Rainey v Greater Glasgow Health Board

For the material-factor defence under section 1(3) of the Equal Pay Act 1970, a difference is material if it is significant and relevant. The enquiry is not confined to personal qualities such as skill, experience or training. Economic or administrative circumstances may justify a pay difference if they are objectively justified and wholly unrelated to sex.

Objective justification requires more than an absence of discriminatory intention. The employer must show that the measure corresponds to a real need, is appropriate to the objective and is necessary to achieve it. Transitional pay protection may therefore justify higher pay for transferred staff where it is necessary to recruit them, while direct entrants receive a standard scale applied alike to men and women.

Rainey v Greater Glasgow Health Board concerned a female prosthetist employed directly by the National Health Service on its standard Whitley Council scale. Her male comparator had transferred from private employment when the Scottish prosthetic service was brought into the National Health Service. He retained his former salary and negotiating arrangements because equivalent terms were needed to recruit the existing prosthetists as a group.

The board accepted that the employees performed like work and that the appellant's remuneration was less favourable. It relied on section 1(3) of the Equal Pay Act 1970, contending that the different methods of entry and associated administrative arrangements constituted a material difference unrelated to sex.

The industrial tribunal dismissed the application. A majority of the Employment Appeal Tribunal dismissed an appeal, and the First Division of the Inner House did likewise, Lord Grieve dissenting: [1985] IRLR 414. The central issue before the House was whether circumstances extending beyond the employees' personal qualifications or merits could constitute a material difference under section 1(3).

1. Appeal dismissed unanimously. Lord Keith of Kinkel delivered the leading speech. Lords Brandon of Oakbrook, Griffiths, Mackay of Clashfern and Goff of Chieveley agreed with that speech and its reasons. The interlocutors of the First Division were affirmed and the appellant was ordered to pay the respondents' costs.

2. Per Lord Keith, section 1(3) of the Equal Pay Act 1970 was not confined to differences in the employees' personal qualities, such as skill, experience or training. “Material” meant significant and relevant, and consideration of each employee's case could encompass all relevant circumstances. The restrictive approach in Clay Cross (Quarry Services) Ltd v Fletcher [1978] 1 WLR 1429, which excluded extrinsic circumstances and circumstances of recruitment, was disapproved.

3. Per Lord Keith, economic factors affecting the efficient operation of an employer's undertaking could constitute a relevant difference, provided that they were objectively justified and unrelated to sex. Absence of discriminatory intention was insufficient. Drawing on Jenkins v Kingsgate (Clothing Productions) Ltd [1981] 1 WLR 972 and Bilka-Kaufhaus G.m.b.H. v Weber von Hartz [1986] IRLR 317, the employer had to show that the measure corresponded to a real need, was appropriate to the objective pursued and was necessary to achieve it. Objectively justified non-economic grounds, including administrative efficiency in a non-commercial undertaking, could also qualify.

4. Per Lord Keith, the Employment Appeal Tribunal's approach in Jenkins v Kingsgate (Clothing Productions) Ltd [1981] 1 WLR 1485 was correct and consistent with article 119 of the Treaty of Rome. Section 1(3) therefore permitted relevant differences extending beyond the personal qualifications and merits of the employees.

5. Per Lord Keith, the board had established an objectively justified material difference. Matching the existing remuneration of transferred prosthetists was necessary to recruit the nucleus without which the new service could not have been established within a reasonable time. Placing direct entrants, male and female alike, on the ordinary Whitley Council scale was supported by sound administrative reasons. The appellant was not paid below the applicable norm; the comparator received transitional higher pay because recruitment from private employment required it.

6. Per Lord Keith, section 1(1)(b) of the Sex Discrimination Act 1975 added nothing material. An unjustified indirectly discriminatory difference could not satisfy section 1(3), and the requirement of objective justification under the two provisions was not materially different for present purposes.

1. House of Lords: The House unanimously dismissed the appeal, affirmed the First Division's interlocutors and awarded the respondents their costs: [1987] AC 224.
2. First Division of the Inner House: The court dismissed the appeal and affirmed the earlier decisions. Lord President Emslie and Lord Cameron formed the majority; Lord Grieve dissented: [1985] IRLR 414.
3. Employment Appeal Tribunal: A majority dismissed the appellant's appeal from the industrial tribunal.
4. Industrial tribunal: The tribunal dismissed the application for a declaration of entitlement to equal pay.