Equal pay: material factor defence continues to operate until new decision on pay
The Employment Appeal Tribunal (EAT) has held in Co-Operative Group Ltd and anor v Walker that a tribunal was wrong to find that an employer's "material factor" defence to an equal pay claim ceased to operate at some point between its original decision on pay and the completion of a job evaluation study a year later.
Around February/March 2014 the claimant was promoted to the role of Chief Human Resources Officer. The claimant and the rest of the Executive Committee were considered essential to COG Ltd's survival (it was in financial crisis at the time) and as a result were all offered enhanced salaries (though the claimant's salary was lower than that of the other members of the group). COG Ltd survived the crisis and entered into a period of consolidation. In February 2015 a job evaluation study (JES) was completed which showed that the claimant's work was at least equivalent to that of male members of the group, and/or of equal value. The claimant was dismissed in April 2017 and brought a claim for equal pay in relation to this period.
The tribunal accepted that a material factor defence was established as at February 2014 which meant that the difference in pay was initially justified. However, it found that "at some stage between February 2014 and February 2015", when the JES became effective, the importance to COG Ltd of the comparator's roles had declined relative to the claimant's work. This meant that by the time of the JES the "historical explanations for the pay differential were no longer material".
On appeal the EAT found that all the tribunal could say was that there had been a slide from a position where there were material factors justifying the pay differential to a position about a year later where the original justifications had gone. However, it was only when the JES became effective that the facts indicated that the objective justifications originally relied upon no longer persisted. In the absence of evidence as to whether each of the justifications persisted, and for how long, it was not open to the tribunal to speculate on the position between February 2014 and February 2015.
Take note: Following the decision in Walker, it is clear that if an employer has a material factor defence for a difference in pay, the defence will continue until a further decision has been made in relation to that pay. Here the JES identified an equal pay issue and it was at the point that the JES was completed, and not at any time before, that the employer could no longer rely on its material factor defence.