality of total pay received.  The Court of Appeal also did not consider it necessary to amend this focus in order to stop employees leapfrogging or cherry-picking beneficial terms.  The opportunity for employees to cherry-pick their terms is long established and the Government has not legislated to avoid this occurring.  It was not the Court's responsibility or position to alter this.

 

The case will now be resubmitted for a substantive hearing by the Tribunal.

 

This case emphasises that equal pay provisions require a term by term analysis to take place, rather than a comparison of the overall salary package.  The ability of employees to cherry pick provisions is not the main focus.  Men and women must be entitled to the same individual terms when they are carrying out the same or like work, unless the employer can demonstrate that the difference is due to a material factor other than sex.