Barry v Midland Bank Plc

A redundancy scheme calculated by reference to pay at termination may indirectly disadvantage employees whose current hours are below their average hours throughout service. Neutral and uniformly applied terms do not preclude such discrimination.

The claimant must prove disproportionate impact using a pool comprising everyone to whom the scheme applies. The relevant comparison is between the proportions of women and men whose current hours are below their service average.

Any disadvantage is objectively justified where the scheme pursues legitimate, non-discriminatory aims and its means are appropriate and reasonably necessary. Necessity does not require proof that no alternative scheme was possible. A scheme based on final pay may therefore be justified where its principal aim is to cushion the financial consequences of redundancy.

The appellant worked for the Bank for 13 years, initially full-time and subsequently part-time. On voluntary redundancy, her contractual severance payment was calculated by multiplying her current part-time weekly pay by the number of weeks attributable to her entire continuous service. She contended that the calculation failed adequately to reflect her earlier full-time service and disproportionately disadvantaged women.

The Industrial Tribunal dismissed claims under the Equal Pay Act 1970, the Sex Discrimination Act 1975 and article 119 of the Treaty of Rome. It nevertheless found, inconsistently, that any indirect discrimination was not objectively justified while any contractual difference arose from a genuine material factor unrelated to sex.

The Employment Appeal Tribunal, reported at [1997] ICR 192, dismissed the appeal. The appellant abandoned her sex discrimination claim and appealed on whether the final-pay calculation produced indirect discrimination under article 119 and the equality clause, and whether any such discrimination was objectively justified.

1. Appeal dismissed unanimously. The claimant had not proved indirect discrimination. In any event, any disproportionate effect was objectively justified and resulted from a material factor unrelated to sex.

2. Peter Gibson LJ delivered the judgment of the court. A measure expressed in neutral terms may still constitute indirect sex discrimination where it works to the disadvantage of far more women than men. The court therefore declined to dispose of the case merely because the severance scheme applied identical rules to both sexes and to full-time and part-time employees.

3. The appropriate comparison included everyone to whom the relevant provisions applied when the employment ended. The disadvantaged group comprised part-time workers whose hours at termination were below their average hours throughout their service. The proportions of women and men within that group had to be compared. The available statistics did not establish those proportions, and the burden of proving disproportionate impact rested on the claimant.

4. The objective-justification inquiry asks whether the scheme pursues a legitimate objective and whether the chosen means are appropriate and reasonably necessary to achieve it. The language of necessity in Bilka-Kaufhaus GmbH v Weber von Hartz [1987] ICR 110 did not require an employer to prove that its scheme was the only possible arrangement. The inquiry requires an objective balance between discriminatory effect and the employer's reasonable needs.

5. The scheme's primary objective was to cushion employees against unemployment and job loss. Its secondary objectives were to compensate for loss of employment and reward loyalty. Those aims were legitimate and non-discriminatory. Calculating payment by reference to current pay was appropriate and reasonably necessary because it related the financial cushion to the employee's earnings when made redundant. Continuous service was also recognised without treating part-time service as less loyal.

6. Rewriting the scheme to correlate payment with historical hours would detract from its cushioning purpose and convert it towards a reward for accumulated hours. Clarity and administrative simplicity also benefited employer and employees. Accordingly, any indirect discrimination infringed neither article 119 nor the Equal Pay Act 1970.

7. The court left open whether article 119 had direct effect only for direct and overt discrimination identifiable solely through equal-work and equal-pay criteria. It refused a reference under article 177 because it had no doubt about the issue necessary to determine the appeal. Costs were awarded against the appellant, and leave to appeal to the House of Lords was refused.

1. Court of Appeal: Dismissed the appeal from the Employment Appeal Tribunal. Any indirect discrimination was objectively justified, and the claimant had also failed to prove disproportionate impact.

2. Employment Appeal Tribunal: Dismissed the employee's appeal in [1997] ICR 192. It held that the contractual severance terms were no less favourable than those of a male comparator and that there was no free-standing jurisdiction to determine an article 119 claim.

3. Industrial Tribunal: Dismissed the employee's complaints. It found no proved indirect discrimination and held that the contractual difference arose from a genuine material factor unrelated to sex, although it separately concluded that hypothetical indirect discrimination was not objectively justified.