SERN/EHRC Conference 2014 Equal Pay Update Peter O’Donnell, Thompsons Chair, Scottish Employment Rights Network

Forum for claims Abdullah v Birmingham City Council [2013] IRLR 38 –6 month time limit for pursuing claims in ET –Longer period in civil courts –Could claim be brought in courts where timebarred in ET? Question centred on whether claim could be more “conveniently” be disposed of by ET? –If so then court could strike out claim Supreme Court held that claim cannot be more conveniently disposed of by ET where it is time- barred

Limits on Abdullah Abdullah was concerned with jurisdiction –Does not mean that these claims were guaranteed to succeed Does not mean that claimant can bring any claim that they wish for some earlier period –5 year backdating period for EP claims still apply Reason why claim was time-barred is not relevant to issue of whether claim can be brought –Could be relevant to costs

Scope of Comparison Require to have actual comparator who meets certain criteria –Opposite sex –Paid more –Do equal work –Work in the same employment 2 cases have recently dealt with issues related to same employment

Associated employers Can use comparator who works for associated employer Particular important where claimant has TUPE transferred –6 month time limit for pre-transfer period –Can pursue claim for post-transfer period Difference in pay will be dynamic if associated employers Difference in pay frozen as at point of transfer if not –Gutridge v Sodexho Glasgow City Council v UNISON Claimants [2014] IRLR 532

Definition of Associated Employers Employers are associated if:- –One is a company of which the other (directly or indirectly) has control –Both are companies of which a third person (directly or indirectly) has control Similar definition used in the Employment Rights Act in context of continuous service

Facts of Glasgow case GCC created a number of arms-length external organisations (ALEOs) –Company limited by guarantee –LLP Staff transferred from council to different ALEOs –Large number of claimants transferred (eg care, cleaning and catering staff transferred to Cordia) –Comparators remained with council Were the ALEOs “associated employers” of the council? –ET found that the council had the necessary degree of control of the ALEOS and cases centred on whether “company”

Decisions of the courts ET –Found that company limited by guarantee was associated employer Never been appealed –Found that LLP was not a “company” (ie not an entity defined as a company under the Companies Act 1998) EAT –Decided that word “company” could be read to include LLP Purposive approach to anti-avoidance provision Inner House –Agreed with EAT – ET used too restrictive approach –Ordinary meaning of the word “company” “a company is an association of persons for an economic purpose, usually entered into with legal advice and some degree of formality” –Re a Company (No of 1992) O’Neill v Phillips [1999} 1 WLR 1092 HL

Same Employment Can use comparator who works in same employment –Works for same employer at same establishment –Works for same employer at difference establishment and common terms apply at the establishments (either generally or as between claimant and comparator) Became an issue in local authority litigation –Claimants based in schools on APT&C terms using peripatetic workers on Manual Worker terms –North v Dumfries & Galloway Council [2013] IRLR 737 –City of Edinburgh Council v Wilkinson [2012] IRLR 202

Principles derived from the decisions “Establishment” does not mean “employer” –Inner House (Wilkinson) overturning EAT –A particular employer could contain a number of establishments Eg different services in a local authority Whether common terms exist may require ET to speculate as to what terms comparator may enjoy if worked at claimant’s establishment –Not necessary to show real possibility or even that it was feasible that comparator would have been employed at that place Inner House & Supreme Court (North) and EAT & Inner House (Wilkinson) disapproving EAT (North)

Job Evaluation UNISON Claimants & ors v GCC (No.2) Used JES that evaluated role profiles rather than jobs –Created job families containing a number of role profiles –JES evaluated demands of role profiles –Individual jobs matched to role profiles to determine base pay JES splits evaluation of demands –8 factors used to assess role profiles to determine base pay –5 factors used to assess individual jobs for additional payment Does this meet test for analytical job evaluation scheme? –Yes, says ET –Subject to appeal – watch this space

Equal Pay Audits Power granted to make regulations under Enterprise & Regulatory Reform Act 2013 Draft regulations published in June 2014 –Apply to claims lodged after 1 October 2014 –ET must order an equal pay audit where they find an equal pay breach Certain circumstances where audit must not be ordered (eg audit already done) Exemption for new and micro-businesses –Requirements of content of audit Descriptions of persons for whom gender pay information must be included and period of time to which audit relates Time by which employer must respond –ET will determine if order has been complied with May hold hearing to consider Remedy for failure to comply –Further order to comply –Financial penalty payable to Secretary of State –Audit must be published

What next? Holiday Pay –Potentially tens of thousands of claims across public & private sector –Issue relates to failure to include additional payments when employees take holidays Holiday pay should be based on “normal remuneration (Williams & ors v BA and Lock v British Gas Trading Ltd) –Include payments intrinsically linked to performance of jobs (eg commission, –Number of issues still to be determined How far does “normal remuneration” go? –Overtime? What is reference period for calculating “normal remuneration”? –12 weeks, 12 months? Does this apply to 4 weeks or 5.6 weeks? How far back can you go?