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Equal Pay - Material Factor Defence Still Relevant Following Job Evaluation Study

on Friday, 21 August 2020.

The recent case of Walker v Co-Operative Group Limited contains useful guidance on defending equal pay claims.

Equal Pay Law

Men and women are entitled to receive equal pay for equal work. There are three categories of equal pay claim:

  • 'like work' - where the two jobs compared are the same or broadly similar
  • 'work of equal value' - where the claimant and comparator's work is equal in terms of the value provided to the employer; and-­­
  • 'work rated as equivalent' - where the two posts are rated as equivalent by a job evaluation scheme (JES)

Equal pay claims can be defended if there was a 'material factor' justifying the pay differential, unrelated to the claimant's sex.

A Claim of Unequal Pay

Mrs Walker (Claimant) was employed as a senior HR Executive at the Co-Operative Group (Respondent) from 2013 to 2017. She was promoted to Group Chief HR Officer in February 2014.

A JES was carried out following the Claimant's promotion. The JES rated the Claimant's job as higher than two male colleagues who earned more than her. Following the termination of her employment, she brought a number of claims, including an equal pay claim. She named her two male colleagues as comparators for the purposes of the claim.

Material Factor Defense

The Respondent identified four 'material factors' which it argued justified the pay differential between the Claimant and comparators:

  1. The two comparators were part of the core team vital to the immediate survival of the business and the Claimant was not.
  2. If either of these two core team members were to leave, their departure(s) could have brought down the business.
  3. The comparators were experienced executives whereas the Claimant was unproven at that level.
  4. Market forces justified their higher salaries. One of the comparators was a senior corporate lawyer whose market rate exceeds that of HR professionals.

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Did These Factors Justify the Gap?

The Employment Tribunal (ET) found the four material factors applied at the date salaries were fixed. However, from the date of the JES onwards, it found the Claimant's work was rated as equivalent to the comparators, which effectively extinguished the material factors. Therefore, the Respondent's defence failed at ET stage.

This reasoning has now been rejected both by the Employment Appeal Tribunal and the Court of Appeal (CA). The CA has confirmed that just because a JES post-dates material factors, those material factors do not automatically cease to exist. In this case, at least one of the four material factors continued to apply to each of the comparators following the JES. This meant the material factor defence succeeded.

Considering Material Factors

This is a helpful decision for employers who could be in the position of identifying historic material factors that explain a difference in pay. The decision demonstrates how those material factors will not cease to apply just because of a future act or event (in this case, the JES).

Equal pay litigation can be time consuming and costly to defend. To reduce the risk of dispute following a JES, it is sensible for employers to audit staff salaries against a JES so any apparent anomalies can be identified, considered and addressed if necessary, at the earliest possible stage.

For more information in respect of equal pay litigation, please contact Gemma Cawthray in our Employment team on 07909 681 665, or complete the form below.

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