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An employer's decision to withdraw the bonus entitlement of a group of employees who were predominantly female in order to bring their pay into line with the labour market rate for that type of work, while continuing to pay the bonus to another group of mainly male employees who performed work of equal value, was not due to a genuine material factor unconnected with the difference of sex since that labour market, as the employer knew, was itself sexually discriminatory, consisting almost exclusively of women who were paid less than men who did jobs of equal value.
The appellant employer (N) appealed against an employment tribunal's finding that it had subjected the respondent female employees (X) to indirect sex discrimination. X were hospital domestics who had commenced proceedings against N, the local health trust, under the Equal Pay Act 1970 because they no longer received bonus payments which N still paid to porters at the same hospital. The domestics were nearly all women, while the porters were overwhelmingly male. The tribunal found that the bonus arrangements had a disparate adverse impact on female employees and that there had been discrimination on the ground of gender. N argued that X's bonus entitlement had had to be removed in order to compete with anticipated outside bids in a compulsory competitive tendering exercise, which did not affect portering services, and that it had not been subsequently possible to remove the differential. The tribunal, however, rejected that "genuine material factor" defence.
HELD: A "genuine material factor" defence under s.1(3) arose when the complainant had first produced a gender-based comparison showing that women doing like, equivalent or equally valued work were being paid or treated less favourably than men. At that point a rebuttable presumption of sex discrimination arose and the employer had then to show that the disparity was genuinely due to a material factor which was not the difference of sex. Only if the employer could not show that the reason was not due to the difference of sex,did it have to show objective justification for the disparity, Glasgow City Council v Marshall (2000) 1 WLR 333 HL and Strathclyde RC v Wallace (1998) 1 WLR 259 HL applied. In the instant case, the rebuttable presumption had arisen and the tribunal had proceeded on the basis that N's explanation was genuine and material, a "genuine material factor" defence based on market forces being admissible in principle, Rainey v Greater Glasgow Health Board (1987) AC 224 HL applied. However, the tribunal had found that the withdrawal of X's bonus entitlement was in order to bring their pay into line with a labour market for domestics which was itself sexually discriminatory because, as was obvious to N, it consisted almost exclusively of women who were paid less than men who did jobs of equal value, Ratcliffe v North Yorkshire CC (1995) 3 All ER 597 HL applied. Accordingly, the disparity was tainted with sex and so the onus was on N to prove objective justification. The tribunal had found that N had wholly failed to discharge the burden of showing that considerations of cost or industrial relations justified the decision to continue the existing discriminatory differences in the payment of bonus. That conclusion could only be challenged on the basis that it was perverse, but N had not advanced any particularised argument as to why the conclusion had not been open to the tribunal.
Counsel for the respondents: Antony White, Melanie Tether.