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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Tyldesley v T M L Plastics Ltd [1995] UKEAT 1044_93_2303 (23 March 1995) URL: http://www.bailii.org/uk/cases/UKEAT/1995/1044_93_2303.html Cite as: [1996] ICR 356, [1996] IRLR 395, [1995] UKEAT 1044_93_2303

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BAILII case number: [1995] UKEAT 1044_93_2303

Appeal No. EAT/1044/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 23rd March 1995

Judgment delivered on 24 January 1996

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MISS C HOLROYD

MS D WARWICK

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MRS C TYLDESLEY          APPELLANT

T M L PLASTICS LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR B CARR

(of Counsel)

Rowley Ashworth

247 The Broadway

Wimbledon

LONDON SW19 1SE

For the Respondents MR C JEANS

(of Counsel)

EEF

Broadway House

Tothill Street

LONDON SW1H 9NQ


 


MR JUSTICE MUMMERY (PRESIDENT):

The Issue

This appeal from the decision of the Industrial Tribunal held at Manchester on 22nd June and 17th September 1993 is principally concerned with the "genuine material factor" defence in an equal pay claim by Mrs C Tyldesley against T M L Plastics Limited ["TML"] by whom she was employed as an Inspection Supervisor.

For extended reasons, notified to the parties on 26th October 1993, the Tribunal:

(1) Rejected Mrs Tyldesley's claim that she had been unlawfully discriminated against under the Sex Discrimination Act 1975 (there is no appeal against that decision);

(2) Rejected the genuine material factor defence raised by TML in answer to Mrs Tyldesley's claim under the Equal Pay Act 1970;

(3) Held that:

(a) From 1st June 1992 to 26th October 1992 Mrs Tyldesley was employed on like work with a man (Mr M D Goward) in the same employment;

(b) the terms of Mrs Tyldesley's contract of employment as to pay were less favourable to her than the terms of the contract of employment of Mr Goward as to pay;

(c) Mrs Tyldesley's terms as to pay for her post should be treated as modified, so as not to be less favourable than Mr Goward's.

(4) Dismissed Mrs Tyldesley's claim in respect of the longer period from 2nd April 1991 to 26th October 1992. The start date of the period was 1st June 1992. That was the date of Mr Goward's appointment, not from 2nd April 1991, the date on which Mrs Tyldesley was appointed.

The Appeal

Mrs Tyldesley appealed against the decision by Notice of Appeal dated 7th December 1993. The question of law raised by the appeal was whether the Tribunal erred in deciding that the equality clause written into Mrs Tyldesley's contract of employment by virtue of Section 1 of 1970 Act, should take effect from 1st June 1992 and whether she should be entitled to arrears of pay or damages for that period rather than from 2nd April 1991, as Mrs Tyldesley contends. She argues that the equality clause has retroactive effect to that earlier date.

It was agreed by the parties and by this Tribunal that it would be convenient for TML's cross-appeal to be heard first. In the cross-appeal dated 9th March 1994 TML contended that the Tribunal erred in law in holding that the "genuine material factor" defence under Section 1(3) of the 1970 Act was not established.

It was also agreed, under the pressure of time at the hearing, that we should give

judgment on the cross-appeal before hearing and deciding the appeal.

The Tribunal apologises to the parties for the length of time which it has taken to give judgment on the cross-appeal and for inconvenience caused. The parties have already been informed that the cross-appeal will be allowed and that it will not therefore be necessary to hear the appeal.

The Background Facts

The facts found by the Tribunal may be summarised as follows:

(1) On 2nd April 1991 Mrs Tyldesley was appointed to the post of an Inspection Supervisor. She had previously been employed from January 1987 as a part-time machine operator. The shift was from 6 a.m. to 2 p.m.. The other shift from 2 p.m. to 10 p.m. was operated by the other Inspection Supervisor, Mrs Margaret Richardson. She was paid at the same rate as Mrs Tyldesley. The duties and job description were the same

(2) In April 1992 Mrs Richardson requested and was granted a transfer to other duties.

(3) With effect from 1st June 1992 Mr Goward was appointed as an Inspection Supervisor to fill the vacancy left by Mrs Richardson's transfer. He was appointed at a higher salary than Mrs Tyldesley was paid. At the time of Mrs Richardson's appointment Mrs Tyldesley's salary was £ 9,253.00. Mr Goward was appointed at the rate of £12,500.00. Both had retirement benefit schemes and private patients plans.

(4) On 26th October 1992 Mrs Tyldesley voluntarily transferred to work as a part-time semi-skilled operator.

(5) Mr Goward was used as a comparator in Mrs Tyldesley's claim.

The Decision of the Industrial Tribunal

The Industrial Tribunal decided that TML had not established the defence of "genuine material factor" in Section 1(3) of the 1970 Act which provides:

"An equality clause shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor-

(a) in the case of an equality clause falling within subsection (2)(c) or (b) above, must be a material difference between the woman's case and the man's; and

(b) in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference."

