Scottish Water v Lynne Edgar

For a material factor defence to an equal-pay claim under Equality Act 2010, the central question is whether the employer has proved the actual cause of the pay difference. Causation is assessed objectively. Identifying the individual pay decision-maker, or obtaining direct evidence of that person's thought process, may assist but is not essential.

The employer may establish causation through direct, circumstantial, or suitably informed second-hand evidence. Comparative evidence after a comparator's appointment may be relevant where it tends to prove a difference in skills and abilities at appointment or explains the continuing pay disparity.

The claimant and her male comparator were both employed as Corporate Affairs Officers within the same pay band. The comparator, an external recruit, started on a materially higher salary after the employer considered his skills, experience, potential and previous earnings.

At a preliminary hearing, the Employment Tribunal rejected the employer's material factor defence. It held that the employer had not proved who made the salary decision and treated later comparative evidence of the parties' skills and abilities as irrelevant.

The employer appealed to the Employment Appeal Tribunal, contending that those rulings misstated the requirements of a material factor defence under Equality Act 2010.

1. Appeal allowed. The Tribunal materially erred by treating proof of the identity of the pay decision-maker as essential to a material factor defence. The statutory question was whether the employer had proved the cause of the pay difference between claimant and comparator.

2. Causation for this purpose is objective. Evidence of what was in a decision-maker's mind may be helpful, but a defence does not fail merely because the decision-maker cannot be identified or because there is no direct evidence from that person. The employer may rely on circumstantial evidence or evidence from a suitably knowledgeable witness, subject to its weight. This approach accorded with Glasgow City Council v Marshall, [2000] IRLR 272, and Skills Development Scotland Co Ltd v Buchanan, UKEATS/0042/10/BI.

3. The Tribunal had wrongly focused on the identity and timing of a decision instead of the reason for the pay disparity. In doing so, it failed to engage with material evidence and findings bearing on whether the comparator's skills, experience, ability, potential and prior salary caused the higher starting salary.

4. The Tribunal also erred by excluding evidence about the parties' comparative skills and abilities after the comparator's appointment. Such evidence could be relevant both to the difference at appointment and to the continuing disparity. Excluding it hindered the employer's attempt to discharge its burden.

5. Paragraphs (2) and (3) of the Tribunal's judgment were set aside. The preliminary issue of the material factor defence was remitted to a differently constituted Tribunal, which must hear evidence afresh and make independent findings. The bias ground consequently fell away.

Observation: Tribunal reasons should explain the decision clearly and concisely. The reasons in this case were unnecessarily long, unclear in places, and internally inconsistent.

• Employment Appeal Tribunal: Allowed the employer's appeal in [2024] EAT 32, set aside the material-factor rulings, and remitted the preliminary issue to a differently constituted Tribunal.

• Employment Tribunal, Glasgow: By a judgment dated 8 February 2023, rejected the employer's material factor defence at an open preliminary hearing. No citation is stated in the judgment.