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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Home Office v Bailey & Ors [2005] UKEAT 0706_04_2907 (29 July 2005) URL: http://www.bailii.org/uk/cases/UKEAT/2005/0706_04_2907.html Cite as: [2005] UKEAT 0706_04_2907, [2005] UKEAT 706_4_2907

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APPEARANCES

 

For the Appellant

Ms Elisabeth Slade (Queen's Counsel) Ms Jennifer Eady (of Counsel) Mr Robert Moretto (of Counsel) Instructed by: The Treasury Solicitor (Employment Team) Queen Anne's Chambers 28 Broadway London SW1H 9JS

For the Respondent

Ms Tess Gill (of Counsel) Mr Ben Cooper (of Counsel) Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW

SUMMARY

Equal Pay Act

Work Rated Equivalent; Material Factor Defence

JES (Job Evaluation Study). Work rated as equivalent. GMF (genuine material factor) - pension arrangements. Value of unsocial hours GMF.


 


HIS HONOUR JUDGE PETER CLARK

1. We have before us two appeals brought by the Home Office (hereinafter the Prison Service) against two separate but overlapping Judgments of an Employment Tribunal sitting at London (South) under the Chairmanship of Mr R W Rideout in these Equal Pay claims brought by the Claimants against their employer, the Prison Service. The first (the first decision) followed twenty-three days of hearing in April and May 2004 and two days deliberation in private on 24-25 June. That decision was promulgated with extended reasons on 19 July 2004. The second (the Formula Judgment) was promulgated with reasons on 25 January 2005, following a hearing held on 16-17 December 2004 and a day's deliberation on 20 January 2005.

Background

2. This litigation involves Equal Pay claims commenced by female administrative staff employed by the Prison Service. In all some 2,000 Claimants have brought such claims, taking as comparators male employees in Prison Officer, Senior Officer, Principal Officer and Governor grades and Operational Support Grades (OSG). The claims began in January 1999 and have been vigorously contested by the Prison Service
3. In order to manage the sheer volume of claims the Claimants have been divided into three groups. Group 1 (Mrs Bailey and others) consists of Claimants and their comparators who were evaluated under a Job Evaluation Study (Equate). As to this group, by their Grounds of Resistance dated 25 October 1999 the Prison Service conceded that the Claimants were engaged on work rated as equivalent for the purposes of s1 (2) (b) Equal Pay Act 1970 (Eq PA) where those Claimants' scores were equal to or higher than their chosen male comparators. That concession ("the Concession") did not extend to two Claimants in the group (Ms Ford and Ms Fox) who were given lower overall scores in the Equate exercise than their chosen comparators. The position of those two Claimants arises for consideration in the first appeal.
4. Subsequently the Prison Service attempted to withdraw that concession by way of amendment to their Grounds of Resistance. That application, opposed by the Claimants affected, came before Mr Rideout sitting alone on 14 February 2003. By an order promulgated with reasons on 2 May 2003 the Chairman refused the amendment application. On appeal to the EAT (His Honour Judge Ansell and members) the Chairman's order was upheld (EAT0343/03/ZT. Judgment 11 September 2003). That same division also adjudicated on a further appeal (EAT/0876/02/ZT) by the Prison Service against the majority decision of an Employment Tribunal (chaired by Mr A Snelson), promulgated on 2 July 2002, upholding claims by certain Claimants whose service pre-dated 1987 in relation to pension benefits. The appeal was allowed and the pension benefits issue was remitted to the Rideout Tribunal to be considered with other issues remitted by a different division of the EAT in August 2002, following an appeal from the decision of a Tribunal chaired by Mr Ian Lamb.
5. Group 2 (Mrs Martin and Others) consists of Claimants whose claims are proceeding as equal value claims under s1 (2) (c) Eq PA and in respect of whom an independent expert has reported, as are those of the Claimants in Group 3 (Mrs Beachcroft and Others), in which an independent expert's report is awaited.
6. The history leading to the present claims is helpfully set out at paragraphs 12-41 of the Rideout first decision reasons. In summary, in 1987 the Prison Service implemented a programme negotiated with the recognized trade unions called 'Fresh Start', whereby Prison Officers, Senior Officers, Principal Officers and Governors (the 'unified grades') received an enhanced rate of basic pay and had certain other benefits protected, notably pension benefits in return for working a more flexible and efficient working pattern. In particular, overtime working was phased out.
7. OSG's were not included in 'Fresh Start', but were later permitted to opt into a similar arrangement from 1 July 1997.
8. Administrative staff (the Claimants' Grades) were not included in Fresh Start. Apart from Higher Executive Grades (HEOs) the administrative staff were predominantly female and the unified grades and OSGs overwhelmingly male.
9. The 1990 Woolf Report into the Prison Service recommended that the pay and conditions of administrative staff should be reviewed. This led to a Pay and Grading Review, beginning in 1996 which in turn resulted in the JES, Equate, conducted by KPMG. It was intended to cover all prison staff including unified grades, OSGs and administrative grades. Benchmark jobs from across the Prison Service were used in designing Equate and were given scores using Equate.
10. It was originally envisaged that the JES would be implemented in two phases. Phase 1 would cover HEOs and Governor Grades; phase 2 would cover the rest of the prison staff including the administrative grades (apart from HEOs).
11. Phase 1 was completed. The relevant jobs having been scored, they were then placed into pay bands. Those job holders who received a salary less than the bottom of the pay band into which their job fell had their salary brought up to the lowest rate in the band. Those receiving salaries in excess of the top of the pay band were 'red-circled' for five years. Phase 1 was implemented on 1 January 2000.
12. Phase 2 was never completed. Whilst the jobs were scored, pay-banding did not follow. In the absence of pay-banding the Phase 2 job-holders did not enjoy salary increases in the same way as those in Phase 1 whose salaries fell below the bottom of their pay band. Hence the bulk of the current claims. We should mention that an issue arose concerning HEO Claimants with which we are not concerned, namely whether the Prison Service was required to objectively justify any difference in pay or other Terms and Conditions, was separately decided in the Claimants favour by the Rideout Tribunal in a decision dated 27 November 2003. That finding was reversed by the EAT (His Honour Judge Wilkie QC, as he then was, presiding) on 27 August 2004. The Tribunal decision has since been restored on further appeal by the Claimants to the Court of Appeal.