The Industrial Tribunal found additional facts relevant to the application of this section.

(1) 95% of TML's business as injection moulders and assemblers was in the supply of parts for the automobile industry. Over the last three to four years TML had adopted a scheme of "total quality", with the significant change in working practices, in obtaining lucrative contracts from manufacturers such as Nissan.

(2) Although the duties and job description of the Inspection Supervisors were the same, it was not disputed that the Inspection Supervisor's job on the 6 a.m. to 2 p.m. was the more onerous.

(3) When Mrs Richardson was transferred, her job was advertised in the local paper, the Lancashire Evening Telegraph. The company intended to advertise the job internally, but that was overlooked. The position advertised was an exact replacement for Mrs Richardson. The Tribunal held that:

"... Mr D Goward was not employed specifically to do anything else other than the job which Margaret Richardson had been doing."

(4) The position of Inspection Supervisor was undergoing a change in the light of the introduction of the Total Quality Management ("TQM"). Mrs Tyldesley had been introduced to it and had been given training and was in the process of introducing a concept of TQM on her 6 a.m. - 2 p.m. shift. She needed future training as she had not fully embraced it, but that fact did not affect her performance as an Inspection Supervisor. She was a good conscientious worker who performed her duties well and had received no complaints about the performance of her job. However, in selecting Mr Goward to replace Mrs Richardson, TML selected someone who had embraced the concept, understood it, was committed to it and had experience of operating in a TQM environment.

(5) Mr Goward was appointed to the post of Inspection Supervisor on the basis of his CV and his interview performance. The appointment was made in "good faith believing that he had the level of experience" shown in his CV. The Tribunal also found that " an important factor in the selection of Mr Goward was his attitude at the interview and his perceived acceptance of the total quality management concept". Mrs Tyldesley did not have the same experience as Mr Goward, though she did have experience in a number of areas listed by the Tribunal in the extended reasons.

The Tribunal's Conclusions

The Tribunal came to the following conclusions:

(1) Mrs Tyldesley was employed on like work with Mr Goward from the date of his appointment (1st June 1992) to the date when she voluntarily gave up employment in that position on 26th October 1992.

(2) The onus was on TML to prove that the variation in the terms of the contract between Mrs Tyldesley and Mr Goward was genuinely due to a material factor which is not the difference of sex. TML had, on the balance of probabilities, to rebut the presumption that any discrimination in the terms and conditions was due to Mrs Tyldesley's sex.

(3) "Material" means "significant and relevant". All the circumstances of the case, going beyond the personal qualities of Mrs Tyldesley and her comparator, had to be taken into account: for example, administrative efficiency, economic factors and market forces.

(4) TML also had to show (Paragraph 15) that:

"... the discrimination is objectively justified, that is, the respondent is pursuing measures that correspond to a real need and are appropriate and necessary to meeting that need."

(5) The Industrial Tribunal concluded that TML had not rebutted the presumption that the discrimination in the terms and conditions that Mrs Tyldesley and Mr Goward was due to sex. They held that:

(i) TML had not established "a good and objectively justified ground for offering a higher rate of pay to Mr Goward than that enjoyed by Mrs Tyldesley." There were "no objective criteria to show that Mr Goward had any better concept of Total Quality Management than that enjoyed by the applicant." TML had emphasised that Mr Goward was employed "because of his acceptance of the total quality management concept."

(ii) TML had intended to advertise the post internally which showed that they were prepared to make an appointment of another employee who necessarily did not have considerable experience of total quality management, as it had not yet been introduced fully into TML.

(iii) As to other factors, there was no evidence before the Tribunal to establish the market rate for someone with Mr Goward's experience of TQM, though the TML managing director, Mr Russell, had referred to the fact that they had to pay Mr Goward this rate of annual pay because it was a rate of pay which someone of his knowledge and experience could expect. No evidence was given of Mr Goward's salary in his previous employment or of the market rate.

(iv) TML failed to show that the discrimination was objectively justified. They failed to show that they had "a real need for an Inspection Supervisor with the type of experience which they alleged justified the difference in pay between Mrs Tyldesley and Mr Goward."

Mrs Tyldesley's Submissions

Mr Carr, on behalf of Mrs Tyldesley, submitted that there was no error of law in the Tribunal's decision on the genuine material factor. The Tribunal had proceeded on the basis of the decision of the House of Lords in Rainey v Greater Glasgow Health Board [1987] ICR 129, that the genuine material factor relied on was "significant and relevant" and was "objectively justified, that is, the Respondent is pursuing measures that correspond to a real need and are appropriate and necessary to meeting that need." The Tribunal were entitled to reject TML's evidence as to the importance of TQM as a factor in determining that Mr Goward was paid more than Mrs Tyldesley.

Mr Carr submitted that the decision was not perverse or in error. The only proper conclusion on the evidence was that the difference in pay was not due to a significant and relevant factor. Experience of TQM was not a genuine material difference. It was not causative of the difference in pay.

