Does Unequal Pay Between Genders Prove Indirect Discrimination?

This is what the Employment Appeal Tribunal considered in the case of McNeil v Revenue and Customs Commissioners.  

What the Law Says

Under the EqA 2010, an employee is entitled to receive equal pay to that of a comparator of the opposite sex in the same employment if they can be said to be carrying out equal work (defined as like work, work rated as equivalent or work of equal value).

An employer can pay a man more than a woman for doing equal work, where it can prove that the variation in pay is due to a material factor which is not directly or indirectly discriminatory (s69 EqA 2010).

The factor will be indirectly discriminatory if:

• it results in the claimant, and other women doing work equal to hers, being put at a particular disadvantage
  
  
• when compared with men doing work equal to theirs, it cannot be objectively justified as being a proportionate means of achieving a legitimate aim

Armstrong v Newcastle Upon Tyne

This case  was also considered by the EAT. The case stated that if a statistical imbalance between genders can be shown by the employee, it would be for the employer to rebut the presumption that this imbalance is based on gender.

If an employer succeeded in rebutting this presumption then the equal pay claim would fail without having to consider objective justification arguments. The judge in McNeil followed some recent Supreme Court decisions and rejected this approach, meaning the defence accorded to employers by Armstrong is no longer considered good law.

McNeil v Revenue and Customs Commissioners

The female employees of HMRC appealed against an earlier decision of the Employment Tribunal that a distribution analysis showing female members of staff clustered at the lower end of the pay scale and male members of staff clustered at the higher end of the pay scale was not sufficient to establish indirect discrimination against the female employees.

HMRC had reviewed and amended its pay structure so that employees in the same 'band' were paid different wages based on their number of years of service. This resulted in the clustering of female employees on the distribution analysis, which has been termed the 'sex taint.'

The female employees claimed that particular disadvantage could be established by reference to the distribution analysis alone. When this was rejected by the tribunal, the female employees appealed the employment judge's decision.

The Appeal

The appeal was rejected.

The EAT held that the material factor in this instance which determined the disparate pay was number of years' service rather than gender.

Further, the EAT held that a distribution analysis on its own cannot prove indirect discrimination. It may, however, indicate an issue which requires investigation. The EAT noted that the distribution analysis did not reflect that the average basic pay of men and women at HMRC showed no significant long-term difference in pay between genders. It therefore could not be relied on to establish particular disadvantage.

Best Practice

• This decision is interesting in the context of the obligations on employer with more than 250 employees to report their gender pay gap. There will be a focus on gender pay in the workplace and the distribution of male and females across an employer's pay range.
  
  
• If you are an employer undertaking a distribution analysis and notice a discrepancy in pay between the genders, this is an indication that you should investigate your pay structures to ensure they are not indirectly discriminatory.
  
  
• If you are an employee concerned about pay distribution in your workplace, you will need further evidence this above and beyond a distribution analysis.
  
  
• For either position, the best way to establish whether indirect discrimination exists is to compare basic pay rates between the genders.

For more information please contact Gemma Cawthray in our Employment Law team on 0117 314 5266.