Bury Metropolitan Borough Council v Hamilton & Ors

Under section 1(3) of the Equal Pay Act 1970, an employer need only identify a factual explanation for a pay differential at the first stage. The explanation need not itself be justified. The ordinary discrimination analysis then determines whether it is tainted by sex and, where appropriate, objectively justified.

A bonus scheme initially introduced for productivity may become indirectly discriminatory if the link between productivity and payment has disappeared. Historical non-discrimination is not conclusive. Pay protection may constitute a continuation of indirect discrimination. Practical difficulty in calculating liability is not a justification, and unaffordability requires particularised evidence of cost and financial context.

Female employees of Bury and Sunderland local authorities claimed under the Equal Pay Act 1970 the benefit of bonus payments received by predominantly male comparators. They also claimed pay protection introduced when the bonus schemes were withdrawn under single-status arrangements.

The employment tribunals rejected the councils’ section 1(3) defences in relation to bonus, treating the schemes as sham arrangements because the connection with productivity had been lost. Bury’s tribunal upheld the defence concerning pay protection. Sunderland’s tribunal rejected the defence except for leisure-centre attendants. The appeals concerned the proper analysis of the material-factor defence, indirect discrimination, objective justification and the evidence required to justify withholding pay protection.

1. Bonus appeals. The appeals were dismissed, subject to remittal of particular Bury claimant groups where the evidence of gender disproportion had not been determined.
2. The tribunals had wrongly treated the question whether the bonus explanation was a sham as the central issue. Sham ordinarily connotes a deliberately fabricated or dishonest explanation. Loss of the link between productivity and payment did not, without more, establish dishonesty. The contrary dicta in Hartlepool Borough Council v Dolphin were disapproved.
3. The councils nevertheless identified a sufficient factual factor: the comparators’ jobs were covered by bonus schemes whereas the claimants’ jobs were not. The first stage under section 1(3) is descriptive and does not require the employer to prove that its explanation is justified.
4. The explanation was, for most claimant groups, prima facie indirect discrimination of the Enderby type because the advantaged and disadvantaged groups had materially different gender compositions. The fact that the schemes were non-discriminatory when introduced did not determine whether their continuation remained discriminatory or justified.
5. On the factual findings, the bonuses had become an automatic part of pay and no longer rewarded measured productivity. Since productivity was the only possible justification for paying more for work of equal value, continuing the differential could not be objectively justified. The relevant Bury groups were remitted to determine their proper groups and gender proportions.
6. Pay protection. The Bury claimants’ cross-appeal succeeded. The inability to calculate the precise sums payable before the primary claims were determined was not a material justification. A legally arising payment obligation may be quantified later.
7. A local authority cannot establish unaffordability by assertion. It must provide sufficiently detailed evidence of the likely costs and the financial context, enabling the tribunal to assess whether the financial constraints were genuinely pressing. Bury had not done so. The claimants were in principle entitled to pay protection calculated by reference to the bonus payments they should have received.

• Employment Appeal Tribunal: allowed the Bury pay-protection cross-appeal, dismissed the councils’ bonus appeals save for remittal of specified claimant groups, and held that the Bury claimants were in principle entitled to pay protection.
• Employment Tribunals: Bury rejected the section 1(3) defence concerning bonus but upheld it concerning pay protection. Sunderland rejected the defence for most claimants and upheld it for leisure-centre attendants.