The Audit Commission v Haq & Ors

A pay differential following restructuring is not indirectly discriminatory merely because men occupy the higher-paid positions. Where the differential results from a neutral policy preserving existing pay points, the claimant must establish either a discriminatory provision, criterion or practice, or sufficiently significant statistics supporting an inference of prior discrimination. Particular disadvantage cannot be inferred solely from the outcome in the individual case.

Protecting the pay of employees affected by restructuring is capable of being a legitimate aim. Pay protection may be proportionate where it compensates only for non-discriminatory potential loss. The position may differ where the protected differential resulted from past discrimination.

The Audit Commission amalgamated the roles of Inspection and Information Officer and Senior Inspection and Information Officer into a new Inspection Support Officer role. Employees selected for the new role retained their existing positions on the same pay scale. Two male former senior officers consequently earned substantially more than nine female former junior officers, although the parties accepted that the pre-existing differential was non-discriminatory.

An Employment Tribunal held that the differential was indirectly discriminatory and that the Commission had failed to justify it. The Commission appealed, challenging both the finding of indirect discrimination and the decision on objective justification. The central issues were whether a prima facie case arose under either Enderby-type or PCP-type principles, and, if so, whether the pay protection policy was justified.

1. Appeal allowed and claims dismissed. The Employment Tribunal was not entitled to find a prima facie case of indirect discrimination.
2. Enderby-type discrimination. That category permits discrimination to be inferred where no discriminatory provision, criterion or practice can be identified. Here, however, the immediate cause of the differential was known: the Commission’s policy of allowing restructured employees to retain their previous pay points. The analysis therefore belonged under PCP principles. In any event, the small number of Senior Inspection and Information Officers, three men and two women, did not support the conclusion that the role was perceived as men’s work or that the differential resulted from prior stereotyping.
3. PCP-type discrimination. The pay protection policy applied equally to employees and benefited most of the claimants because the new role had been evaluated lower on the same scale. The fact that the two male comparators had reached higher points for non-discriminatory reasons did not establish that the policy placed women at a particular disadvantage.
4. Objective justification in the alternative. Protecting the pay of employees affected by restructuring was plainly capable of being a legitimate aim. The policy was proportionate because the protection corresponded to the loss each employee would otherwise suffer. The fact that it produced a large difference between employees doing work of equal value did not make it discriminatory where the protected rates were themselves non-discriminatory.
5. The availability of assimilation or a mark-time arrangement did not make the chosen policy disproportionate. Good practice may favour phasing out pay protection, but such phasing is not invariably legally required. The conclusion would differ if the differential being protected had resulted from past discrimination.

• Employment Tribunal, London Central: claims under the Equal Pay Act 1970 allowed; Judgment and Reasons sent to the parties on 3 December 2009.
• Employment Appeal Tribunal: appeal allowed and the claims dismissed.