Landmark ruling on equal pay 'could cost councils and NHS millions'
Published by Jon Land for 24dash.com in Communities and also in Central Government, Health, Local Government
Landmark ruling on equal pay 'could cost councils and NHS millions
A landmark ruling today over equality for low-paid women could cost local authorities and the NHS millions of pounds.
The critical equal pay test cases at the Court of Appeal resulted in a judgment that pay protection schemes which perpetuate sex discrimination were unlawful.
This paves the way for thousands of pay claims to be launched in Employment Tribunals throughout the country, principally against local authorities and NHS trusts.
But the three judges who heard the cases said the effect of the ruling extended beyond the public sector and was likely to affect the way in which employers, employees and trade unions approach equal pay, job evaluation and changes to pay and grading.
Lord Justice Mummery, who delivered the ruling today, refused permission to take the issues to the House of Lords but said he understood the public importance of the case and the financial consequences of the findings.
"The sums involved in the proceedings are very large indeed," he said, allowing the parties extra time to lodge petitions for appeals at the highest court in the land.
The cases were heard by the Court of Appeal between January 15 and January 23 this year and concerned two separate groups of female claimants - among them cleaners and school crossing patrol staff - employed by two councils in the North East.
Speaking after the ruling, equal pay specialist, Cloisters' barrister Rachel Crasnow, said: "The court's ruling, that discriminatory pay protection is unlawful, could pave the way for thousands of new equal pay claims against local authorities and the NHS. This would be in addition to the thousands of equal pay claims which are already in the system.
"At the root of these cases was a question about pay protection. Pay protection has been a popular mechanism in pay negotiations over recent years after a new regime of terms and conditions called the Green Book was introduced for local authority workers in 1997."
She said the new terms removed some of the attractive bonus schemes under the previous regime which were mainly paid to male groups of workers.
"Pay protection - a process whereby the losers' pay was tapered downward on a sliding scale year on year for a set period - was used as a means of selling the removal of attractive bonuses and was designed to act as a 'soft landing' for workers whose pay was being decreased."
"But this form of pay protection actually reinforced the pre-existing sex discrimination in the workplace because it meant that male employees were in effect receiving the same discriminatory bonuses just under a different label. In essence, the women were being discriminated against again."
The employees argued that pay protection was not wrong - but they should also have benefit from it.
Had they been paid what they should have been under the original pay regime they too would have suffered a loss of income under the Green Book and would have been entitled to pay protection.
Redcar & Cleveland and Middlesbrough Councils argued unsuccessfully that they should be allowed to provide pay protection to their male employees regardless of the discriminatory background to the payments.
The women had won at an Employment Tribunal where it was held that they were entitled to pay protection too.
But the cases went to the Employment Appeal Tribunal where the Redcar women won but the Middlesbrough women lost.
Lord Justice Mummery said the cases involved "the most complicated employment issues ever to be heard by this court".
"The court's ruling on this issue has the greatest possible significance to all concerned... and the sums involved in the proceedings are very large indeed."
The judges found for the women workers on all issues except retroactive payments.
Lord Justice Mummery said it was apparent that the Employment Appeal Tribunal (EAT) had been sympathetic to Middlesbrough, recognising that employers, especially in local government, will have a limited budget.
He said the EAT had accepted the argument that the employer will always be entitled to say that it must continue to discriminate against women for a few more years because it cannot afford to bring them into line with the men.
"We find that a very surprising and undesirable general conclusion.
"We accept that a large public employer might be able to demonstrate that the constraints on its finances were so pressing that it could not do other than it did and that it was justified in putting the need to cushion the men's pay reduction ahead of the need to bring the women up to parity with the men. But we do not accept that that result should be a foregone conclusion."
He added: "If the general rule suggested by the EAT were to apply, employers would be able to allow their pay structures to fall out of compliance with the law and then, when forced to do something about it as the result of claims being brought, would be able to assert that they could legitimately take a further three to four years to bring their pay structures into compliance."
This would not be consistent with the terms of the Equal Pay Act 1970, he said.
John Wadham, legal director at the Equality and Human Rights Commission, said: "The quagmire of equal pay in local government needs to be ended now, and the thousands of women involved deserve
money in their pockets now, not in another 10 years' time.
"There is no simple solution, but it may not always be possible to deliver change overnight. Practical and fair transitional arrangements are necessary but it is right that we set a strict test for when these arrangements can be justified.
"Without them, employers may simply turn a blind eye to the problem until forced by a slow and overburdened legal system to deliver. Litigation is not enough. We need other tools to deliver change, including negotiated settlements."
Redcar and Cleveland Council leader George Dunning said: "We are pleased that two of the four important issues being considered have been decided in our favour but, obviously, we are disappointed with the judgment on the remaining points of appeal.
"The fact that the judgment runs to 150 pages demonstrates both the importance and complexity of the matters being decided and we will now be taking some time to consider our position in conjunction with our legal team."
The number of equal pay claims lodged in tribunals have spiralled in the last year, largely driven by cases brought by women working in local government.
Figures from the tribunals service showed a 155% increase over the past year, with claims now topping 44,000.