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Equal Pay - Material Factor Defence

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As part of an extensive job evaluation scheme by Middlesbrough Borough Council, a pay protection scheme was introduced to protect those in receipt of higher pay against an immediate and significant reduction in pay. Agreement on the scheme was reached in February 2005 by which time a number of equal pay claims related to pre-April 2005 terms were under way but were not resolved. The Claimants submitted that they too should receive the benefits of the protected pay arrangements, arguing that had the Equal Pay Act "equality clause" been applied to them at the correct time they would have been in receipt of a higher rate of pay, and thus the protected pay scheme would have applied to them. The ET agreed. The Council appealed.

The EAT has allowed the appeal. Given that the purpose of the scheme was to cushion better paid employees from a potentially disastrous sudden drop in pay, the Council was justified in limiting it to those who were actually in that group. Further justification lay in the fact that the need to agree a pay protection scheme with the trades unions was crucial to the making of the job evaluation scheme.

The EAT held that the scheme was not, to the knowledge of the Council at the time, exacerbating existing discrimination. However (1) the benefits under the scheme were limited to those who, to the knowledge of the Council, were in receipt of higher pay when it was introduced, (2) at least some of the outstanding claims were likely to succeed, and (3) the Claimants were overwhelmingly female. The decision not to extend the payment protection scheme to those who were subsequently found to be entitled to equal pay was therefore tainted by sex discrimination and therefore required objective justification - a requirement which, as noted above, the EAT found the Council had satisfied.

[Thanks to for permission to reproduce their summary of this case.]

Middlesbrough Borough Council v Surtees & Ors