April 18, 2013

Equal Pay and Pay Protection

The Court of Appeal dismissed the Claimant’s appeal against the EAT decision which found that, on the face of it, there was no indirect sex discrimination in circumstances where the employer had applied a pay protection policy to employees whose jobs were changed when it merged 2 roles into 1, resulting in the men employed in those roles being paid considerably more than women in like roles.The Court of Appeal had to consider whether or not the policy was indirectly discriminatory and if so, whether this was justified.

Although the Tribunal found there was indirect discrimination, the EAT overturned this decision in favour of the Audit Commission and the Court of Appeal agreed. The pay protection policy was applied equally to both men and women and there was no inherent reason why men should be advantaged by it. The Court of Appeal pointed out that the issue of comparators being disproportionately advantaged by pay protection is appropriate to consider in a direct discrimination case, but not an indirect discrimination case where both groups are treated the same. The question then was whether the indirect discrimination was objectively justified. By a majority, the Court of Appeal approved the EAT’s finding that the difference in pay was justified in order to prevent the employees from suffering a reduction in pay and the risk of losing their skills and experience. In any event, it was the pay protection policy which ultimately resulted in the inequality and not the fact that the comparators were male.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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