In this case the EAT held that, in an equal pay claim, evidence of an employer's thought process (or of any particular decision-maker) is not essential to establish a material factor defence. What is required is evidence of a sufficient causal link between the difference in pay and a genuine factor unrelated to the differing sex of the claimant and their comparator.
The Facts
The claimant, Ms Edgar, was employed by Scottish Water as a corporate affairs officer, which was banded at grade C. She brought an equal pay claim under the Equality Act 2010. She identified a male colleague, Mr B, who began employment after her, as a comparator. Both Ms Edgar and Mr B had the same job title and were within the same pay grade but Mr B received a higher salary. Scottish Water defended the claim on two grounds:
- First, by arguing that Ms Edgar and Mr B did not perform like work or work of equal value; and
- secondly, by invoking the material factor defence that the difference in pay was due to Mr B’s superior skills, experience, responsibility and potential, and nothing to do with the difference in sex.
In respect of the material factor defence Scottish Water led evidence about the discussions within the organisation that led to Mr B's respective pay level and the resultant level of salary ultimately offered to the him at the time of his appointment. It also sought to lead comparative evidence of the claimant’s skills, experience and potential both at the time of, and after, Mr B's appointment. The tribunal directed itself that Scottish Water needed to prove the identity of the pay decision-maker when Mr B was appointed. It concluded that as Scottish Water had not done this, the material factor defence inevitably failed. It also directed itself that comparative evidence of the respective skills, experience and potential of the claimant and her comparator following Mr B's appointment was irrelevant. Scottish Water appealed to the EAT.
The EAT set aside the tribunal's judgment in its entirety and remitted the case to a differently constituted tribunal to consider the material factor defence. The EAT held that:
- the tribunal's self-direction that Scottish Water needed to prove the identity of the decision-maker was a material misdirection of law.
- the tribunal should have focused on determining the actual cause of the pay disparity.
- there may be cases in which evidence of what was in the mind of a person who took a pay decision may be useful to the tribunal in considering the actual cause of the pay disparity; and the subjective view of a decision-maker might well be helpful evidence to a tribunal in making an assessment (on an objective basis) as to what the cause was. However, it was an error of law for the tribunal to conclude that identification of the decision-maker was essential.
- the tribunal's conclusion that an absence of proof of the identity of the decision maker inevitably led to a failure to prove the material factor defence was also a material misdirection of law.
- the tribunal has also made a mistake in deciding that comparative evidence of the respective skills and abilities of the claimant and her comparator after the comparator’s appointment was irrelevant.
What this means for employers
The material factor defence is often a crucial part of defending an equal pay claim.
This reminder that evidence explaining the material factor, or reason, for the salary level of a comparator does not need to be direct evidence setting out what was in the mind of any person or body at the point the salary level was decided is useful for employers. As the EAT said, other relevant evidence can helpfully be deployed including circumstantial evidence or second hand evidence from a person who is suitably knowledgeable about the factors that were regarded as important to explain the difference.
However, though not essential, if the decision maker is still employed the best evidence is likely to be from them provided they can give clear information, unrelated to sex, about why a comparator's salary was set at the level it was.
