Equal pay claim based on differential pay distribution fails in Court of Appeal

The recent Court of Appeal decision in McNeil and ors v Commissioners for HM Revenue and Customs considered the issue of whether a clustering of men towards the upper end of a pay grade, and women towards the lower end established a ‘particular disadvantage’ for women, for the purposes of an equal pay claim.  The Court of Appeal found that it did not.

The claims were brought by a group of female employees at HMRC.  Jobs in HMRC below Senior Civil Service level are allocated to one of seven grades, each of which attracts its own “pay band”.  The Claimants were employees in grades 6 and 7 (6 being the higher) whose salaries had, during the periods to which their claims related, been at the lower end of the pay band for their grade.  It was common ground that the Claimants and their comparators did work rated as equivalent, for the purposes of the Equality Act 2010, and would be entitled to be paid the same as them unless HMRC could show a “material factor defence”.

The “factor” causing the pay differential was found to be use of a length of service criterion, as everyone joined the pay grade at the bottom of the pay band and generally increased annually until they reached the top of the band.  The employment tribunal and the EAT both found that this factor did not put women generally at a disadvantage and therefore HMRC’s material factor defence was proved. The Claimants appealed.

The Court of Appeal upheld the decision.  They rejected the Claimant’s argument that showing that proportionately more women are towards the bottom and, therefore, proportionately more men are towards the top of the pay grade would establish disadvantage in itself.  The distribution of men and women within a pay band only means anything in so far as it represents what sums they are in fact paid.  It necessarily follows that it is essential to take into account the actual amounts paid to each person in the group.

This rejection by the courts that clustering of men and women within pay grades necessarily puts women at a particular disadvantage without examining actual pay between the women and their comparators is helpful for employers in terms of gender pay reporting.  If a picture emerges in the GPG report of women in lower quartiles and men in higher paid quartiles, this will not be sufficient information on which to base a claim alone – further details will be needed to establish the actual pay of Claimants and their comparators.  

For more information, please contact Emma Bartlett.