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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Villalba v. Merrill Lynch & Co Inc & Ors [2004] UKEAT 0461_04_0107 (1 July 2004) URL: http://www.bailii.org/uk/cases/UKEAT/2004/0461_04_0107.html Cite as: [2004] UKEAT 461_4_107, [2004] UKEAT 0461_04_0107 |
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At the Tribunal | |
On 21 June 2004 | |
Before
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
MR A HARRIS
MR T HAYWOOD
APPELLANT | |
MERRILL LYNCH EUROPE LTD (CAYMAN) 2ND MERILL LYNCH INTERNATIONAL BANK LTD 3RD |
RESPONDENTS |
Transcript of Proceedings
JUDGMENT
Revised
For the Appellant | MS MONICA CARSS-FRISK QC Leading MR BRIAN KENNELLY (of Counsel) Instructed by: Messrs Lewis Silkin Solicitors Employment Department 12 Gough Square London EC4A 3DW |
For the Respondent | MR NICHOLAS UNDERHILL QC And MR THOMAS LINDEN (of Counsel) Instructed by: Messrs Lovells Solicitors Atlantic House Holborn Viaduct London EC1A 2FG |
SUMMARY
Equal Pay Act
Appeal against the dismissal by the Employment Tribunal of an application (on the first day of a six-week hearing) for disclosure of pay data. ET entitled to find that (i) reliance upon Danfoss required that the pay data sought was of those doing like work/work of equal value, and there was no sufficient evidence that such was the case (ii) the disclosure did not arise out of an amendment by the Respondent to rely on remuneration history as a material factor within s1(3) of the EPA.
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
"[The Applicant's] application was for written answers to requests for pay information to provide a comparison of the net pay of male and female employees of Global Private Clients at level 2 and above [i.e. levels 1 and 2] in 2000, 2001, 2002 and 2003, providing the figures separately for employees in the US Private Client and International Private Client. A request for pay data in respect of levels [3-6] was not pursued and the Applicant limited her request to levels 1 and 2 …"
(i) (dealt with in paragraphs 13 to 19 of the Reasons) The Applicant was entitled to such information in any event, by reference to the cases of Handels-Og Kontorfunktionærernes Forbund I Danmark v Dansk Arbejdsgiverforening acting on behalf of Danfoss [Danfoss] [1989] ECR 3199 and Enderby v Frenchay Health Authority (ECJ) [1994] ICR 112. The premise of the application, for which the Applicant relied upon Danfoss and Enderby to support her, was that, where an employer's system of pay is not transparent, and it is shown statistically that the average pay of a group of women is lower than the average pay of a group of men, then the employer is obliged to justify that differential to avoid a case of discrimination: and disclosure of information about the pay data of all employees of levels or groups or bands 1 and 2 (of which both the Applicant herself and all the 10 comparators were members) was necessary to kickstart such process. This is the 'pure Danfoss' point. It was accompanied by an amendment of the Applicant's consolidated pleading made in May 2004 so as to read as follows:
"97A. For the avoidance of doubt, the Applicant contends that the burden of proof rests on the Respondent to show that its practice in relation to pay did not discriminate against female employees, including the Applicant, on grounds of their sex since
97A.1. During the relevant period in relation to a relatively large number of employees the average pay for women was less than that for men; and/or
97A.2. The system of remuneration applied by the Respondent was not transparent."
(ii) The second way that the request for disclosure was contended to be supported (dealt with in paragraph 20 of the Reasons) was by reference to a recent amendment by the Respondents of their consolidated and re-amended grounds of resistance. The Respondents had originally pleaded, as was of course to be expected, reliance on s1(3) of the Equal Pay Act 1970 ("EPA"), in paragraph 52 of the original Notice of Appearance:
"If the Applicant is found to have been employed on like work to, or her work is determined to be of equal value to, any or all of the Comparators or any other male employees, the Respondent will say that any adverse difference in pay was due to genuine material factors unconnected with sex."
By the amendment of 24 March 2004, such plea was considerably elaborated or particularised by way of the spelling out of those genuine material factors relied upon. The pleading was as follows:
"The Respondent will also say that in cases where like work/work of equal value is established, any differences between the Applicant's pay and that of her comparators was due to genuine material factors which were not the difference of sex between them. Those factors were one or more of the following:
93.3.1. The decision as to the Applicant's pay and that of her comparator were made independently of each other …
93.3.2. The decision as to the pay of the Applicant and her comparators were taken on the basis of
93.3.2.1. the perceived value to the Respondent of the individual and their respective jobs;
93.3.2.2. the relevant decision-makers' assessment of their performance at the material time;
93.3.2.3. the performance of the sections of the business for which they were responsible;
93.3.2.4. the particular circumstances in which the decision was reached;
93.3.2.5. the compensation history of the Applicant and/or her comparator."
