Equal Pay Claims – What Happens if the Comparator Changes Jobs?

In Reading Borough Council v James, the Employment Appeal Tribunal (EAT) considered the temporal scope of a pay comparison in proceedings based on equal pay for work of equal value brought under the Equal Pay Act 1970. This, together with other discrimination legislation, has now been replaced by the Equality Act 2010, which largely mirrors its provisions.

Section 1 of the Equal Pay Act made it unlawful for an employer to discriminate between men and women in terms of their pay and conditions where they were doing the same or similar work, work rated as equivalent or work of equal value. If a woman’s employment contract did not specifically contain an equality clause, it was automatically deemed to include one. Where inequality in pay was established, by means of a comparison between the terms of the woman’s own contract and the terms of a male worker’s contract – ‘the comparator’ – the equality clause operated automatically to amend the less favourable term in the woman’s contract in order to make it equal with the corresponding more favourable term in the comparator’s contract. Only if the employer could prove that the variation in contractual terms was genuinely due to a material factor which was not the difference of sex could a claim be defended.

A number of female employees of Reading Borough Council sought arrears of pay dating back to 2002, claiming that they were doing work of equal value to a male comparator who was remunerated at an average rate of pay that was higher than their own. Other male operatives who were performing work of equal value were paid more than the women but less than their chosen comparator. The Council claimed material factor defences but none was established. In 2006, the comparator had been promoted to a different role and the Council argued that the women could no longer compare themselves with him for the purposes of their arrears claim. There were other operatives who remained doing work of equal value who were available as comparators for equal pay purposes.

The Employment Tribunal (ET) rejected the employer’s arguments. In its view, in cases where the equality clause has operated to amend an employee’s contract, it remains amended until something else happens to it – such as a further contractual agreement between the parties, a further collective agreement or a further statutory modification. The fact that the comparator was promoted did not operate to change the women’s modified contractual terms. The equality clause had crystallised the right to pay at the same level as the comparator until something else happened to change the contractual term. The fact that there were other operatives carrying out work of equal value was irrelevant.

The Council appealed against the ET’s decision and lost. The EAT agreed with the ET’s reasoning. There is no temporal limitation or other provision in the Equal Pay Act that restricts the continued implication of the statutory modification in any way. The implied contractual right to pay at the higher rate referable to the women’s chosen comparator crystallised in 2002 and will continue frozen at that level until their contracts are validly varied or terminated. No variation occurred because other potential comparators continued in post and, in any case, no term in the women’s contracts was less favourable than the other male operatives’ contracts at that point because, as a result of the equality clause, they already had statutorily implied contractual rights to higher pay by the time their chosen comparator was promoted in 2006.

In spite of continued efforts to tighten the laws on equal pay and focus employers’ attention on the gender pay gap issue, discrepancies persist. We can advise you on taking the appropriate steps to ensure your pay structures are free from unlawful sex discrimination.

View the current Statutory Code on Equal Pay.