Case Management

13. The first appeal was listed for full hearing on 15-17 March 2005. An appeal against the Formula Judgment of 25 January having been lodged on 4 March, application was made on behalf of the Prison Service by letter from the Treasury Solicitor dated 8 March for the first appeal to be adjourned to be heard later with the second appeal. I directed on paper that the hearing dates be retained, when further directions for the disposal of the appeals would then be given.
14. The procedural issues were resolved in terms of our order, drawn up by Ms Eady and Mr Cooper, date sealed 16 March 2005. The first Tribunal decision was concerned principally with questions of liability; however, having resolved those issues, mainly in favour of the Claimants, the Tribunal then went on to proffer a "Standard" Formula to be applied to the pay of successful Claimants. They did so without receiving the parties' full submissions on the Formula. The first appeal raised 24 separate grounds under paragraph 6 of the Notice of Appeal. Some were withdrawn on 15 March; some were resolved by consent and with our approval; others concern liability issues; some concern the Tribunal's approach to the formula.
15. In our order we recorded those grounds of appeal which were withdrawn and those (Grounds 6.4 and 6.6) which were stayed. We directed that argument on grounds 6.1, 6.5, 6.7 – 12, 6.13, 6.14–6.15 and 6.16 would be taken during the hearing on 15-17 March if time allowed; the remaining grounds, 6.18–19 and 6.20–21, which overlap with the second appeal, would be taken with that second appeal at a later full hearing fixed for 18-19 April. Directions were given for the disposal of that second appeal.
16. It is appropriate at this point to express our gratitude to Miss Slade QC and Ms Gill and their respective juniors and those instructing them, for navigating us through the live issues now falling for determination in these appeals and for resolving others. We found it helpful to take those issues separately and to hear argument from both parties in relation to those issues sequentially. Miss Slade and Ms Gill were content to adopt that approach in advancing oral submissions to supplement their very full skeleton arguments.
17. At the second hearing held on 18-19 April ground 6.14 in the first appeal was, by consent, upheld in terms agreed between the parties and lodged with the EAT; ground 6.15 was, by consent, dismissed.
18. As to the second appeal, the grounds of appeal are set out, under various headings, at paragraphs 7-21 of the Notice of Appeal. Those at paragraphs 9 and 12 were not pursued by Miss Slade, however, on the penultimate day of hearings Miss Slade applied to amend her second Notice of Appeal to recast the way in which her case was put under paragraph 9. We put that application over to the final day in order to allow Ms Gill an opportunity to consider her position. She opposed the application. Having heard argument we concluded that Miss Slade was seeking to raise a new point, not argued below. For the reasons then given in a short interlocutory judgment we refused permission to amend.
19. In these circumstances we turn now to the live issues in both appeals and our determination of those issues.

The Law

20. Section 1 Eq PA provides, so far as is material:

1. Requirement of equal treatment for men and women in same employment.

(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one.

(2) An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed ("the woman's contract"), and has the effect that -

…

(b) where the woman is employed on work rated as an equivalent with that of a man in the same employment –

(1) If, apart from the equality clause (any term of the woman's contract determined by the rating of the work is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and

(2) if, apart from the equality clause, at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which she is employed and determined by the rating of the work, the woman's contract shall be treated as including such a term.

