BMC Software Ltd v Shaikh

The Court of Appeal considered whether the Employment Tribunal had given adequate reasons for rejecting the employer's material factor defence to an equal pay claim under the Equality Act 2010. The Tribunal had accepted that the claimant was doing equal work within the meaning of section 65 and therefore the employer bore the burden of proving a non-discriminatory "material factor" under section 69. The Tribunal rejected three pleaded factors (a comparator's promotion, market/recruitment forces concerning the other comparator, and "merit adjustments") on the basis that the employer had not particularised or evidenced how those factors operated; the Court of Appeal held that those conclusions were adequately reasoned and allowed the claimant's cross-appeal, so that the employer's challenge to the adequacy of reasons failed. The Court also held that the Employment Appeal Tribunal's order remitting the case to the Employment Tribunal to state its reasons was wrong in principle.

This is an appeal from an Employment Appeal Tribunal decision dealing with the sufficiency of reasons given by an Employment Tribunal in an equal pay claim. The claimant, employed by BMC from June 2004 to September 2014, alleged unequal pay in relation to two male comparators. The Employment Tribunal (Reading) found that the claimant and the comparators did equal work under section 65 of the Equality Act 2010 and rejected the employer's material factor defence under section 69, concluding the employer had not discharged the burden of proof.

Procedural history:

• The Employment Tribunal's reserved judgment was issued on 30 October 2015.
• BMC appealed to the Employment Appeal Tribunal; HHJ Hand QC handed down judgment on 9 August 2017, allowing the appeal on the ground that the Tribunal's reasons were inadequate and remitting the matter to the same Employment Tribunal to state reasons.
• Permission to appeal to the Court of Appeal was granted and the claimant obtained permission to cross-appeal on the point of adequacy of reasons.

Nature of the claim and relief sought: the claimant sought equal pay and other reliefs; the Court of Appeal's consideration was confined to whether the Employment Tribunal had given adequate reasons for rejecting the employer's material factor defence to the equal pay claim and whether the EAT's remedial order was appropriate.

Issues framed by the court:

• Whether the Employment Tribunal's reasons for rejecting each pleaded material factor (promotion, recruitment/market forces, and merit adjustments) were adequate.
• Whether, having found reasons inadequate, the EAT was correct to remit the case to the same Employment Tribunal to state those reasons.

Court's reasoning and disposition:

• The Court analysed the Tribunal's detailed factual findings about the employer's opaque pay systems and lack of particularity or documentary evidence supporting the pleaded factors. It concluded the Tribunal had given adequate reasons by identifying specific evidential lacunae and explaining why those lacunae meant the employer had not discharged its burden under section 69.
• The Court therefore allowed the claimant's cross-appeal, making the employer's appeal unnecessary. The Court additionally observed that the EAT's order remitting to the same tribunal to "state" reasons was an impermissible hybrid order; if an appeal is allowed the proper remedy is remittal for a fresh decision rather than an order that the original tribunal supply reasons for its earlier decision.

The cross-appeal by the claimant was allowed. The Court of Appeal held that the Employment Tribunal had given adequate reasons for rejecting the employer's material factor defence under section 69 of the Equality Act 2010 because it identified specific evidential deficiencies and explained why those deficiencies prevented the employer from discharging the burden of proof. The Court further held that the Employment Appeal Tribunal's order requiring the Employment Tribunal to "state" its reasons was wrong in principle.

Employment Tribunal (Reading) reserved judgment 30 October 2015 (claimant succeeded on equal pay issue); Employment Appeal Tribunal (HHJ Hand QC) judgment 9 August 2017 allowing the appeal on ground 1 and remitting to the Employment Tribunal to state reasons; permission to appeal to the Court of Appeal granted 23 March 2018; Respondent's Notice and permission to cross-appeal granted 5 July 2018; Court of Appeal hearing on 1 February 2019 and judgment delivered 5 March 2019 ([2019] EWCA Civ 267).