McNeil & Ors v HM Revenue & Customs

In an equal-pay claim concerning a contractual basic-pay term, the particular disadvantage required by section 69 of the Equality Act 2010 must concern lower basic pay. Differential distribution of women and men within a pay range may warrant investigation, but it does not alone establish that disadvantage. The evidence must show a sufficiently significant or consistent pattern of pay inequality caused by the material factor.

A claimant cannot divide an indivisible contractual basic-pay term into a notional variable-pay element. Once a particular disadvantage caused by a provision, criterion or practice is established, however, the claimant need not prove why that disadvantage is associated with the protected characteristic.

Female HMRC employees in Grades 6 and 7 claimed equal pay with higher-paid male comparators performing work rated as equivalent. The parties agreed that length of service was the material factor explaining differences in basic pay. The central issue was whether that factor put women at a particular disadvantage for the purposes of section 69 of the Equality Act 2010.

The London Central Employment Tribunal, Employment Judge Snelson sitting alone, dismissed the claimants’ statistical case. They had abandoned a case based on significant and persistent average-pay differences and instead relied on evidence that women clustered in the lower quartiles or deciles of the pay ranges. The claimants appealed. They also challenged the Tribunal’s approach to the Armstrong line of authority and HMRC contended that individual claimants had to establish an additional personal connection with the group disadvantage.

1. Appeal dismissed. The Employment Judge made no error of law or principle in rejecting the claimants’ case that distribution statistics alone established particular disadvantage. The claim was one concerning a less favourable contractual term as to basic pay under section 66(2)(a) of the Equality Act 2010. The relevant disadvantage under section 69 therefore had to be a disadvantage in basic pay, rather than an abstract disadvantage in relative position within a pay range.

2. Differential distribution of women and men across quartiles or deciles may indicate an apparent problem. It may justify investigation. It does not, without evidence that it reflects a sufficiently significant or patterned pay inequality, prove particular disadvantage in an equal-pay claim. Where the connection between the material factor and lower pay is not inherent, it must be proved by evidence.

3. The Tribunal was entitled to rely on the agreed evidence that average basic-pay differences were marginal, had reduced over time, and did not show a significant long-term difference between men and women in either grade. It had considered, rather than excluded, the distribution evidence. It was also entitled to accept the respondent’s statistical evidence that the claimants’ chi-square analysis was not a reliable substitute for analysis of actual pay.

4. The contractual term was basic pay. It was indivisible, although several factors explained its amount. A claimant cannot subdivide a single contractual term into a notional base element and a variable element attributed to length of service. Average total basic pay was therefore the relevant comparison.

5. The remaining issues were academic but were addressed. Following Essop/Naeem, any understanding of Armstrong which permits a respondent to defeat an established group disadvantage by showing that its underlying reason is unrelated to sex is no longer good law. A respondent may still challenge whether the statistics establish a significant disadvantage or causal connection. If length of service had caused women disproportionately to receive lower pay, each claimant would only have needed to show that it caused her the same disadvantage; no additional feature such as childcare-related shorter service was required.

• Employment Appeal Tribunal: appeal dismissed. The Tribunal upheld the London Central Employment Tribunal’s rejection of the claimants’ case that length of service caused a group disadvantage in basic pay.
• London Central Employment Tribunal: Employment Judge Snelson, sitting alone, gave reasons promulgated on 17 June 2016 following a preliminary hearing on the material factor and particular-disadvantage issues. The Tribunal found that length of service was the relevant factor and that the claimants had not established particular disadvantage.