(c) [the equal value provision]

…

(5) A woman is to be regarded as employed on work rated as equivalent with that of any men if, but only if, her job and their jobs have been given an equal value. In terms of the demand made on a worker under various headings (for instance effort, skill, decision), on a study undertaken with a view to evaluating in those terms the jobs to be done by all or any of the employees in an undertaking or group of undertakings, would have been given an equal value but for the evaluation being made on a system setting different values for men and women on the same demand under any heading.

21. A discrete point arises in the first appeal (G.6.1) as to the proper construction of s 1 (2) (b) and (5). It is convenient to deal with the law in the context of that ground of appeal.
22. The second area of the law which arises in these appeals is the GMF (genuine material factor) defence (s 1 (3). Again, it will be convenient to consider the applicable principles in relation to that part of the first appeal dealing with pension benefits.

The First Appeal

23. We begin with three live issues arising for determination in this appeal. We are conscious on any further appeal the question is not whether we would have decided the case differently but whether the Employment Tribunal was wrong in law. Yeboah v Crofton [2002] IRLR 634, para. 11 (per Mummery LJ). In these circumstances we do not propose to burden this judgment by repeating the findings and conclusions of the Employment Tribunal below save insofar as it is necessary to put in context the material attacks on the Tribunal's first decision. Those issues are as follows:

(1) Work rated as equivalent (G6.1)

24. The starting point is the concession made by the Prison Service to which they were held by the Claimants. It must be remembered that Phase 2 of Equate did not, unlike Phase 1, proceed to the pay banding stage. Thus, the effect of the concession was that the Claimants who were scored the same or higher than their chosen male comparators were, by concession, to be treated for the purposes of s 1 (2) (b) as being employed on work rated as equivalent with their comparator(s). That concession necessarily implied acceptance by both sides that a valid JES was carried out. The advantage to the Claimants covered by the concession was that it was unnecessary to being their claims under s 1 (2) (c). s 1 (5) was satisfied.
25. The issue that now arises relates to the Claimants Ms Ford and Ms Fox. On the JES Ms Ford scored 95.85, whereas her comparators, Mr Fitzgerald (97.17) and Mr Trembath (97.51) scored higher. Ms Fox scored 113.63; her comparator, Mr Bond, scored 115.63.
26. Ms Ford and Ms Fox were included in Group 1, that is, Claimants who were evaluated under a valid JES. S 1 (5) provides that a woman is to be regarded as employed on work rated as equivalent with that of any men if, but only if, her job and their job have been given an equal value. It is and was the Prison Service's case that these two Claimants' jobs have not been given an equal value with those of their chosen comparators under the JES; they have been given a lower value.
27. The Employment Tribunal rejected that case. The relevant findings and discussion are to be found at paragraphs 53-59 of the first decision reasons. They held that this was a complete Job Evaluation exercise applying to these two Claimants. That was not negatived by the lack of pay banding. Having consider the EAT decisions in England v Bromley Council [1978] ICR 1; Southampton & District Health Authority. v Worsfold (598/98. 28 April 99. Unreported) and Arnold v Beecham Group [1982] ICR 744, they concluded that, based on the expert evidence they had received as to the lack of precise mathematical calculation in a Job Evaluation exercise a degree of tolerance between various scores must be accepted, as not indicating a lack of equality. On the small differences in these two cases, regarded by the Employment Tribunal as insignificant, both Claimants jobs were rated as equivalent by a completed job evaluation exercise which gave them equal value.
28. It is common ground that the point here at issue is a hard-edged question of law. What is the proper construction of s 1 (5) Eq PA on the facts of these two individual cases? We agree.
29. We look first to the earlier EAT decisions for assistance. In England v Bromley Council [1978] ICR 1. The EAT (Phillips J) made clear that where a claim is made under s 1 (2) (b) the Claimant must show that there was in existence an evaluation study which satisfied s1 (5). Where only one study met that requirement it was not open to the Claimant to contend either that some different study ought to have been adopted or that the study which was adopted did not satisfy s 1 (5). In the present case the relevant study terminated at the point-scoring stage; it did not proceed to Phase 2 pay-banding. As the Employment Tribunal correctly observed (Reasons. para, 53) both parties agreed that it is inappropriate to consider where pay band boundaries might have fallen had Phase 2 of the implementation been completed. Equally, we think, it was not open to the Employment Tribunal to revisit the question of whether this was a valid JES in light of the Prison Service's concession by which they were held to be bound.
30. In Robson, under the relevant JES, the female Claimant scored 410 points and her male comparator 428. However, the scheme proceeded to the equivalent of Phase 1 in the present case whereby jobs scoring between 410-449 points were banded together and converted to Grade 5. The EAT held that the industrial tribunal was right to have regard to the full results of the scheme including the final allocation of a Grade. The exercise did not end with the points scored. The Claimant's job was rated as equivalent with that of her comparator within s1 (2) (b) and 5.
31. In Worsfold the claim was brought under s 1 (2) (c) - equal value. In these circumstances we do not regard the observations of Holland J in that case as other than obiter insofar as they relate to s 1 (2) (b).
32. In Arnold, the issue was whether a JES which had resulted in the Claimant and her comparator's jobs both being classed as grade 2, but which had not been implemented in terms of equal pay was a complete study for the purpose of satisfying s 1 (2) (b) and (5). The EAT held that it was. The present case proceeded on the basis and it was so found by the Employment Tribunal that the JES was a complete study. In these circumstances, it seems to us, the short question is whether the JES has resulted in a conclusion that the job of these two Claimants has been evaluated under s 1 (5) as of equal value with the job of the man. See O'Brien v Sim-Chem Ltd [1980] ICR 573, 599F, per Lord Russell of Killowen.
33. In our judgment Miss Slade is correct in submitting that it has not. We accept that the s 1 (2) (b) gateway is precise when read with s 1 (5). The formula is 'if, but only if', her job and that of her comparator have been given equal value in the relevant JES. Ms Gill seeks to draw a distinction between 'relative value' and 'comparative value'; we do not find that approach helpful on the facts of this case. Given that this was a complete JES as a result of the concession, entitling the vase majority of Group 1 Claimants to claim that their work was rated as equivalent with that of their male comparators who scored the same or less points in the study it cannot be right to alter that approach in the case of Claimants who scored less than their chosen comparators under that study and introduce extraneous expert evidence to found the proposition that the difference in scores is insignificant such that the study has given the respective jobs an equal value.
34. In these circumstances we shall allow this part of the appeal and set aside the Employment Tribunal's decision that Ms Ford and Ms Fox have been the subject of a valid job evaluation exercise which has established that the value of their jobs is rated as equivalent to the value of the jobs of their named comparators and dismiss the claims of Ms Ford and Ms Fox as formulated earlier under s 1 (2) (b) Eq PA.