The Applicant sought to justify the application for disclosure by reference to this last sub-paragraph, 93.3.2.5, and the submission, as recorded by the Tribunal in paragraph 20 of the Reasons, was that "if the historical pay of the Applicant was to be relied upon to explain any pay differential between her and her comparators, then the historical pay data of all women and men in bands 1 and 2, as well as their current earnings, becomes relevant, because a pay system which fossilises pay and inequalities might require objective justification". This became known as the remuneration history point. It was not the subject of any suggested amended pleading before the Tribunal.
(i) The order, and consequently the emphasis, of the two points relied upon by the Applicant were reversed, and greater attention directed to the remuneration history point than to the pure Danfoss point. It seemed to us that this was considered to be necessary, from the point of view of the Applicant, in relation to so belated an application, to seek to place as much emphasis as possible on a case that it arose as a result of a late amendment by the Respondents.
(ii) A proposed amended pleading was produced by the Applicant to justify and explain the remuneration history point, which read as follows:
"99A. In relation to the Respondents' case under s1(3) of the Equal Pay Act 1970, the remuneration history of the Applicant and her comparators is a factor tainted by sex. Paying the Applicant and her comparators doing like work or work of equal value on the basis of their previous years' pay had a disparate impact on women because more women received lower pay in the previous years."
Ms Carss-Frisk QC accepted that if the Tribunal's conclusion in paragraph 20 of its Reasons were right, then the last words of such amendment might need to read "because more women, alternatively more women doing like work or work of equal value, received lower pay in the previous years".
(i) In an Equal Pay Questionnaire served in June or July 2003, the Applicant sought details of the pay data of all employees in bands 1 and 2 for each of the previous six years. This was refused on 18 July 2003 in the Respondents' answers to the Questionnaire, on the following basis:
"4.35. Again, you have made no attempt to suggest or demonstrate that every male employee captured in your wide request was employed on like work and/or work of equal value. You have not named them as your comparators and we are therefore unwilling to disclose this confidential information."
No further steps were taken.
(ii) By letter dated 8 April 2004, the Applicant's solicitors took stock of the Respondents' amended pleading of 24 March 2004, indicating that in response the Applicant would intend to amend its own pleading, to plead what was in that letter explained and particularised clearly as a pure Danfoss point. In the light of such intended amendment, the Applicant's solicitor set out further information which it sought, which was very carefully specific. In relation to the year 2000 it sought pay data for male and female employees in the role of Regional Business Executive, for the year 2001 the same in respect of those with the title of Market Leader at the First Vice President/Managing Director level reporting to the Chairman of Europe Middle East, in relation to 2002 the average total net pay for male employees and female employees separately in the role and with the title of Market Executive reporting to the Head of International Private Client Markets and in relation to 2003 the average total net pay for male and female employees separately in the role and with the title of Regional Business Executive reporting to Head of Europe, Middle East, Asia and Japan markets for Global Private Client, or Market Executives reporting to a Mr Abbas. This information was duly provided, under cover of a detailed letter by the Respondents' solicitors dated 19 April 2004.
(iii) The Applicant's solicitors' response, in a letter dated 20 April 2004, was to thank the Respondents for the pay data requested in their letter of 8 April, and to continue "In addition to this data please would you provide us with details of the total net pay of male and female employees in the whole of the Global Private Client Organisation at manager level and above for the years 2000, 2001, 2002 and 2003, identifying separately employees of US Private Clients and employees of International Private Clients". This was quite plainly a dramatically larger category, almost as large as that sought in the earlier Questionnaire. It was clarified in a letter dated 30 April 2004, after some further correspondence, as being a request for the net pay of male and female employees of Global Private Client at (a) level 2 and above, and (b) level 6 and above in the years 2000 to 2003. It was explained in that letter that "the pay data which you object to providing is necessary in order for the Tribunal to consider the Danfoss amendment", i.e. that set out in paragraph 6(i) above.
(iv) By letter dated 4 May 2004, the Respondents' solicitors queried the relevance of the data requested, and the explanation was given (plainly by reference to the pure Danfoss point) by the Applicant's solicitor's letter of 7 May 2004:
"As a matter of courtesy … we are prepared to clarify why we requested this information. Given the limited number of employees in the class of employees so far disclosed to us, and given our concern that wide pay differentials and pay existed and continued to exist between male and female employees in International Private Clients as a whole, we will invite the Tribunal, using the information which you have agreed to provide, to draw inferences from the wide differentials in support of the Applicant's case. We believe that the pay data will demonstrate systematic underpayment of female employees as opposed to male employees"
In their further letter dated 28 May 2004 the Applicant's solicitors again asserted that the information was "necessary for the Danfoss plea".
