Haq & Ors v The Audit Commission

Under the Equal Pay Act 1970, a difference in pay between employees doing like work is not, by itself, proof of indirect sex discrimination. However, a tribunal may find prima facie indirect discrimination where restructuring and pay protection preserve a significant disparity, supported by stark, non-fortuitous statistics and the historical female composition of the lower-paid role. A neutral policy applied equally can still cause comparative disadvantage. Objective justification requires a structured assessment of a real and legitimate aim, appropriate and reasonably necessary means, and the discriminatory effects weighed against less discriminatory alternatives that would achieve the same aim. Pay protection during restructuring may legitimately protect existing pay and retain skills. The majority held that the Employment Appeal Tribunal was entitled to substitute its conclusion and dismiss the claims.

Nine women employed by the Audit Commission brought equal pay claims under the Equal Pay Act 1970. After the amalgamation of two roles, the claimants and two male comparators performed like work, but the comparators retained higher pay through the Commission’s pay protection policy. The Employment Tribunal found indirect sex discrimination and rejected objective justification. The Employment Appeal Tribunal allowed the Commission’s appeal and dismissed the claims under UKEAT/0123/10/LA. The Court of Appeal considered whether the Employment Tribunal had made an error of law in finding prima facie indirect discrimination and, if so, whether the Employment Appeal Tribunal was entitled to uphold the justification defence and substitute its own decision.

1. Indirect discrimination. All three judges agreed that the Employment Tribunal had not erred in law in finding prima facie indirect sex discrimination. The pay difference alone was insufficient, but the Tribunal was entitled to rely on the combination of role amalgamation, pay protection, the substantial disparity, stark and non-fortuitous gender statistics, and the fact that the lower-paid predecessor role had been performed exclusively by women. Equal application of the pay protection policy, and the benefit of protecting the claimants from a pay reduction, did not answer the question of comparative disadvantage. The absence of historic discrimination before the roles became like work was irrelevant to the post-restructuring claim.
2. Objective justification. The structured approach described in [2012] UKSC 15 and [2006] EWCA Civ 1293 required assessment of a real and legitimate aim, appropriate means, reasonable necessity, and less discriminatory alternatives. The judges agreed that the Employment Tribunal had asked the wrong questions and that the Employment Appeal Tribunal was entitled to interfere. The majority held that protecting employees from pay reductions during restructuring, and retaining their skills and experience, were legitimate aims. Alternatives had to achieve those same aims, not merely eliminate the disparity.
3. Disposition. Lewison LJ and Sir Mark Waller held that the Employment Appeal Tribunal was entitled to substitute its own conclusion. The alternatives identified by the Employment Tribunal were legally flawed, no further fact-finding was required, and remission was a last resort. The appeal was therefore dismissed. Mummery LJ would have set aside the Employment Appeal Tribunal’s order and remitted objective justification to the same Employment Tribunal because of flaws in the Employment Appeal Tribunal’s approach.

• Court of Appeal (Civil Division) dismissed the appeal by majority: [2012] EWCA Civ 1621.
• Employment Appeal Tribunal allowed the Audit Commission’s appeal and dismissed the claims: UKEAT/0123/10/LA.
• Employment Tribunal found indirect sex discrimination and rejected objective justification.