The Supreme Court has confirmed that employees may bring equal pay claims in the civil courts, even where they would be out of time to bring those claims in the Employment Tribunal. The effect of this is to allow former employees to bring equal pay claims up to 6 years after the relevant breach occurred.
The Equal Pay Act 1970 (and now the Equality Act 2010) is intended to provide equality of pay and other contractual terms between men and women who carry out equal work. Unlike other types of discrimination legislation, it operates by implying an "equality clause" into all contracts of employment which gives employees a contractual right to equal pay. Unlike any other type of discrimination, a breach of the equal pay right is effectively a breach of contract.
Typically, equal pay claims are brought in the Employment Tribunal, where the time limit for bringing that claim is, in broad terms, 6 months after termination of the relevant employment relationship. However, general breach of contract claims can be brought in the civil courts, up to 6 years after the relevant breach occurs (5 in Scotland). Unlike the Employment Tribunal where each party usually covers its own legal costs, win or lose, in the civil courts the successful party is usually entitled to recover a proportion of its legal costs from the losing party.
The Equal Pay Act (and the Equality Act) anticipates that claims for breach of the equality clause might be brought in the civil courts, and expressly confers power on civil courts to strike out such claims where they consider that the claim "could more conveniently be disposed of separately by an employment tribunal…". The issue in this case was whether a claim should be struck out on this basis, where the claims would have been out of time in the Tribunal.
Birmingham City Council -v- Abdulla & Others
The Claimants were a group of ex-employees who had all left Birmingham City Council more than 6 months before bringing their claims. They were therefore unable to bring those claims in the Employment Tribunal. Instead, the Claimants brought claims in the High Court, relying on the 6-year limitation period for breach of contract claims.
The Council applied to have the High Court strike out the claims. They argued that the claims could be disposed of "more conveniently" by the employment tribunal, even though they would be out of time in the Tribunal, and would not be permitted to proceed there. They argued that the issue of "convenience" involved considering whether there was a sufficiently compelling reason why each of the claimants could not have brought her claim in the Tribunal within the 6-month time limit.
The High Court rejected that application, holding that the claims could not be "more conveniently dealt with" in the Employment Tribunal, since they would not be allowed to proceed there. The Court of Appeal upheld that decision. The Council appealed to the Supreme Court.
The Supreme Court upheld the decision of the Court of Appeal, by a majority of three judges to two. The majority agreed that it could not be "more convenient" to dispose of the claims in the Tribunal, since that would deprive the employees of the ability to pursue their claim. The claims could still be struck out if it was clear that the employees had decided to bring claims in the civil courts so as to gain some unfair advantage that represented an abuse of process. However, such circumstances would be rare. The majority also indicated that the reasons why the employees did not bring claims in the 6-month time limit in the Tribunal were not relevant to the issue of "convenience". However, those reasons may be relevant to the level of costs the court awards to the successful party.
The impact of this decision on Birmingham City Council has been well-publicised; it has announced that liability for these claims and others relying on them will exceed £750m. However, the legal impact extends beyond the Council to all respondents to equal pay claims. It effectively allows claimants to bring equal pay claims up to 6 years after they have left employment. It also gives them a free choice as to whether to bring claims in the Tribunal (where they will not recover their legal costs) or in the civil courts (where they can recover a proportion of their legal costs if they win, but will have to pay a proportion of the respondent's costs if they lose).
In practice, the potential that the employee to be ordered to pay the employer's legal costs if her claim is unsuccessful will dissuade many employees from bringing equal pay claims in the civil courts. However, for those who consider they have strong claims (perhaps because a colleague has already succeeded in a similar claim) the costs issue may be a positive incentive to bring claims in the civil courts. The Supreme Court appeared to acknowledge this, and suggested that Parliament consider extending the time limit in the Tribunals to match that in the civil courts. However, unless and until that happens, or Parliament restricts the civil courts' ability to hear equal pay claims, there remains a risk that employers may face claims long after the 6-month Tribunal time limit has expired, in a court where adverse costs awards are the norm.