Scotland's Court of Session has refused Glasgow City Council's appeal bid in a long-running equal pay case.
Around 6,000 female staff brought equal pay claims against Glasgow City Council, arguing that pay protection measures that had been implemented as part of a pay re-structure to equalise men and women’s pay discriminated against female employees due to historical sex discrimination.
The case involves claimants represented by unions Unison and GMB, and law firm HBJ, with some pay claims dating back to 2006.
The pay re-structure had been designed to bring administrative and professional staff and manual workers together on to one pay scheme. As part of this process, bonuses that were earned by manual staff, who were mainly men, were no longer included. Employees whose pay would decrease as a result of the re-structure were classified as ‘in detriment’, and 'red circled' to be given the benefit of pay protection. Employees who would not see their pay decrease were 'green circled' and not included in the pay protection scheme.
Under the pay protection scheme, the red circled employees would have their pay protected for three years before the pay changes would be implemented, effectively lessening the impact of a pay decrease for higher earners. It was largely male staff who were red circled because they predominantly held the better paid positions and received bonus payments.
The claimants argued that because their work had been defined by the council to be comparative, hence the initial pay re-structure, treating red circled and green circled employees differently with regards to the pay protection scheme could not be justified.
The Employment Tribunal (ET) originally found that the pay protection provisions were ‘tainted for sex’, but that they could be objectively justified. The claimants responded by appealing to the Employment Appeals Tribunal (EAT), which ruled in the claimants' favour. The case was then taken to the Court of Session.
The Court of Session refused Glasgow City Council’s appeal of the EAT decision, with the final decision published on 31 May 2017. The court ruled that there was no evidence to support the objective justifications Glasgow City Council had cited, such as cost or to avoid becoming uncompetitive, for not including green circled employees in the pay protection scheme.A spokesman at Glasgow City Council said: “The council implemented a new pay and benefits structure, designed to ensure equal pay more than ten years ago. The matter before the court on this occasion related to the initial implementation of that scheme and, more specifically, the decision to offer a three year period of payment protection as a ‘soft landing’ for members of the workforce facing a drop in earnings.”Councillor Susan Aitken, leader at Glasgow City Council, added: “This is a complex legal ruling. However it is now clear that the award of pay protection was done in a way which discriminated against some of our female [employees] at that time. The right thing to do now is for the council to have open discussions with those [employees] and their representatives about how we give effect to this ruling. I hope there will be goodwill on both sides during those discussions.”Mike Kirby, Scottish secretary at Unison, said: "The pay protection win is great news. The way Glasgow rates and pays workers has been the source of conflict and division for ten years. These women have already waited long enough to receive the pay they have worked hard for and deserve. It's time for Glasgow City Council to do the right thing and pay up on equal pay."Moving forwards, employers are going to need to be wary of using a pay protection scheme to justify pay differentials, said Josephine Van Lierop, employment lawyer at Slater and Gordon Edinburgh. “The ramification for employers is they’re going to have [to] have very good reasons to rely on where they still may create or preserve old pay differentials. In ongoing and in new equal pay claims, employers won’t be able to just safely rely on the defence of pay protection to justify their gender pay gap. It’s the objective justification defence which the court has attacked,” she added.
To be non-discriminatory, female employees should have had their pay increased to the same level as male employees immediately, rather than red circling male employees and reducing their pay over time, said Stefan Martin, partner at Hogan Lovells. “In situations where an employer has identified an imbalance and takes steps to address it, if [it does] it in a way which in itself effectively discriminates against women then that will be something that [it] will be exposed to claims for,” he added.
