The Court of Appeal has handed down its judgment in the combined appeals in the long-running equal pay disputes of Redcar and Cleveland Borough Council v Bainbridge and Others and Surtees and others –v- Middlesbrough Borough Council.

Although the appeals addressed a number of issues, at the crux of both was the question of whether pay protection schemes, negotiated by the councils as part of the implementation of new pay and grading systems, discriminated against women. The new systems were designed to implement the "Single Status Agreement", a national collective agreement concluded in 1997. The agreement brought former "blue collar" and "white collar" workers on to the same pay scale and required councils to re-evaluate their jobs and review pay and grading.

The background

Middlesbrough and Redcar, like many authorities, introduced pay protection schemes to cushion employees, predominantly those in male dominated roles like refuse collection and street cleansing, against the effect of a sudden drop in pay brought about by the new pay structure.

The female claimants, mainly care and catering workers, contended that they had been unlawfully excluded from the scheme. The only reason, they claimed, that they were not receiving the same pay as the men at the point of the changeover, and were therefore unable to benefit from the schemes, was because the councils had not yet equalised their pay. The claimants argued that this was contrary to equal pay legislation. The Court of Appeal agreed.

The Redcar claimants had previously succeeded in both the Employment Tribunal (ET) and the Employment Appeals Tribunal (EAT) in showing that the exclusion of the female claimants from the pay protection scheme was essentially a perpetuation of historical discrimination and had not been shown to be justified.

In contrast, however, the EAT in Middlesbrough had decided on similar although not identical facts that a decision to limit the pay protection scheme to the predominantly male employees was justified. However, it accepted that it was legitimate to prioritise the male dominated group who would otherwise be cash losers where there were insufficient funds to provide pay protection to all who might, theoretically, be entitled to it.

The decision

The Court of Appeal has now found that the tribunals in both cases were fully entitled to reject the Council's arguments that their actions were justified in circumstances where there was no evidence that they had applied their minds to the problem or made attempts to reduce the discrimination. Essentially, they had not considered what it might cost to include the women in the pay protection proposals. In the case of Middlesbrough, the court said that the EAT had been wrong to interfere with the EAT's decision, which was one based on fact.

Importantly, however, the Court accepted that a large public employer might still be able to justify its actions in cases such as these by showing a need to cushion the men's pay reduction ahead of the need to bring women in line with the men. However, the key will be proving that what it has done was objectively justified in the individual case. It was satisfied that the councils in these cases had been unable to do just this before the earlier courts.

While this decision does not close the door to pay protection schemes, it strongly reinforces the need for employers who are considering pay protection proposals to fully explore and cost the available options to ensure that their aims are legitimate. Employers also need to ensure that the proposed solution is the most proportionate (and least discriminatory) way of achieving those aims and, crucially, that their analysis will stand up to scrutiny by the tribunals.