Glasgow City Council and Others v. Marshall and Others (Scotland)

The House of Lords considered the meaning and operation of section 1(3) of the Equal Pay Act 1970, the so-called 'material factor' defence. The court held that an employer relying on section 1(3) need only identify factors which genuinely caused the pay disparity, prove those factors were genuine and causally relevant, and show they were not due to the difference of sex. Where no element of sex discrimination is pleaded or established, the employer is not obliged to demonstrate a broader justificatory 'good reason' for the disparity.

The appellants (instructors in special schools) had been found by an industrial tribunal to do like work with teachers but the tribunal applied a test requiring employers to justify historic pay differences; the House held that was an erroneous approach. The employers' explanation — that instructors and teachers were paid under different nationally negotiated pay structures and scales — was a genuine, non-sex-related causal factor and therefore succeeded under section 1(3).

Background and parties: Eight instructors (seven women and one man) employed in special schools in the former Strathclyde region claimed equal pay with teachers working in the same schools. The respondents were Strathclyde Regional Council and successor education authorities. The instructors alleged that, despite performing like work, they were paid less than teachers.

Procedural history:

• The industrial tribunal (hearing over 52 days) found the instructors were engaged on like work with teacher comparators and rejected the employers' section 1(3) defence.
• The Employment Appeal Tribunal dismissed the authorities' appeal.
• The Court of Session allowed the authorities' appeal on the section 1(3) point.
• The House of Lords heard the appeal and dismissed it (thus upholding the employers' section 1(3) defence).

Nature of the claim and relief sought: The applicants sought equal pay under the Equal Pay Act 1970, contending they did like work with teachers and were therefore entitled to the same pay.

Issues framed by the court:

• Whether the instructors' work was 'like work' with teachers (the tribunal found it was; this finding was not challenged on appeal to the House).
• Whether the employers succeeded in establishing the section 1(3) defence — i.e. whether the pay variation was genuinely due to a material factor not the difference of sex.
• As a subsidiary/fallback issue, whether there was a case of indirect sex discrimination with disparate impact on women.

Reasoning: The House analysed section 1(3) and explained that 'material factor' should be understood primarily in a causative sense — the employer must show a significant and relevant factor which caused the disparity and that it was not sex-related. The tribunal had wrongly required the employer to demonstrate a justificatory 'good reason' (for example, that the employer had reviewed and regraded posts). The education authorities had identified differing collective bargaining structures and distinct nationally negotiated pay scales (SJNC for teachers and APT&C for instructors) as the cause of the disparity; no one alleged sex discrimination tainted that explanation. On the authority of Strathclyde Regional Council v. Wallace, the House held that the employers' defence satisfied section 1(3).

Other points: The House declined to decide a new factual argument about disparate impact on women (indirect discrimination) urged for the first time at the House; it considered it unfair to permit fresh factual issues to be raised at this stage and indicated such a matter would need remittal for fresh evidence if pursued.

Appeal dismissed. The House held that under section 1(3) of the Equal Pay Act 1970 an employer relying on a material factor defence need only identify factors which genuinely caused the pay disparity, prove they are genuine and causally relevant, and show the factor is not the difference of sex. The industrial tribunal erred in requiring the employer to justify historic pay differences by showing a re-assessment or other proactive justification; the employers satisfied section 1(3) by pointing to different national bargaining/pay structures.

Industrial Tribunal (claim succeeded on like work and rejected section 1(3) defence; decision dated 15 May 1996) -> Employment Appeal Tribunal (Lord Johnston) dismissed the employers' appeal -> Court of Session (Lord President, Lord Prosser and Lord Cameron of Lochbroom) allowed the employers' appeal on section 1(3) -> House of Lords ([2000] UKHL 5) dismissed the instructors' appeal.