The female claimant was promoted to the role of Chief Human Resources Officer in 2014.  The respondent was in financial difficulties yet the claimant amongst others were regarded as essential and offered enhanced salaries.   However, the claimant’s salary was lower than the others.    The following year a job evaluation study was conducted which showed that the claimant’s work was equivalent to the male members of the group or of equal value.

The claimant was dismissed in 2017 and she brought a claim relating to equal pay.  The respondent relied upon the ‘material factor’ defence contained in Section 69 of the Equality Act 2010 (Section 1(3) of the Equal Pay Act (NI) 1970).  The Tribunal accepted this on the basis the respondent outlined that the claimant was not required for the immediate survival of the company in 2014 and that she was only newly promoted.  The Tribunal also accepted arguments in relation to other members being more likely to leave the company and the market rate for the particular positions being different.   It is important to note that the Tribunal differentiated between the appointment date in 2014 and the job evaluation study conducted in 2015.  It was held that at the later date the claimant’s work had become important and the historical explanations given by the respondent were no longer material.   On appeal from the respondent, the EAT stated that the Tribunal erred in suggesting that the factors ceased to exist at some point between early 2014 and early 2015.   Accordingly, the material factors that existed in 2014 were seen to continue to exist until a further decision could be identified by the claimant. The claimant appealed this decision to the Court of Appeal.

The Court of Appeal rejected the claimant’s appeal stating that for each of the comparators that had been mentioned by the claimant there was at least one material factor that was valid.   There was no valid explanation given as to when these material factors would have diminished or ceased.    Males LJ, giving the judgment, observed that the Tribunal at first instance had failed to consider the proper process when dealing with an equal pay claim under the 2010 Act.     He stated that the starting point is for the claimant to show that their work is equal to the comparator.   It is only after that has been satisfied does the defence of ‘material factor’ come into play.   The suggestion that the work became ‘equal’ at some point between early 2014 and early 2015 left a lot to be desired.  This was on the basis that it did not show when the material factor would have to be considered as well as meaning that any remedy hearing (if applicable) would have led to a re-opening of the case to determine when the equal pay actually applied.  For this reason, the claimant’s appeal was dismissed and she failed in her equal pay claim.

Practical Lessons

The Court of Appeal have set out very clearly the process that they expect when there is an equal pay claim brought to the Tribunal.   There is clearly a first part where the claimant must demonstrate that their work is of equal value before the respondents will be expected to demonstrate any material factor defence.  The fluid approach adopted by the Tribunal here was not satisfactory and led to a lengthy series of appeals.   For this reason, respondents should be cognisant of why certain members of staff are actually paid different amounts and this should be taken into account when there are later reviews or job evaluations as was seen in this case.
https://www.bailii.org/ew/cases/EWCA/Civ/2020/1075.html