Job evaluation - possible impact of a 'no retrospective effect' judgment
Consultant editor Darren Newman asks if a recent ruling will
result in thousands of employees bringing both "work rated as equivalent" and
"work of equal value" pay claims.
The case law reports added to XpertHR this week include another significant case arising from the move to single status in local authority pay bargaining. To understand 1) Bainbridge & Ors 2) Redcar & Cleveland Borough Council v 1) Redcar & Cleveland Borough Council 2) Williams & Ors EAT/0424/06 & EAT/0031/07 , an appreciation that the Equal Pay Act 1970 (EqPA) works differently from other discrimination law is required. Instead of compensating "less favourable treatment", the EqPA simply implies an "equality clause" into all contracts of employment. The clause applies where a woman is employed on "like work", "work rated as equivalent" or "work of equal value" to that of a man in the same employment. Its effect is that, where the man's contractual terms are in any respect more favourable than the woman's, her contract is treated as being modified to match the man's entitlement (or vice versa if it is a man who is bringing the claim).
In a sense, an equal pay claim is really a breach of contract claim. The remedy is an award of arrears of the remuneration that should have been paid under the equality clause. There is no limit on the monetary award that can be made, but arrears cannot be awarded in respect of any period more than six years before the day on which the proceedings were instituted. This means that where a claim was instituted in 2005 and heard in 2007, the tribunal can award eight years' arrears of pay going back to 1999.
However, not all employees claiming equal pay will receive six years' worth of arrears. The inequality may have arisen more recently - either on the recruitment of the comparator or when jobs were redefined. In such cases, the arrears will go back as far as the time that the equality clause should have kicked in and amended the claimant's contract.
In Bainbridge, the EAT has held that, where the basis for the claim is that the work has been rated as equivalent under a job evaluation study, no arrears can be claimed in respect of the period before the job evaluation study was carried out. The EAT's reasoning is that, prior to the study having been carried out, the work had not been rated as equivalent. If the work had not been rated as equivalent, the equality clause did not apply, so no damages for breach of the clause are due.
I can find no flaw in the EAT's reasoning. Although the decision may seem harsh on employees in cases where a job evaluation study reveals an inequality that has existed for many years, employers would be deterred from undertaking job evaluation exercises if the consequence could be a substantial claim for arrears from employees who suddenly realise that they are entitled to benefit from an equality clause.
However, from a practical point of view, this decision could cause chaos. Every year, thousands of equal pay claims based on job evaluation schemes are brought. If the employees bringing those claims wish to claim in respect of a period before the evaluation was carried out, they will have to bring separate equal value claims. As the EAT in Bainbridge made clear, there is no guarantee that two jobs rated as equivalent would also be found to be of equal value, since jobs that attract different scores in a job evaluation study may nevertheless be placed on the same grade and therefore be "rated as equivalent". In an equal value case, the requirement is that the two jobs are assessed as being of equal value. Despite recent amendments aimed at speeding up the system, the equal value procedure remains cumbersome and time-consuming compared to the process for cases based on job evaluation.
If this case stands - and I would expect an appeal - the consequence will be that a huge number of cases will take longer to resolve and be more costly to run. That's bad news for the "no win, no fee" solicitors processing a large proportion of the claims. But it's also bad news for everyone else involved in the process.
