Armstrong & Ors v Newcastle Upon Tyne NHS Hospital Trust

For an equal pay comparison under EC Treaty article 141, common employment is insufficient. The relevant pay terms must be attributable to a body responsible for the inequality and capable of restoring equal treatment.

A genuine material factor defence follows a structured sequence. A statistically significant disparate impact raises a presumption of sex discrimination. The employer must then prove a genuine, causal and non-sex-based explanation. Objective justification is required only where the employer cannot establish that absence of discrimination.

Disparate impact must be assessed through logic, relevance and common sense in the context of the affected workforce. Competitive tendering in a predominantly female market may be discriminatory, but it is not necessarily so. The tribunal must examine all factors that actually caused the pay difference.

Domestic ancillary workers claimed equal pay with male porters employed at the Royal Victoria Infirmary. The claims concerned bonus payments lost by domestic workers following compulsory competitive tendering, while the porters retained bonuses.

Two appeals arose from an order of the Employment Appeal Tribunal dated 22 November 2004. The non-RVI workers challenged the conclusion that, after the respondent trust was formed in 1998, they could not compare themselves with RVI porters under article 141. The trust challenged the rejection of its genuine material factor defence concerning RVI workers.

The central questions were whether the workers' pay terms were attributable to a single source and whether the tribunal had properly determined disparate adverse impact, discrimination, and objective justification.

1. The wrong comparator appeal was dismissed. The employment tribunal had found that pay negotiations remained departmental after the 1998 merger. It was entitled to conclude that the respondent was not responsible for setting both groups' relevant terms. Some involvement in harmonising employment conditions did not compel a finding that the trust was the single source. Whether merely adopting disparities created by predecessor employers could suffice did not require decision.

2. The genuine material factor appeal was allowed. A gender-based comparison showing sufficiently disparate adverse impact raises a rebuttable presumption. The employer must then establish a genuine and causal material factor which is not the difference of sex. Objective justification arises only if that absence of sex discrimination is not proved.

3. By the reasoning of Buxton LJ, with which Latham LJ agreed as to disposal, the finding of disparate adverse impact lacked an adequate contextual assessment. Raw percentages required the application of logic, relevance and common sense to the affected workforce. The issue therefore had to be reconsidered.

4. The tribunal could not find that the decision against tendering portering services was influenced by sex. Its reliance on general local experience concerning male unionisation and likely opposition was unsupported by evidence about the particular workforce.

5. The principle considered in North Yorkshire County Council v Ratcliffe [1995] ICR 833 did not make tendering in a predominantly female labour market necessarily discriminatory. The tribunal had to determine from all the evidence whether tendering the domestic services, or ending their bonus scheme, was an act of sex discrimination. The fact that the comparators were male could not be used to characterise the separate decision against tendering portering services.

6. The tribunal had also failed to assess the trust's full defence based on financial constraints, legal obligations, industrial relations and the policy of phasing out bonuses. A historical explanation alone was insufficient where justification was required, but the defence advanced was not purely historical.

7. The matter was remitted to the employment tribunal. It was to reconsider disparate adverse impact, then discrimination if impact was proved, and finally the genuine material factor defence if discrimination was established. No further evidence was to be admitted except an updated analysis of bonus incidence.

• Court of Appeal: Dismissed the workers' wrong comparator appeal, allowed the trust's genuine material factor appeal, and remitted the specified issues to the employment tribunal.
• Employment Appeal Tribunal: Upheld the tribunal's rejection of the non-RVI comparison and its rejection of the trust's genuine material factor defence.
• Employment Tribunal: Determined preliminary issues by accepting the wrong comparator defence for non-RVI workers and rejecting the genuine material factor defence concerning RVI workers.