The Pure Danfoss Point
"Can an employee or an employees' organisation, by proving that an undertaking with a large number of employees (e.g. at least 100) engaged in work of the same nature or value pays on average the women less than the men, establish that the Directive is thereby infringed?"
Advocate General Lenz addressed the matter in full in his Opinion as follows:
"37. In order to establish with conclusive force discrimination in regard to wages it must suffice, in the given circumstances in the present case, that the pay for men and women for the same work or work of equal value is appreciably different. … It must however not be overlooked that specific comparison always forms the basis for a finding of direct discrimination.
38. … In accordance with the general rules on the burden of proof the plaintiffs would have to show … that one or more criteria … applied disproportionately more frequently to members of one sex and that there is thus a disadvantage related to sex. It is therefore indispensable to compare representative groups of persons. The difficulty in this case lies in the fact that, even in the event of actual indirect discrimination, the plaintiffs would, owing to the lack of transparency in the system of pay, have no means of adducing the requisite evidence.
39. It is only in that context that relevance attaches to the question whether infringement of a directive may be proved by showing that for the same work or work of equal value women on average receive less pay than men (Question 3(a)). Since it is in practice impossible for the plaintiffs to gather the requisite evidence, a system of proof should be accepted in this case, with a view to assuring the effectiveness of the principle of equal pay, whereby on proof of a lower average wage per group of employees to find according to their duties a presumption of discrimination can be established. …
40. …It is not possible to state here an absolute figure for the minimum size of a reference group. The point of departure is of course that there should be the same work or work of equal value, so that possibly the employees of a different department or of an assembly stage may constitute a reference group."
It is apparent that what is being suggested is that in lieu of (or perhaps to supplement) the existence of comparators, or adequate comparators, it may be necessary, where the payment system is not transparent, to look not to identified comparators doing like work or work of equal value, but to average pay as between men and women in groups (providing that the relevant group is statistically sufficiently large) of men and women carrying out like work or work of equal value. The judgment of the European Court is in that context:
"16. In those circumstances the answers to Questions 1(a) and 3(a) must be that the Equal Pay Directive must be interpreted as meaning that where an undertaking applies a system of pay which is totally lacking in transparency, it is for the employer to prove that his practice in the matter of wages is not discriminatory, if a female worker establishes, in relation to a relatively large number of employees, that the average pay for women is less than that for men."
"However, if the pay of speech therapists is significantly lower than that of pharmacists and if the former are almost exclusively women while the latter are predominantly men, there is a prima facie case of sex discrimination, at least where the two jobs in question are of equal value and the statistics describing that situation are valid."
"Consideration of whether the principle of equal pay has been observed requires a comparison between the pay of workers of different sexes for the same work or for work to which equal value is attributed."
"… it is for the complainant to provide the necessary statistics, although of course, as Peter Gibson LJ observed in Barry v Midland Bank plc [1999] ICR 319 at 335 … "seeking, if necessary with the [employment] tribunal's assistance, the relevant information from the [employer]". It has long been possible for complainants to ask for further and better particulars of their employers and to interrogate them (as, indeed, the applicant did here). Nowadays, moreover, the complainant can serve upon the employer a questionnaire under the 1970 Act which further facilitates the proof of a valid claim."
The Remuneration History Point
(i) As can be seen from the above, a request for all pay data relating to all employees in levels 1 and 2 does not begin to be a proportionate or legitimate response to the specific case in relation to remuneration history added or particularised by the amendment of 24 March 2004. Indeed, in our judgment, it bears no relation to it.
(ii) We agree with the Employment Tribunal that, given the underlying requirement that, if discrimination is to be shown in relation to pay, like must be compared with like, the same answers must be given to an application based upon the remuneration history point as on the pure Danfoss point. If 'taint' is to be shown then it can only be shown by reference to differential treatment of those carrying out like work. At paragraph 20 of the Reasons, to which we have already referred, the Tribunal recorded its agreement with Ms Rose's submission that a "pay system which fossilises pay and inequalities might require effective justification" but expressly "only if at that historical time the women were engaged in like work or work of equal value". We agree. Mr Underhill QC submits, and we accept his submission, that the argument depends upon there having been past discrimination in the group about which the data is sought: that the purpose of obtaining data is to demonstrate that, by statistical analysis of the group: but that if the members of the group were not doing work of equal value, statistical analysis would not demonstrate such discrimination. In any event we are entirely satisfied, as set out above, that if such argument does not succeed, as we are satisfied it does not, on the pure Danfoss point, then the Respondents' specific plea, by reference to the 9 (out of 10) comparators, of reliance in part on particularised remuneration history does not provide an alternative justification for the sweeping disclosure sought.