(2) Pay Progression

35. Once it is established that a Claimant is employed on work rated as equivalent with that of her male comparator under s 1 (2) (b) if any term of her contract is less favourable than a term of a similar contract in the man's contract, that term of the woman's contract shall be treated as so modified as not to be less favourable (s 1 (2) (b) (i)).
36. We have been referred, as was the Employment Tribunal, to a helpful analysis in the judgment of Ward LJ in Enderby v Frenchay Health Authority (No. 2) [2000] ICR 612, 630G-631F. In the course of that analysis Ward LJ refers to a passage from the speech of Lord Nicholls in Glasgow City Council v Marshall [2000] ICR 196, 202F where, in referring to the scheme of Eq PA he referred to the s 1 (2) (b) comparison where the woman is being paid or treated less favourably than the man.
37. It was common ground before the Employment Tribunal that the respective terms in certain relevant comparisons in relation to pay progression (PP) fell to be assessed in the equivalence process of relative favourability.
38. The difference between the relevant PP systems was that progression for the Claimants was dependent on performance rating, whereas that for the male comparators involved incremental pay progression. The Employment Tribunal found (first decision reasons, paragraphs 86-90) that in relation to PP the Claimants were treated less favourably than their comparators in two respects. The first was uncertainty; the second was non-consolidation of awards. As to uncertainty, the Employment Tribunal found that whereas, for example, Prison Officers received nine annual increments of a fixed amount plus two additional long service awards after three and six years, the Claimants received varying annual performance increases. The evidence was that 70% of Claimants were likely to be treated each year as 'achieved'; 20-25% 'exceeded' performance standards and 1% would be regarded as 'unacceptable' (thus receiving no performance increase). Further, whereas the comparators' incremental increases were then consolidated into their basis pay, thus counting for pensionable purposes, the Claimants' annual performance payments were not consolidated. The Employment Tribunal concluded that these two factors rendered the Claimants' PP term less favourable than that of their comparators.
39. We remind ourselves that our jurisdiction is limited to correcting errors of law by Employment Tribunals. It is not our function to retry the arguments below. Provided the Employment Tribunal has reached a permissible conclusion in law we cannot and will not interfere.
40. The principal point taken by Miss Slade is that it was impermissible for the Employment Tribunal to focus on the system of PP rather than its product, that is, whether the Claimants received less pay in respect of PP. She submits that the Employment Tribunal misinterpreted the effect of Enderby (cited as Evesham at paragraph 89 reasons) which was concerned only with product. We disagree. First, we repeat the distinction drawn by Lord Nicholls in Marshall between the woman being paid or treated less favourably than her comparator. Secondly, we refer to Ward LJ's analysis in the passage mentioned in Enderby. In considering how the respective terms operated (the issue here), his Lordship found (631 D-E) that the Claimant's terms were less favourable in that her salary was less than her comparators and:

"(7) As to the scale, her scale was less favourable than his in that: (a) the stage payments were less in amount than his, (b) she was only entitled to three increases, he to four and (c) she would enjoy no more increases because she was at the top of her scale whereas he would have all of his to follow."

