UK: Equal Pay: GMB v Allen And Redcar v Bainbridge: Everyone´s A Loser

Last Updated: 9 October 2008
Article by Catriona J. Aldridge

Recent press coverage has indicated that, as a consequence of the credit crunch, there are signs of unions reverting to a 1970s style of industrial relations, with strike action bringing parts of the country to a standstill on a regular basis over the last few months and more unrest on the horizon. Will the recent Court of Appeal decisions in GMB & ors v Allen and Redcar & Cleveland BC v Bainbridge prove to be a further nail in the coffin of the collaborative approach assumed by many unions and employers in the 21st century?

Redcar & Cleveland Borough Council v Bainbridge: The Facts

In the Redcar case the Court of Appeal considered the Council's policy of implementing a pay protection scheme as it moved towards its ultimate goal of equal pay. Under the pay protection scheme, following implementation of its job evaluation scheme ("JES"), the Council red circled male employees for a certain period and continued to pay them their pre-JES rates, despite the fact that under the JES their jobs had been evaluated at a lower pay rate. The purpose of doing so was to preserve industrial relations, given that many of the male employees would have made plans based on their pre-JES salaries and to deprive them of this with limited warning would cause employee unrest.

A number of female employees brought claims under the Equal Pay Act 1970, claiming that they had been excluded from pay protection because their pay prior to implementation of the JES had been unlawfully low due to the unequal pay practices from which men had previously benefitted.

The Decision

In a long and complicated judgement the Court of Appeal decided that pay protection is discriminatory because the underlying reason for it is historical sex discrimination. In other words the reason why the males required pay protection is that they had historically been paid more (through unjustified bonuses, allowances etc), which in itself was sex discrimination and the pay protection was effectively continuing that discrimination.

The Court did go on to say that there may be some cases where an employer could objectively justify pay protection. In order to do so the employer would have to show that the pay protection scheme had been "carefully crafted and costed and negotiated for the purpose of cushioning the effects of a drop in pay and without reason to suppose when it is implemented that it would have discriminatory effects". The circumstances in which these requirements could be met are limited although they do give employers some room for manoeuvre.

The Impact

Until now, it is has been necessary for local authorities to use pay protection schemes to gain agreement in their negotiations with the unions over the implementation of their JES and new terms and conditions. Employers now find themselves between a rock and a hard place. To preserve industrial relations they and the unions may want to press ahead with pay protection schemes on much the same basis as before. In order to facilitate this, the unions may agree not to bring claims. But what is to stop employees seeking alternative representation? And in light of the decision in GMB v Allen (discussed below) how willing will the unions be to take this pragmatic stance? Unfortunately, the answer, in light of the large compensation bills currently being faced by GMB, Unison and Unite, is that they are much less likely to be inclined to do so than before.

Alternatively, employers could consider "buying out" the pay protection payments (i.e. rolling up the payments which the male employees would have received during the pay protection period and paying them up front). In doing so it would be advisable to get the employees to sign compromise agreements. Hopefully, such an approach would not allow female employees to bring "piggy back" claims, since the buy out payments could be arranged in such a way so as not to be contractual (therefore falling outwith the scope of the Equal Pay Act 1970).

So, employers are left to either forge ahead with pay protection, in whatever form they choose, with the hope of being able to rely on the, now narrowly defined, objective justification defence or must choose to abandon pay protection and face the consequences of creating a disgruntled male workforce.

Interesting Snippets

The Redcar decision confirmed a number of other helpful points, including:

  • persons whose jobs are rated as equivalent under a JES can claim back pay only to the date of implementation of the JES (if that period is less than the statutory 5 (Scotland) or 6 (England) years);
  • employees can bring a claim under the Equal Pay Act 1970 on the basis that they have carried out "like work", "work rated as equivalent" or "work of equal value" but have been paid less than the relevant comparator. The Court of Appeal confirmed that each head of claim is separate and so an unsuccessful claim under one head does not prevent an employee from bringing a claim under another head in respect of the same period of time; and
  • in cases of mass litigation, if the employer fails to comply with the statutory grievance procedure, the tribunal ought not to apply an uplift to the amount of compensation awarded to the claimant.

GMB & Ors v Allen: The Facts

This case is part of a long running "single status" equal pay dispute involving Middlesbrough Borough Council. The case involved claims against the GMB that they had pressurised their members into accepting reduced levels of back pay, in settlement of equal pay claims, in order to protect the wider interests of all their members. The GMB argued that they recommended a compromise deal to members because they had to balance the interests of all their members. In achieving settlement of some equal pay claims the GMB argued that they were in a better position to secure pay protection and to maximise the sums available for their members in the future, through their negotiations with the Council. The GMB also feared that if they pushed for a better settlement deal this could ultimately lead to redundancies or privatisation.

The Decision

The compromise deals inevitably affected more women than men. The Employment Tribunal accepted that the union's "collective aims" argument was a valid reason for reaching a compromise, but it was very critical of the way in which the GMB had advised its members in this particular case, saying that they were guilty of "mis-selling and manipulation." Although the EAT had accepted the GMB's argument, on appeal the Court of Appeal reversed this decision, agreeing with the ET that "mis-selling and manipulation" was not a proportionate way to achieve a legitimate objective. In other words, the GMB had indirectly discriminated against some of its female members.

Leave to appeal to the House of Lords was refused.

The Impact

There is a risk that, moving forward, the unions will take an adversarial and polarised approach to collective negotiations, disregarding the "bigger picture" as portrayed by the employer, for fear of claims by their members. The impact is likely to be felt in all unionised workplaces, be it private or public sector, and not just in relation to equal pay issues. The attitude of unions towards collective redundancy consultation, for example, may also become more entrenched, as may their attitude towards collective negotiations over changes to terms of conditions. Such a response from the unions is particularly likely given that there are apparently over 10,000 claims against GMB, Unison and Unite outstanding, the cost of which is, as yet uncertain (although the Guardian reports the figure to be £100m). The situation is likely to become further exacerbated by the current economic climate and the unrest that is causing among employees.

The Future?

Now more than ever employers need to ensure that they have a clear communication strategy with a view to maintaining dialogue in the workplace, both with employees directly and the unions. Despite the fact that the Equal Pay legislation can sometimes appear outdated (as a result of which, there are proposals to refresh it) and many employers feel that obstacles are continually being placed in their path towards implementing equal pay, the ultimate aim is nonetheless important. Many employers, particularly local authorities, have spent years working towards implementation of their Job Evaluation Schemes. While, in light of the above cases, the unions may be less likely to play ball, if clear lines of communication are maintained with the workforce itself, this should go some way to help to smooth the way.

Catriona Aldridge
Dundas & Wilson CS LLP
catriona.aldridge@dundas-wilson.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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