Conclusions

In our judgment, Mr Jeans, who appeared for TML on the cross-appeal, is correct in contending that the Tribunal erred in law in requiring TML to satisfy a test of objective justification, apparently in addition to the matter specified expressly in Section 1(3) of the 1970 Act. We agree with him that the questions which arise for decision on this point, where a defence is raised under Section 1(3) are:-

(1) What variation (if any) is there between a woman's contract and a man's contract?

(2) To what factor is that variation genuinely due?

In answering question (2), the employer must:

(a) Identify the factor, (which must not be the difference of sex);

(b) satisfy the Tribunal that it is a material factor;

(c) satisfy the Tribunal that the factor is a material difference between the woman's case and the man's case.

In this case, the Tribunal appeared in paragraphs 15 and 16 of the extended reasons to think that, in order to make out the defence under Section 1(3), it also had to be shown by TML that there was an objective justification for the discrimination and that the company was pursuing measures that corresponded to a real need and were appropriate and necessary to meet that need.

This approach places an additional burden on the employer to establish the defence under Section 1(3) which is not expressly stated in the relevant statutory provisions. In our view, this is not the correct approach. It is not necessary under Section 1(3) for the employer to satisfy the test of "objective justification" to make out the defence. In our view, the legal position is as follows:

(1) The 1970 Act, Article 119 of the Treaty of Rome and the EC Directive on Equal Pay have as their purpose the elimination of sex discrimination, not that of achieving "fair wages". Their detailed provisions are to be construed in the light of that purpose.

(2) A difference in pay explained by a factor not itself a factor of sex, or tainted by sex discrimination, should, in principle, constitute a valid defence.

(3) The comment of the House of Lords in the Rainey case, that, in order to establish defence under Section 1(3), objective justification must be shown, applies only where, as on the facts of Rainey, the factor to be relied upon is one which affects a considerably higher proportion of women than men, so as to be indirectly discriminatory and thus tainted by sex discrimination, unless justified. The same observation may be made in relation to the comments of the European Court of Justice in Jenkins v Kingsgate [1981] ICR 592 and Enderby v Frenchay Health Authority [1994] ICR 112. Those were both cases where the factor relied upon was one which affected a considerably higher proportion of women than men and therefore required objective justification.

(4) Even if Enderby was not a case of indirect discrimination, as understood by English Law, the pre-condition of enjoying a higher salary in that case was membership of a group which comprised predominantly men. A prima facie case of unequal treatment was made out which needed to be rebutted by objective justification. No such case arises here. There was no suggestion that the requirement of particular experience of, or embracing, TQM was one which affected a considerably higher proportion of women than men.

(5) Accordingly, there was no allegation or evidence in this case of indirect disctrimination which required rebuttal by objective justification.

(6) In the absence of evidence or a suggestion that the factor relied on to explain the differential was itself tainted by gender, because indirectly discriminatory or because it adversely impacted on women as a group in the sense indicated in Enderby, no requirement of objective justification arises. See Calder v Rowntree MacIntosh [1992] ICR 372 at 379 - 380F and [1993] ICR 811 and Yorkshire Blood Transfusion v Plaskitt [1994] ICR 74 at 79 - 80F. Thus, even if a differential is explained by careless mistake, which could not possibly be objectively justified, that would amount to a defence under Section 1(3) and for the purpose of Article 119, provided that the Tribunal is satisfied that the mistake was either the sole reason for it or of sufficient influence to be significant or relevant. If a genuine mistake suffices, so must a genuine perception, whether reasonable or not, about the need to engage an individual with particular experience, commitment and skills.

For those reasons, the Industrial Tribunal erred in law in directing itself that the explanation for the difference in pay had to be objectively justified. It was sufficient in law that the explanation itself caused the difference or was a sufficient influence to be significant and relevant, whether or not that explanation was objectively justified.

We agree with Mr Jeans that the Industrial Tribunal did not treat the case as one of indirect discrimination, but simply as one where Mrs Tyldesley was engaged on like work with a male comparator for which she was receiving a difference in pay. If it was not in fact a case of indirect discrimination, the question of objective justification did not arise and the Industrial Tribunal erred in treating it as relevant. No case of indirect discrimination contrary to S.1(1)(b) of the Sex Discrimination Act 1975 was put forward on behalf of Mrs Tyldesley, nor was there any basis for contending that the factor relied upon did impact adversely on women, so as to require objective justification. The Tribunal erred in treating objective justification as relevant.

We add that since this case was heard the House of Lords in North Yorkshire CC v. Ratcliffe [1995] ICR 833 at 839 E-G have decided that the distinction between direct and indirect discrimination in the 1975 Sex Discrimination Act is not imported into S.1(3) of the 1970 Act.

For these reasons the cross-appeal will be allowed, no order will be made on the appeal and the case will be remitted to the Industrial Tribunal for re-hearing in accordance with the correct approach to the determination of the genuine material factor defence.