Two recent EAT decisions have clarified the issues of who are permissible comparators and when length of service criteria must be justified in relation to equal pay claims.
In North Cumbria Acute Hospitals NHS Trust v Potter & others, the EAT has held that section 1(6) of the Equal Pay Act does not require there to be a "single source" of pay inequality in order for employees to bring claims under the Act, where the claimants seek to compare themselves to employees at a different establishment where "common terms and conditions" are observed. Such a requirement would place an additional hurdle for female workers to overcome and would make it impossible for a significant number of them in the public sector to bring equal pay claims.
In any event, the EAT found that there was in fact a "single source" for the inequalities alleged by the claimants. Although the terms and conditions of the female claimants and their male comparators were the result of different sets of collective bargaining arrangements (Whitley Councils), the Trust itself was responsible for instigating, negotiating and agreeing terms and conditions with the unions. By its actions (in particular the harmonisation of terms and conditions following the merger of a number of different NHS bodies to form the Trust) it had demonstrated that it was the body that had the power and capacity to put right the inequalities in pay.
Impact on employers
This decision is primarily of interest to public sector employers, particularly sectors such as the NHS where, historically, separate collective bargaining arrangements have been used to set pay for female and male dominated jobs. However, private sector employers should also take note that the fact that terms and conditions of employment are governed by more than one collective agreement will not prevent their employees having common terms and conditions for the purposes of the Equal Pay Act.
Justification of length of service criteria
In the case of Wilson v Health and Safety Executive, the EAT has considered when an employer will be required to justify a length of service pay criterion in order to avoid liability for unequal pay.
Previously, in the case of Cadman v HSE, the European Court of Justice has held that where pay inequality results from the application of a length of service criterion, an employer will only have to justify the use of the criterion if the claimant can provide evidence capable of raising "serious doubts" that the criterion is appropriate.
The HSE operated an incremental pay scheme linking pay to length of service over a ten-year period. The Employment Tribunal rejected Mrs Wilson's claim for equal pay with three longer serving colleagues on the basis that the "serious doubts" test applied only to the nature of the job in question, not whether the length of time over which it applied was appropriate. The EAT overturned this decision and has sent the case back to the Tribunal to determine whether the claimant can provide evidence raising "serious doubts" that the ten-year length of service criterion was appropriate.
Impact on employers
In reaching its decision, the EAT suggested that the hurdle for the claimant to overcome in raising "serious doubts" is a high one. A tribunal has to be satisfied that "there is a real reason to suspect that the employer has stepped beyond the margins which can properly be afforded to employers when considering whether added experience typically improves job performance". However employers with long-term incremental pay schemes should consider whether they genuinely reflect experience- related performance improvement. If not they may be subject to challenge not only under the Equal Pay Act, but also the Age Discrimination Regulations.