41. We highlight that passage because it shows, in our judgment, clear authority for the approach which this Employment Tribunal took to the principle of PP, rather than simply its product.
42. Having rejected the Prison Service case in principle, we are not persuaded that the Employment Tribunal's finding can be characterized as perverse in the true legal sense. Yehoah v Crofton, paragraphs 92-95, per Mummery LJ. In these circumstances we dismiss this ground of appeal.

(3) Pension Doubling (G.6.16)

43. The third live issue in the first appeal concerns the Prison Service GMF defence in relation to what may be described shortly as pension-doubling. On this question the members of this Tribunal are divided.
44. Until 1987 and Fresh Start all Prison Officers were entitled to doubling of their pensionable years for every year of service after 20 years. Thus a Prison Officer with 22 years service could claim 24 years for pension purposes. This was to allow Prison Officers to retire at age 55 without suffering a reduction in the value of their pension. In 1987 doubling was abolished for new Prison Officer recruits; however it was retained for Prison Officers whose service commenced before 1987. It has never applied to the contracts of administrative staff. Hence those Claimants whose service commenced prior to 1987 complained that the pension term in their contract was less favourable than their male Prison Officer comparators' term. Plainly it was, but in this respect the Prison Service raised a GMF defence.
45. At this stage it is convenient to deal with two matters raised in the appeal. The first is bad faith. One of the Prison Service grounds of appeal (G.6.13) relates to 'bad faith', that is, a challenge to the Employment Tribunal's reasons on 'Meek' grounds as to whether the Employment Tribunal had in fact found that Prison Service was guilty of bad faith in rejecting the JES after 1999 (the relevant date for the purposes of these proceedings). Happily it is unnecessary for present purposes to examine this aspect since the question of bad faith does not go to any live issue in these appeals. In particular, we are quite satisfied having heard argument that the question of bad faith played no part in the Employment Tribunal's reasoning in relation to the issue of pension doubling. We therefore say no more about it.
46. Secondly, the Employment Tribunal, at paragraph 93 of the first decision reasons, set out what they described as well-established principles of law consisting of six propositions. Miss Slade takes issue with those propositions and advances her own formulation, also reduced to six propositions. Ms Gill does not entirely accept that formulation.
47. Interesting as it may be as an academic exercise to examine those arguments we prefer to focus on the present GMF issue now raised in the first appeal, that of pension doubling. The first question is whether, in attacking the Employment Tribunal's ultimate conclusion that here the GMF defence is not made out, Miss Slade is challenging the Employment Tribunal's approach as a matter of legal principle as opposed to the application of those principles to the facts as found. We have concluded that it is the latter. What the Employment Tribunal has done is to ask itself the correct question, namely, has the Prison Service proved (the burden lying on the employer) any causally relevant objective justification for this less favourable treatment as at 1999, the relevant date when these proceedings were commenced?
48. Before returning to the Employment Tribunal's reasoning we should recall how this issue came before the Rideout Employment Tribunal. We have earlier referred to the two appeals adjudicated upon by Judge Ansell's division in September 2003, particularly in the context of the 'concession' appeal. The other appeal concerned the majority decision of the Employment Tribunal chaired by Mr Snelson rejecting the GMF defence in respect of pension-doubling. The Prison Service appealed successfully against that majority decision and the issue was remitted to the Rideout Employment Tribunal for reconsideration.
49. In remitting the point Judge Ansell said this at paragraph 39 of his judgment:

…In particular, there are no findings made by the Snelson Tribunal as to what attempts, if any, were made to redress the inequalities in the years following on from the Fresh Start deal. These are matters of fact which can only be addressed by a Tribunal. The Rideout Tribunal will, no doubt, be exploring all aspects of the Fresh Start deal and the years following its implementation and, accordingly, we set aside the Snelson Tribunal's finding in relation the early retirement [pension doubling] issue and remit the case to the Rideout Tribunal for a re-hearing of the issues.

50. We think that the Rideout Employment Tribunal had that direction well in mind when approaching the issue of pension-doubling, dealt with at paragraphs 132-134 of the first decision reasons. They looked at the position in 1987, the time of the Fresh Start agreement, and found that at that time the 'red-circling' of existing Prison Officers' pension-doubling was objectively justified on the grounds that to remove the benefit would jeopardise union acceptance of Fresh Start and to buy out the benefit would be prohibitively expensive, undermining the economies which Fresh Start was designed to achieve. In addition, withdrawing the benefit would have led to the loss of experienced officers from the service, presumably anxious to retain their existing pension entitlements. Thus, on the Employment Tribunal's findings, as at 1987, the Prison Service had objectively justified this less favourable treatment of pre-1987 administrative staff.
51. However, when considering the position as in 1999 the Employment Tribunal found that the Prison Service led no evidence to show that consideration had been given to extending the benefit to pre-1987 administrative staff, given the fall in the number of employees affected since 1987. As Mr Harris and I read paragraph 134 of their reasons the Prison Service lost on this point because they adduced no evidence to show that what was objectively justified in 1987 remained so in 1999. We find it significant that the Employment Tribunal observe:

'In our view there may well be very good reasons why the benefit of the red-circle justified in 1987 was still justified in 1999.'

