Nelson v Carillion Services Ltd

In a direct equal-pay claim, a woman may compare herself with a single male comparator in the same establishment doing like work. A workforce-wide pool and statistical analysis are not prerequisites. Once like work and a pay disparity are established, the employer bears the burden under section 1(3) of the Equal Pay Act 1970. A pay difference inherited on a transfer of undertaking does not automatically establish a material-factor defence. Whether TUPE required continuation of an unlawful disparity, and whether a labour-market factor was tainted by sex, were arguable issues. Permission to appeal was granted; the merits were not finally determined.

Monica Nelson brought an equal-pay claim against Carillion Services Ltd, relying on an admitted disparity between her pay and that of a male employee doing like work in the same employment. The Employment Tribunal accepted that the employer’s reliance on inherited pay differences following a transfer of undertaking established the defence under section 1(3) of the Equal Pay Act 1970. It also rejected an indirect-discrimination challenge, considered by analogy with section 1(1)(b) of the Sex Discrimination Act 1975, partly because no satisfactory pool had been established. The Employment Appeal Tribunal dismissed the first appeal. The central issue was whether the statutory defence had properly been made out and whether the indirect-discrimination analysis was necessary.

Application allowed. Permission to appeal was granted. The Court of Appeal did not finally determine the equal-pay claim.

1. The appellant’s notice required amendment because the proposed appeal lay from the Employment Appeal Tribunal, although the Court of Appeal had to focus principally on the Employment Tribunal’s decision.
2. Section 1 of the Equal Pay Act 1970 permits a woman to claim equal pay by comparing her position with that of a single man employed in the same establishment on like work at a higher rate. The provision does not require examination of the entire workforce or of an identified pool.
3. Where the two foundation facts are established, the employer must rely on section 1(3) and prove that the variation is genuinely due to a material factor which is not a difference of sex. The burden of negativing the equal-pay claim remains on the employer.
4. The Employment Tribunal’s conclusion that TUPE obliged Carillion to perpetuate inherited pay disparities was highly debatable. The stronger argument was that a transfer does not carry an obligation to maintain disparities contrary to law. Regulation 5, paragraph 2(a), of the Transfer of Undertakings (Protection of Employment) Regulations might instead transfer the transferor’s duties and liabilities, including the obligation to pay men and women equally for like work.
5. The question whether a labour-market factor was tainted by sex could arise if the section 1(3) defence were otherwise persuasive. An analogy with indirect discrimination may assist in some cases, but it introduces the need for a pool and statistical analysis and should not obscure the direct statutory questions.
6. These were substantial and properly arguable issues which deserved consideration by the full court. The formal order was: Application allowed.

1. Court of Appeal (Civil Division): granted permission to appeal from the Employment Appeal Tribunal and directed that the appellant’s notice be amended.
2. Employment Appeal Tribunal: dismissed the first appeal. No citation was stated in the judgment.
3. Employment Tribunal: accepted the employer’s section 1(3) defence and rejected the indirect-discrimination rebuttal.