St Helens Metropolitan Borough Council v Arnold & Ors

A COT3 must be construed objectively as a whole and against the relevant background. A settlement of equal pay claims up to the payment date does not necessarily compromise the continuing element of an equal pay claim.

Where COT3 terms stay existing proceedings or prohibit new proceedings pending implementation of Single Status, the restraint ends automatically when Single Status is implemented. A contractual mechanism permitting an earlier lifting of the restraint if equality issues are not addressed does not make the restraint perpetual or require a further application after implementation.

The failure of a material-factor defence concerning post-implementation pay protection was not itself a basis for lifting the earlier restraint.

Women employed by the Council brought equal pay claims concerning bonus payments received by male comparators. The Council relied, among other matters, on COT3 agreements made in 1999 and 2000, which settled claims up to the payment dates and restricted claims relating to subsequent periods pending Single Status and job evaluation.

The Employment Tribunal held that the claimants could pursue claims for the period up to implementation of Single Status because the Council had failed to establish a genuine material factor defence. It also directed further argument and possible evidence on estoppel by convention.

By consent during the appeal, the Tribunal’s rejection of the material-factor defence was set aside for inadequate reasons on proportionality and remitted to a fresh Tribunal. The remaining issues were the proper construction of the COT3s and the consequential estoppel direction.

1. The COT3 appeal was dismissed. The Employment Tribunal reached the correct result that the claimants were not precluded from bringing equal pay claims for the period between the COT3s and 1 November 2004, but for the wrong reason.

2. Applying the objective approach to contractual construction in Investors Compensation Scheme and BCCI v Ali, the 1999 COT3 settled only claims up to payment. Equal pay claims also have a continuing element because a successful claim affects future contractual pay. The reference to the stay of the “remaining proceedings” therefore covered the continuing part of existing proceedings, not only proceedings begun after the COT3.

3. Paragraphs 2 and 3 of the 1999 COT3, read together, made the stay temporary. It ended automatically on implementation of Single Status, which occurred on 1 November 2004. Paragraph 3(a) allowed an earlier lifting if equality issues were not addressed; it did not make that condition necessary to end the stay at implementation.

4. The 2000 COT3 similarly prevented the presentation of new claims only until the grading reviews and job evaluation contemplated by the agreement had been considered. That prohibition also ended on implementation of Single Status. The Tribunal erred in treating the failure of a material-factor defence for unequal pay after November 2004 as a basis for lifting either restraint.

5. The estoppel-by-convention issue depended on that erroneous basis. Since the restraints had expired by their own terms, the issue was academic and the direction for further submissions and evidence was set aside.

6. Under the consent order of 17 July 2014, the material-factor decision was set aside and remitted to a differently constituted Tribunal for rehearing on proportionality.

• Employment Appeal Tribunal: The appeal against the COT3 ruling was dismissed on different reasoning. The estoppel-by-convention direction was set aside. By consent, the material-factor decision was set aside and remitted to a fresh Employment Tribunal.

• Employment Tribunal: In a judgment sent on 22 October 2012, the Tribunal held that the COT3s did not preclude the claims because the Council had failed to establish its material-factor defence, and directed further consideration of estoppel by convention.