01 December 2020

Nicola Mullineux, senior employment specialist for Peninsula, reviews the decisions in three cases

Walker v Co-operative Group
The Court of Appeal has ruled that, when considering a ‘material factor’ defence within an equal pay claim, employers need to explain not justify pay disparity.

Walker, the claimant in this case, was promoted in February 2014 when the respondent was in financial crisis, which was labelled as essential to its survival. She, along with her colleagues on the executive team, was offered increased salaries but her salary was lower. As time passed, the crisis was resolved, and a decision was made to downsize her role and pay her less.

In February 2015, a job evaluation study (JES) was conducted which concluded that the claimant was paid substantially less than others whose work was of at least equal value to hers i.e. her ‘comparators’. Following a later dispute which took place in April 2017, she was dismissed from her role and later brought numerous claims to the employment tribunal (ET), including equal pay.

When faced with an equal pay claim, it is open for employers to point towards a material factor not connected to gender which explains the difference in pay. The respondent sought to rely on a number of material factors.

The ET determined that the material factors which related to her pay as it was originally set in February 2014 were sufficient justification. These were as follows:

  • the claimant’s comparators were vital to the immediate survival of the company as they formed part of a core team, whilst the claimant was not part of this team
  • the claimant was newly promoted and unproven at executive level
  • there was a more significant risk that the claimant’s comparators would leave the organisation
  • one of the comparators was a ‘top’ corporate lawyer and therefore paid at a higher market rate.

However, the ET then assessed the impact of the JES outcomes as outlined in February 2015. The tribunal concluded that, at some stage in the twelve months leading up to this study, the claimant’s comparators’ roles had been shown to have declined and had become more comparable to her own. Therefore, the ET was of the view that the material factors present in February 2014 were no longer material by the time of the study. The claimant was entitled to equal pay.

The respondent, the Co-operative Group, appealed to the employment appeal tribunal (EAT), arguing that the ET should not have decided that the non-discriminatory factors that applied in 2014 did not continue to apply when the JES was carried out in 2015. The EAT agreed. They outlined that a material factor defence continues to be in place until there is a reason for it not to be e.g. a further pay review is carried out.

The claimant appealed to the Court of Appeal, but this was dismissed; the EAT’s finding stands.

Argos Ltd v Kuldo
The EAT has found that an employee was constructively dismissed when she was moved onto a different role instead of being subject to appropriate redundancy procedures.

The claimant, Ms Kuldo, was employed as a costs manager at Argos when it was acquired by Sainsburys. As a result of this business acquisition, she was informed that her role was at risk of redundancy but that she, along with a colleague, was being considered for the role of central costs manager. At this time, she was provided a job description, alongside information about a proposed collective redundancy process. She was eventually told she would be given this role.

Argos maintained a procedure where employees could be ‘mapped’ into similar roles if these were only 30% different at the most. Whilst Argos argued that the new role fell into this bracket, the claimant disagreed. In writing, she outlined that it offered less responsibility, less status and too much of a change in her daily duties. Argos treated her concerns as a grievance and ultimately rejected it, informing her that she was to move into the new role.

The claimant later brought claims to the ET, including unfair dismissal and failure to provide redundancy pay. The ET upheld her claim for constructive unfair dismissal. In forming their decision, they agreed that the new role offered had been significantly different to the old one and Argos had failed to properly assess how the 30% rule should be applied. The ET also found that as Argos had failed to properly consult with the claimant, it had breached the implied term of mutual trust and confidence. As the claimant had resigned in response to these breaches, she was constructively dismissed.

The ET failed to deal with the redundancy pay issue, instead postponing this to a remedy hearing.

Argos appealed on numerous grounds, arguing that the ET had failed to consider if the organisation had acted reasonably in the circumstances. Argos also stated that the ET had misinterpreted the law in finding the new role was not a suitable alternative role.

The EAT agreed that the ET had carried out a fair, objective assessment as to whether Argos’s actions amounted to a breach of the implied term and had correctly concluded this amounted to a constructive dismissal. That said, as constructive dismissals are not always necessarily unfair dismissals, they had failed to properly consider if Argos had acted reasonably.

A significant aspect of this decision was the ET’s failure to assess the suitability of the new role. The EAT explained that, from what it could see, the ET had not approached this in the correct way, and it was therefore unclear how they had assessed the role was unsuitable. To this end, the EAT concluded that this needed to be revisited to confirm whether the dismissal was fair and what redundancy pay should be due to the claimant. The case was remitted to the ET for further consideration on this point.

Sullivan v Bury Street Capital Ltd
The EAT has considered whether a claimant suffering from paranoid delusions had a disability for the purposes of the Equality Act 2010.

Mr Sullivan, the claimant in this case, developed paranoia in May 2013, later specifying that this caused him to deliberately avoid putting information into his work calendar, or deliberately giving misleading information. The chief executive became aware of this situation in July 2013, admitting that the claimant appeared to be in a “bad place psychologically”. Despite this, the two went on a business trip in September 2013, where the claimant’s condition appeared to be improving.

Over the next few years, the claimant received psychological help for his condition and started to manage it much more effectively. However, the relationship between him and the chief executive began to break down, with continued discussions being had over his time-keeping and attitude. His paranoia did not affect him again at work until 2017, when a discussion over his remuneration was held. Following this, the claimant’s condition decreased significantly, leading to him taking time off work. After being dismissed, he brought a claim to the ET for disability discrimination. The ET addressed whether he was disabled for the purposes of the Equality Act, ultimately concluding that he was not.

They held that although there was a ‘substantial adverse effect’ present both in 2013 and 2017, it did not meet the definition of ‘long-term’. Following his improvement towards the end of 2013, this condition had not resulted in the relevant effect on the claimant. For example, he had been allowed to attend a business trip, which would not have been permitted if he were not fit for the task.

The claimant appealed on numerous grounds.

The EAT dismissed the appeal, finding that the ET had lawfully drawn the distinction between the claimant’s condition, namely his delusional beliefs, and the impact of this on his ability to carry out day-to-day tasks. Explaining that the effect of a condition can vary over time, they held that although there was a substantial adverse effect in 2013, and again in 2017, in neither case was it likely that the condition would last twelve months or more.

The ET had correctly assessed the intermittent years where the condition had not had an adverse effect, taking evidence from medical professionals, and other employees of the respondent, to find that the claimant’s condition had improved between September 2013 and April 2017.

The EAT also dismissed the claimant’s argument that his condition was likely to recur. This was because the law on recurring conditions relates to past disabilities; the claimant’s condition had continued throughout the period in question. Where an adverse effect does occur again at a later date, it does not mean that the ET automatically needs to conclude that the first occurrence was ‘likely’ to reoccur; they need only assess the situation with the evidence at hand. The EAT agreed that the adverse effects were unlikely to recur as the triggering events.

Featured in the December 2020 - January 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.