In other words, we infer, there may be good reasons but if so the Prison Service has not put them before us so as to discharge the burden of proof lying on them under s 1 (3) Eq PA. Is that a permissible conclusion in law?

52. Miss Slade says not. She puts her case in a number of ways. First, she relies on the dictum of the European Court of Justice in Enderby [1994] ICR 112, 162B, paragraph 19 of the Court's judgment, that Article 141, (formerly 119) of the Treaty requires the employer to show that the difference [in pay] is based on objectively justified factors unrelated to any discrimination on the grounds of sex. Here, she submits, the difference was justified by the difficulty in removing the benefit from the comparators. The provision of the benefit to the Claimants would be the remedy if the red-circling was not justified at the relevant date.
53. In our judgment that analysis places too much emphasis on the Employment Tribunal's observation which simply amounted to this, given that the red-circling continued for twelve years, can depriving the Claimants of the comparable benefit still be justified?
54. Nor do we accept Miss Slade's submission that the Employment Tribunal fell into error in requiring the Prison Service to show that they had considered the need for the continuing disparity in treatment. This is not, unlike Cadman v Health and Safety Executive [2004] IRLR 971, see paragraphs 28-29, per M. Kay LJ, a case where the employer is putting forward 'after the event' justification; on this Employment Tribunal's findings the Prison Service put forward no justifying factors over and above those which pertained in 1987.
55. We have in mind the observations of Phillips, J in an early EAT Equal Pay case, Outlook Supplies Ltd v Parry [1978] IRLR 12. Referring to his earlier EAT judgment in Snoxell & Davies v Vauxhall Motors Ltd [1977] IRLR 123, the President said, paragraph 11:

The decision of an industrial tribunal under s 1(3) is one of fact, to be based on all the relevant circumstances. It may well be that in Snoxell & Davies v Vauxhall Motors Ltd we tended to treat a question of fact as one of law when we implied that indefinite prolongation of a 'red circle' cannot result in a defence under s 1 (3) failing where it might earlier have succeeded. In truth it is all a question of whether the industrial tribunal is satisfied that the employers have discharged the burden laid upon them by the sub-section. Prolonged maintenance of a 'red circle', especially if contrary to good industrial practice, may well in all the circumstances of the case lead to a doubt whether the employers have discharged that burden.

56. With that approach we respectfully agree. It is reinforced by this observation made by the European Court of Justice in Enderby (paragraph 25):

The Court has consistently held that it is for the national court, which has sole jurisdiction to make findings of fact, to determine whether and to what extent the grounds put forward by an employer to explain the adoption of a pay practice which applies independently of a workers sex but in fact affects more women than men may be regarded as objectively justified economic grounds;

citing Bilka-Kaufhaus [1987] ICR 110, paragraph 36. For national court read Employment Tribunal.

57. Put shortly, the Prison Service relied upon the original 1987 justification for the disparity in treatment as justifying the practice in 1999. The Employment Tribunal were not satisfied by that explanation. They were entitled to reach that conclusion. Consequently this ground of appeal also fails in the view of the majority.
58. Mr Yeboah takes a different view; he reasons that, given its own findings of fact, the Employment Tribunal erred in holding that "in 1999, therefore, there does not appear to be any causative factor for the continuing inequality of pension provision. There is, therefore, neither a genuine nor a material factor" (see paragraph 134 of the first decision). Prior to the introduction of Fresh Start in 1987, the prison officer (but not governor or OSG) grades were entitled to retire at the age of 55. To enable them to do so without reducing the value of their pension, each year of service after 20 years of service counted as 2 years for the purposes of their pension – a scheme known as "doubling". In 1987, as part of the Fresh Start reorganisation, this benefit was ended for new entrants. The Prison Service was not however, able to remove the benefit from those already in post and who were thereby contractually entitled to such benefit.
59. The Employment Tribunal found, inter alia, that:

"…to have abolished [doubling] would have provided a sticking point jeopardising the entire Fresh Start process and creating widespread industrial unrest. Consideration was given to the possibility of withdrawing the entire benefit and it was concluded that the only practical way in which that could be done was to buy it out. This was regarded as prohibitively expensive, especially in the light of the fact that Fresh Start was designed to introduce economies. We assume that it follows that any idea of extending the scheme to all staff for the future was regarded as even more expensive". (Employment Tribunal first decision paragraph 133).

