Case - North Cumbria Acute Hospitals NHS Trust v. Potter

[2009] IRLR 176, Employment Appeal Tribunal - Anya Palmer

The Equal Pay Act 1970 s.1(6) did not require the terms and conditions in the respective employment contracts of a claimant and his chosen comparator to emanate from a "single source".

The appellant NHS trust (N) appealed against an employment tribunal's decision on a preliminary issue as to whether the comparators chosen by the respondent employees (P) were valid for the purposes of their equal pay claims. N had been formed in 2001 as the result of a merger of two NHS trusts (W and C). Before the introduction of the concept of NHS trusts, the employers of P and the comparators had been required to adopt for their employees the appropriate "Whitley Council" terms and conditions of employment. After the merger, N continued to utilise Whitley terms and conditions for new and existing employees. A collective agreement signed in 2002 enshrined the harmonisation of locally-determined terms and conditions to Whitley. Senior managers, however, remained on locally-determined terms and conditions. There was a general Whitley Council and nine functional councils, which each set pay and other terms in relation to the specific NHS staff groups which they covered. N maintained that the employment histories of P and their selected comparators and the different mechanisms by which their terms and conditions were established were such as to render the comparators invalid under either domestic or European law. N argued that (1) the tribunal's finding that the harmonisation of terms and conditions had established common terms and conditions between W and C observed generally was erroneous or perverse. The tribunal had failed to take into account that the senior managers were not employed on Whitley terms and conditions at the relevant time; (2) the need to establish a "single source", namely a body which was responsible for the inequality and could restore equal treatment, was applicable not only to the EC Treaty (Nice) art.141 but also to the Equal Pay Act 1970 s.1(6). The case of Lawson v Britfish (1987) ICR 726 EAT, which construed s.1(6) contrary to the incorporation of a single or common source, had been wrongly decided; (3) the tribunal's conclusion that both N and the Whitley Council were single sources was wrong in law and perverse. There could not be two single sources for terms and conditions of employment.

HELD: (1) On the face of it, the harmonisation of terms and conditions in 2002 created the paradigm example of the common terms and conditions contemplated by s.1(6), as explained in Leverton v Clwyd CC (1989) AC 706 HL. The tribunal had been correct in its conclusions. The fact that senior managers were treated differently could not prevent the collective agreement from amounting to common terms and conditions observed generally. If it could, then it would mean s.1(6) could rarely be satisfied, as there was often a section of senior employees who had their own separate pay and conditions. What was required was a sufficient similarity for a fair comparison to be made, Leverton, British Coal Corp v Smith (1996) 3 All ER 97 HL and Pickstone v Freemans Plc (1989) AC 66 HL applied. (2) The tribunal had been right to conclude that s.1(6) did not require the incorporation of the concept of a single source. The authorities relied on by N were concerned with the interpretation of art.141, and did not state that they applied to s.1(6), Lawrence v Regent Office Care Ltd (C320/00) (2002) ECR I-7325 ECJ, Robertson v Department for the Environment, Food and Rural Affairs (2005) EWCA Civ 138, (2005) ICR 750 and Armstrong v Newcastle upon Tyne NHS Hospital Trust (2005) EWCA Civ 1608, (2006) IRLR 124 considered. The decision in Lawson was correct, Lawson applied. The addition of the further requirement of establishing a single source on top of the requirements already in s.1(6) would impose an extra hurdle for the female worker to overcome and would limit otherwise valid comparisons from being made under the Act. To so restrict equal pay claims would be contrary to the intent and spirit of art.141. (3) There was ample material before the tribunal upon which it could conclude that N was a single source of the terms and conditions in question. N had the power to change the employment terms of its employees including any inequality of pay, and it chose to exercise that power. The tribunal found that N and the Whitley Council were single sources. It was difficult to see how there could be two single sources operating at the same time; however, an NHS trust could exercise its responsibility through the Whitley Council without thereby ceasing to be a single source. There was no error of law in the tribunal's conclusion that N was a single source responsible for the inequality and for restoring equality. The tribunal's decision that the Whitley Councils were a single source could not stand. The Whitley Councils were merely the process by which pay and conditions were determined. They did not have the power to deal with inequality of pay nor the restoration of equal treatment, Enderby v Frenchay HA (C127/92) (1994) 1 All ER 495 ECJ (1st Chamber) considered.

Appeal allowed in part
 
For the Casson respondents: Tess Gill, Anya Palmer.
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