Birmingham City Council v Abdulla
This week The Supreme Court handed down a landmark ruling in relation to equal pay claims brought by former employees of Birmingham City Council in the High Court (rather than, as would be the norm, in the Employment Tribunals). This judgement is likely to have far reaching consequences for cash strapped councils and other employers throughout the country, particularly, but by no means exclusively, in the public sector.
The case centred on alleged historic unequal pay treatment of female council employees in comparison to their male counterparts.
Lawyers for the 174 claimants argued the pay disparity was in contravention of equal pay legislation and that female workers were denied bonuses that were given to their male colleagues in what were traditionally regarded as male dominated jobs such as road workers, refuse collectors etc.
Lawyers for the Council argued that consideration should be given to the claims being struck out. In most cases, equal pay claims issued in the Employment Tribunal have to be made within the period of 6 months beginning with the last day of employment. For breach of contract claims brought in the Civil Courts (the basis on which these claims were being pursued), there is a 6 year limitation period. In essence, the Council argued that the High Court should strike out the claims, unless the Claimants could show "good reason" why the claims were not submitted within the 6 month time limit which applies in the Employment Tribunals. The High Court and later the Court of Appeal found in favour of the Claimants. The Council took the case to the Supreme Court but lost last week after a 3-2 judgment in favour of the Claimants.
Three of the judges ruled that claims of this kind could be pursued in the Civil Courts even if they had been brought outside the 6 month time limit. In practical terms, the ruling establishes a 6 year limitation period for all equal pay claims.
Where does this leave councils and other employers now?
Given that this appeal involved some 174 claims with thousands of other claims awaiting the outcome, the decision could potentially open the floodgates to a barrage of claims against councils, the NHS and other employers (including, for example, private sector employers who have "inherited" employees from the public sector under TUPE) who thought that their exposure to equal pay liability had ended a long time ago or that they had made appropriate financial provision for liabilities yet to be determined or settled.
This also, potentially, has additional financial implications as it is the norm for an award of costs to be made against the losing party in the Civil Courts whereas costs are only awarded in very limited situations in the Employment Tribunals. There was, however, some comfort for employers in this regard in the Supreme Court decision. The judgement suggests that the fact that a claim could have been pursued in the Employment Tribunals may well be a strong factor pointing a Civil Court towards reaching the same decision on costs that would have been reached in the Employment Tribunals – in the vast majority of cases, no award of costs.
Councils and other employers may therefore need to revisit the possibility of claims being brought within the 6 year window and consider how best to manage and prepare for any potential exposure. In many cases which have been settled on a commercial basis by employers, it is hoped that the settlement documentation (ACAS COT3s etc.)will cover the additional liability but this will depend on the drafting used.
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