In a decision which could have far reaching consequences the Supreme Court has dismissed an appeal by Birmingham City Council (“Council”). Such a decision provides a further sense of unease to employers who could be faced with a huge unknown financial burden.
Former employers of the Council brought equal pay claims after discovering that their ex-colleagues had received compensation payment from Council over equal pay. By the time the Claimants had discovered these payments they were out of time to bring their claims in the Employment Tribunal (“Tribunal”) and so they brought their claims in the Civil Court. A Claimant normally only has six months from their termination date to bring a claim in the Tribunal but they have six years to bring it in the Civil Courts. The Council applied to have their claim struck out under section 2(3) of the Equal Pay Act (“EPA”) (now found on the Equality Act) on the grounds that the Tribunal would be better placed to deal with these claims. The outcome being that if the claims were sent back to the Tribunal they would be struck out.
Section 2(3) of the (“EPA”) allows a claim to be struck out by the Civil Courts if the claim can be more conveniently disposed of by a Tribunal. Equal pay between men and women is now provided for in the Equality Act 2010. If a woman’s employment contract is on less favourable terms even though she does the same role and is in the same employment then statute implies a term of equality into the contract so that the relevant clauses are brought into line with equality.
The High Court refused to strike the claims out and this decision was upheld by the Court of Appeal who dismissed the Council’s appeal. Both agreed that the wording of section 2(3) of the EPA in particular the meaning of “more conveniently” could not mean, that in this situation, it would be more convenient for the Tribunal to hear the claim.
The Supreme Court by a majority again dismissed the Council’s appeal. This case could not be “more conveniently disposed of” by the Tribunal as they would strike out the claims on the grounds of them being out of time. This cannot be seen to be convenient. It was also held that as Parliament allows Claimants to bring their claims in the Civil Courts then this is why it is not possible to extend the time limit for bringing a claiming the Tribunal. The Supreme Court also noted that the reasons for bringing the claim in the Civil Courts should not taken into account when considering whether to strike out. Section 2(3) does not provide that the Court can strike out a claim because of the Claimant’s behaviour. That is something that should be considered when looking at costs.
This ruling is very much dependent on the facts and is one which allowed the Claimants to continue with their claim and seek compensation. Had the Courts decided in favour of the Council then the Claimants’ claim would have come to an end. It is feared this outcome may lead to an influx of equal pay claims in the Civil Courts and employers who are already struggling financially may find that these claims bring them to brink bankruptcy. However people should note that there are different rules when it comes to costs in the Civil Courts. In the Tribunal the general rule is that each party bears their own costs and costs awards are very rare. In the Civil Courts, the general rule is the loser pays the winner’s costs. Therefore an unsuccessful claim could end up being very costly indeed for the Claimant especially if their claim is one without merit.
It also highlights the importance of employers treating sexes equally as even past failures can come back to haunt them. Therefore potential liabilities could be huge. When buying a business due diligence in respect of Equal Pay claims will need to go back 6 years. Claims cost a considerable amount not only in monetary terms but also in terms of manpower and using company resources, when such resources should be spent on the business.