"…in 1987 withdrawal of 'doubling' would not have been practicably possible. It follows that there was a real need to retain it, … because abolition would have opened the door to loss of significant numbers of experienced staff…" (paragraph 134)

"Cost of extension…would have been a very significant issue, especially bearing in mind that there was no other need for such a beneficial system save the need to match the existing benefit for prison officers" (paragraph 134)

"In our view there may well be very good reasons why the benefit of the red-circle justified in 1987 was still justified in 1999…although we do not know the numbers of administrative staff involved in extension it is likely that extension would involve considerable expense and that expense would have to be justified in respect of a system which no one at that time would have sought to support as still necessary." (paragraph 134).

60. The inequalities in Pension provision, on the particular facts of this case as found by the Employment Tribunal was not, for example, like the difference in pay which could be red-circled and be allowed to be eroded by successive pay increases to other (lower paid) employees until they caught up with the red-circled employee's pay. Therefore, in its judgment, once the Employment Tribunal accepted that the retaining the pension "doubling" for the red-circled prison officers and not extending it to other employees in 1987 was objectively justified, the Employment Tribunal should have concluded that the continuing causative factor and objective justification for the difference in pension provision is the continuing obligation to those already in possession of the benefit in 1987 and the absence of such an obligation to others, whether Claimants, or Prison Officers employed after 1987. To the extent that the Employment Tribunal found that there was neither a genuine nor a material factor justification because there was "no indication whatsoever of any consideration of extension of the pension doubling system" by the Home Office, it erred in law, see Cadman v HSE [2004] IRLR 971, 976-977 per Maurice Kay LJ, paragraphs 28-29.

The Formula Judgment

61. We have earlier treated pension doubling as a discrete issue. However, that was not the only GMF issue raised by the Prison Service. In their first decision the Employment Tribunal accepted that one factor, unsocial hours, and no other, was made out. They then proceeded, without hearing argument, to produce their own standard formula to deal with the quantification of unsocial hours, seeking to compare the actual salary of the Claimant with the notional salary of the comparator. That approach differed from those of the experts who gave evidence before them.
62. In the first appeal the Prison Service took a natural justice point (G.6.17), that it had not been given an opportunity to lead evidence or comment on the formula which the Employment Tribunal adopted. However, the Employment Tribunal made clear that its first model was not set in stone, but was subject to further discussion at a subsequent remedies hearing (reasons paragraph 143, 159). Argument was heard at that hearing before the final Formula Judgment was promulgated and hence the natural justice point is not pursued.
63. However certain grounds raised in the first appeal (G.6.18 (a) - (b) and 6.19 (a) and 6.20 (c) and 6.21) challenge aspects of the Employment Tribunal's approach finally adopted in the Formula Judgment and it is convenient to take those issues together with the issues raised in the second appeal, as did Counsel in their submissions. Miss Slade does not object to the standard formula approach in principle; rather she submits that in certain respects the Employment Tribunal reached the wrong result. It is necessary for her to show that, as to these remaining grounds in the first appeal and the grounds raised and pursued in the second appeal, the Employment Tribunal's decision was substantively perverse.
64. In our earlier order we permitted the second appeal to proceed to a full hearing in order to have the benefit of hearing argument on both sides. Having done so, we are acutely aware of the danger that a close examination of the evidence and of the findings of fact of the Employment Tribunal may lead us to substitute our own assessment of the evidence and to overturn what are essentially findings of fact made by the fact-finding Employment Tribunal. That would be wrong. See Yeboah v Crofton, paragraph 12 per Mummery LJ. Having considered the submissions we have unanimously concluded that in all outstanding respects save one Miss Slade is simply seeking to reargue the case put below. Insofar as it was rejected by the Employment Tribunal that was a permissible option. Ms Gill is correct in submitting that both the method and ultimate valuation produced by the Employment Tribunal was open to it on the evidence before it and the second appeal, taken with the outstanding issues from the first appeal, does not ultimately raise any issue of law.
65. That said, there is one aspect of the appeal on which we are not agreed, that is the value which the Employment Tribunal attach to each unsocial hour as a GMF justifying a salary differential between the Claimants and their comparators. In their first decision reasons, paragraph 150 the Employment Tribunal suggested a premium of 50% to be added to each unsocial hour worked by the comparator. At the formula hearing it was submitted on behalf of the Prison Service (Formula Judgment reasons paragraph 27) that the value to be attached to unsocial hours should be calculated by reference to the contractual entitlement of those in the Claimant grades so that if they worked outside 'social hours' (found by the Employment Tribunal to be 7.30 am – 5.30 pm) they would receive a minimum shift disturbance allowance of 12.5%, and additional pay for attendance on Saturdays (50%), Sundays (100%) and public and privilege holidays (200%). The Employment Tribunal considered that approach and, ultimately, rejected it in favour of the 50% across the board figure. In doing so they reasoned that account should be taken of the practice of voluntary shift swapping as against the adverse effects of 'unsocial hours' working. The majority has concluded that in arriving at the overall figure of 50% the Employment Tribunal made a permissible finding and not one with which we ought to interfere. Other Employment Tribunals might reasonably take a different approach, including that advanced by the Prison Service, but that does not invalidate this Employment Tribunal's approach as matter of law.
66. However, in the view of Mr Yeboah, the Employment Tribunal erred in the value it attached to the Prison Officers' contractual obligations to work shifts and unsocial hours. The Employment Tribunal found that part of the difference in pay between the Claimants and their comparators was justified by the "unsocial hours element of the Fresh Start reorganisation" (Employment Tribunal first decision paragraph 135). Having so found, the Employment Tribunal had to determine the value to be attached to this GMF. The Employment Tribunal decided that the value of each unsocial hour worked was 50% of the basic hourly rate (paragraph 150 of the first decision and paragraph 28 of Formula Judgment). In doing so, it is his view that the Employment Tribunal erred in two respects.

