BMC Software Ltd v Shaikh

In an equal pay claim, an employer relying on a material factor defence must prove, with sufficiently cogent and particularised evidence, that the factor explains the pay difference. It is unnecessary to find that the employer’s explanation was a deliberate sham or otherwise disingenuous. The tribunal must identify the evidential defects preventing it from being satisfied that the factor caused the disparity. An order remitting a case merely for further reasons is appropriate during the Burns/Barke procedure, but not as the final disposal of an appeal after inadequate reasons have been found. The proper final order is remittal for a fresh decision.

An employee brought an equal pay claim under the Equality Act 2010, alleging that two male comparators received higher basic salaries despite doing equal work. The employer relied on promotion, recruitment or transfer circumstances, and merit adjustments as material factors under section 69.

The Employment Tribunal rejected each defence and directed a remedy hearing. The Employment Appeal Tribunal held that the Tribunal had not adequately explained its rejection of the material factor defence and ordered it to state further reasons, while dismissing a perversity ground. The employee cross-appealed against that finding. The central issue was whether the Employment Tribunal’s reasons were adequate and whether the EAT’s order was permissible.

1. Cross-appeal allowed. The Employment Tribunal’s reasons were sufficient. Its conclusions at paragraphs 73, 77 and 80 were explained by the immediately preceding reasoning and by its wider findings, particularly those concerning BMC’s incoherent and non-transparent employment systems.
2. For the purposes of section 69(1) of the Equality Act 2010, the employer bears the burden of proving that the pleaded factor caused the pay disparity and was material. It must provide a particularised explanation and sufficiently cogent evidence showing what the factor meant, how it was assessed, and how it applied to the circumstances of the case. General assertions, unexplained records and chronology alone may be insufficient.
3. A finding that an explanation is not “genuine” is not required. The tribunal need not conclude that the explanation was a deliberate sham or disingenuous. It is enough to decide that the employer has not proved that the disparity was due to the pleaded factor, and to explain the defects in the evidence and reasoning advanced.
4. The Court also stated that an employer relying on promotion, merit, market forces or similar factors must explain with particularity what those factors mean, how they were assessed and how they apply. This was an additional observation on the correctness of the Tribunal’s reasoning, which was strictly unnecessary to the reasons challenge.
5. The Court further stated, obiter, that a remittal for further reasons may be used during the Burns/Barke procedure while an appeal remains under determination. Once an appeal has been finally allowed for inadequate reasons, the proper final order is remittal for a fresh decision. One tribunal cannot provide reasons for another tribunal’s decision. The employer’s appeal fell away after the cross-appeal succeeded.

1. Court of Appeal (Civil Division) — [2019] EWCA Civ 267. The employee’s cross-appeal was allowed. The employer’s appeal fell away and was not argued in full.
2. Employment Appeal Tribunal — judgment dated 9 August 2017. The appeal was allowed on the reasons ground and remitted to the same Employment Tribunal to state further reasons, while the perversity ground was dismissed.
3. Employment Tribunal — the employee succeeded on the equal pay claim. The Tribunal rejected the employer’s three material factor defences and directed a remedy hearing.