News - What to look out for in equal pay from our next generation: McNeil v HMRC

Employment & Discrimination - Joanne Twomey, Ben Cooper QC, Betsan Criddle, Robert Moretto

By Joanne Twomey

This case concerned an equal pay claim brought by several women employed by HMRC. The pay system implemented by HMRC in respect of the claimants was one which employees moved through the pay band for their grade, from a fixed minimum up to a fixed maximum, by different amounts each year, without any fixed increments but with the amount of any increase depending on the pay award for the particular year.  As a result of the way this system operated, one factor relevant to where an employee was within the band, was length of service: the longer an employee had been employed in the band, the more opportunities s/he would have had to move up towards the maximum.

The claimants (who were the appellants at both the EAT and CoA) argued that length of service was a factor which placed women at a particular disadvantage. Essentially, the operation of length of service resulted in “clustering” of women towards the lower end of pay bands and of men towards the higher end. This was because these were historically male-dominated jobs and women had only been recruited in greater numbers more recently. The effect was also exacerbated by “austerity” in public sector pay from around 2010, which meant that those towards the bottom of the pay bands have had a long period with little or no increase in their pay.

The respondents denied that HRMC’s pay system put women at a particular disadvantage, arguing there had not been statistically significant differences in the average pay of men and women.

The claimants argued that the EAT (and ET) erred in adopting an approach to the concept of particular disadvantage under Equality Act (EqA) 2010 which measured the wrong thing, in particular by applying a method (comparison of total average basic pay) which measures the size or value of (average) differences in pay relative to total pay, instead of measuring the disparate impact on women compared with men caused by the factor of length of service by analysing the relative distribution of men and women along the pay range in each of the relevant grades. The claimants argued that analysis using averages ‘smooths out’ gender differences and masks disadvantage experienced by a significant proportion of women found at the bottom of the grade by ‘lumping them together’ with other women who may not be so disadvantaged.

The Court of Appeal rejected this argument finding that establishing the existence of disadvantage by reference to distribution in fact means abandoning any useful reference point. The court held that since a distribution analysis affords no way of putting a number on the extent of the disadvantage suffered, there are no fixed points for the purpose of examining justification (or identifying an appropriate remedy) and only averages give a workable tool for measurement.

The Court of Appeal unanimously dismissed the appeal. The claimants have applied to the Supreme Court for permission to appeal and that application has yet to be decided.

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