(1)The sex equality clause in A's terms has no effect in relation to a difference between A's terms and B's terms if the responsible person shows that the difference is because of a material factor reliance on which—
(a)does not involve treating A less favourably because of A's sex than the responsible person treats B, and
(b)if the factor is within subsection (2), is a proportionate means of achieving a legitimate aim.
(2)A factor is within this subsection if A shows that, as a result of the factor, A and persons of the same sex doing work equal to A's are put at a particular disadvantage when compared with persons of the opposite sex doing work equal to A's.
(3)For the purposes of subsection (1), the long-term objective of reducing inequality between men's and women's terms of work is always to be regarded as a legitimate aim.
(4)A sex equality rule has no effect in relation to a difference between A and B in the effect of a relevant matter if the trustees or managers of the scheme in question show that the difference is because of a material factor which is not the difference of sex.
(5) “Relevant matter” has the meaning given in section 67.
(6)For the purposes of this section, a factor is not material unless it is a material difference between A's case and B's.
Cases considering section 69 25
[2020] EWCA Civ 1075 · 14 August 2020Limits
Interprets the material factor defence as requiring a genuine, causative and sex-unrelated factor which is significant and relevant to the difference between the cases. Objective justification is not required where the absence of sex discrimination is proved. (see paras [40]-[46]; [60]-[63])
Applies the operative defence to the sex equality clause. The employer had to show that the difference in pay was because of a material factor, rather than merely identify a factor which appeared to justify it. (see paras [20]; [40]-[46]; [60]-[63])
Confirms that the material factor must not involve treating the claimant less favourably because of sex. The court treated absence of sex discrimination as sufficient without requiring a separate good-reason justification. (see paras [20]; [40]; [60]-[63])
Limits the proportionality requirement to cases in which the factor falls within subsection (2). The court explained that objective justification becomes relevant where evidence of sex discrimination or disadvantage exists. (see para [40])
Limits the proportionality branch of the defence to a factor producing the specified disadvantage for the claimant and persons of the same sex. That branch was not required on the finding that the factors were untainted by sex. (see paras [20]; [40])
Defines materiality by requiring a significant and relevant difference between the claimant’s case and the comparator’s case. The court applied that causative and comparative approach to the pay factors. (see paras [20]; [40]-[46]; [60]-[63])
[2019] EWCA Civ 1112 · 3 July 2019Limits
The material factor defence applies where the pay difference is caused by an identified factor satisfying the statutory direct and indirect discrimination conditions. (see paras. [9]; [18])
The employer must show that the difference is because of a material factor. The court treated that burden as part of the statutory defence. (see paras. [9]; [18])
The factor must not involve treating the claimant less favourably because of sex. (see para. [9])
Where the factor creates particular disadvantage, the employer must show that it is a proportionate means of achieving a legitimate aim. (see paras. [9]; [18])
Particular disadvantage requires comparison of the protected and non-protected groups within the relevant pool, together with disadvantage to the individual claimant. In a continuum-pay case, actual average pay is the appropriate measure where available. (see paras. [14]-[20]; [61]-[75])
[2019] EWCA Civ 267 · 5 March 2019Interprets
The employer bears the burden under section 69 of proving that the pay difference was due to a material factor and was not attributable to sex. The judgment confirms that this requires a sufficiently particularised explanation supported by cogent evidence showing how the factor caused the disparity (see paras [2], [15], [18]-[19]).
Section 69(1) places on the employer the burden of proving the material factor defence. The Court held that the employer must prove, with particularised and sufficiently cogent evidence, that the pleaded factor explains the pay difference; a failure to prove that causal link is sufficient without a finding of sham or disingenuousness (see paras [15], [18]-[19]).
5 more judgments, and what each says about section 69, are in the
case-law panel in the full Act.
236.As a general rule, if the work of a worker and a comparator of the opposite sex is equal but their terms are not, the sex equality clause takes effect. Section 69 provides that neither a sex equality clause nor a sex equality rule will apply if the employer can show that the difference in terms is due to a material factor which is relevant and significant and does not directly or indirectly discriminate against the worker because of her sex.
237.If there is evidence that the factor which explains the difference in terms is not directly discriminatory but would have an adverse impact on people of her sex (that is, without more, it would be indirectly discriminatory), the employer must show that it is a proportionate means of meeting a legitimate aim or the sex equality clause will apply. For these purposes, the long-term objective of reducing pay inequality will always count as a legitimate aim.
238.Subsection (4) deals with the application of the material factor defence to occupational pension schemes.
239.The Equal Pay Act 1970 and Pensions Act 1995 made similar provision permitting employers and trustees to objectively justify differences to which an equality clause or rule would otherwise apply. This section draws those separate provisions into one section and clarifies the way in which they are to be applied. The reference in the previous legislation to a difference being “genuinely” due to a material factor has not been repeated in this section since the adverb added nothing to the meaning of the requirement, which is that the employer’s obligation is to show that the reason for the difference is genuine and not a sham. The section incorporates the effect of EU law in respect of objective justification of indirectly discriminatory factors.
240.The reference to an employer’s long-term objective of reducing pay inequality between men and women always being considered a legitimate aim is new.