(1) Failure to Attribute Any Value to be Ascribed to the Contractual Requirement to Work Shifts Regardless of Whether Unsocial Hours were Worked.

The Employment Tribunal refers extensively to the GMF of "unsocial hours" (heading to paragraph 135); "the unsocial hours element" (paragraph 135); "unsocial hours working" (paragraphs 136 and 142); and "the unsocial hours working factor" (paragraph 143). However, in attaching a value of 50% on top of basic pay to be ascribed to each unsocial hour worked, the Employment Tribunal did not at any stage attribute any value to be ascribed to the contractual requirement to work shifts regardless of whether unsocial hours were worked. The minority Member is persuaded by the Prison Service's argument that, in failing to do so, the Employment Tribunal erred in law because:

(a) it failed to address their argument that part of the difference in basic wages was not only due to the fact that the comparators in practice worked unsocial hours, but was also due to the fact that they were contractually obliged to work shifts. It is a contractual requirement of the comparators to work shifts whilst the Claimants are under no such obligation. In simply addressing itself to the number of unsocial hours worked, and not to the contractual obligation to works shifts regardless of unsocial hours worked, the Employment Tribunal failed to consider a relevant difference between the contracts of the Claimants and their comparators;

(b) the Employment Tribunal itself recognised that "it may well be there is an element of disadvantage in the requirement to work shifts, arising largely because of the variable nature of working hours within a shift pattern" (Employment Tribunal first decision 136).

(2) Adopting 50% Up-lift

The Employment Tribunal acknowledges that "unsocial hours premiums in collective bargaining represent the amount an employer is prepared to pay to induce the workforce readily to accept unsocial hours working" (paragraph 28 of Formula Judgment). HM prisons must be operated day and night, 365 days a year and the Prison Service has to offer terms and conditions attractive enough to induce its prison officers readily to accept to work shift patterns (including nights) and unsocial hours.

(3) The evidence before the Employment Tribunal was that, firstly, prior to Fresh Start in 1987, those in the prison officer grades were contractually obliged to work shifts and were paid 12.6% allowance on top of basic pay for the requirements to work shifts. On top of that, they were paid premia for unsocial hours worked at weekends and public and bank holidays. These premia were ½ plain time for every Saturday; plain time for Sundays; and double time for public/bank holidays. Post-Fresh Start, payment of the shift disturbance allowance and premia ceased, but basic pay was increased so as to contain an element to reflect the requirement to work shifts as well as the requirement to work unsocial hours. The contractual obligation on prison officer grades to work shift and unsocial hours remained.

(4) Secondly, the shift disturbance allowance and premia payments continued to be paid to the OSGs, post-Fresh Start, until 1997 when they opted to come under the Fresh Start terms and conditions of service, at which time those payments were incorporated into their basic pay.

(5) Thirdly, the evidence before the Employment Tribunal showed that the shift and premia payments were not just historical but contemporary, because the Claimants' terms and conditions of employment provide that if they were required to work shift, they would be paid 12.5% shift disturbance allowance. Equally, if the Claimants were required to work on Saturdays, Sundays or public/bank holidays, they would be entitled to be paid unsocial hours premia of ½ time, plain time and double time, respectively.

(6) In the light of the very clear evidence as to the actual valuation of shifts and unsocial hours in respect of both Claimants and Comparators, the Employment Tribunal erred in deciding to adopt the 50% up-lift as the value to ascribe to this GMF, based on "general impression" (see paragraph 28 of Formula Judgment).

67. With that exception, as to which the majority view must prevail, we do not propose to address the minutiae of the arguments presented to us in the second appeal. Consequently, it is dismissed. As to the first appeal, with the exception of the pension doubling issue, as to which the majority view again prevails, the sole ground on which that appeal succeeds is the discrete issue concerning Ms Ford and Ms Fox. That appeal is otherwise dismissed.
68. A copy of this judgment in draft will be circulated to counsel only prior to handing down, subject to the usual restrictions. Any consequential applications must be made in writing within seven days of receipt. Junior counsel are invited to draft an agreed minute of order, following on from the order of 16 March 2005, including as an annexure the consent order made under first appeal G.6.14.