Dinner Ladies and Equal Pay

Many local authorities are, rightly, concerned about the need for ensuring that their staff are treated fairly as between each other and that those sectors of their work force which are primarily female are not employed on lower pay and less favourable terms than their male colleagues.

Despite these concerns, the 31 March 2007 deadline (agreed 10 years ago) for equal-pay structures to be put in place has come and gone with reports that many local authorities have failed to meet the deadline for agreement. (The Times reported that less than 20 per cent of all councils had complied - some other estimates are even lower.) Anecdotal evidence suggests that larger authorities and councils in the South of England are more likely to have failed to meet the deadline; some are concerned that deals reached with unions might not protect them against claims from employees who do not accept the negotiated deal. Others are concerned that previously agreed deals have been unpicked because the agreements negotiated with the relevant union do not provide adequate compensation for years of unequal pay (such as in the Allen v GMB case where the tribunal found that the union had indirectly discriminated against some female members by failing to properly explain a deal with their council employer on back pay that protected men’s pay and bonuses more than women’s). There is also understandable concern that awards of compensation for years of unequal pay will be substantial.

Notwithstanding these concerns and despite a number of high profile cases, the flood gates of tribunal claims have not yet been opened. However, the potential costs of ensuring equality of pay might be as high as £5 billion (even conservative estimates put this at £3 billion) and the TUC is calling for central government to provide direct funding to help settle all outstanding pay claims in the public sector.

These concerns have been highlighted by the recent decision of the House of Lords in St Helens Metropolitan Borough Council v Derbyshire and others [2007] UKHL 16.

In order to protect themselves against equal-pay claims, often fuelled by no-win-no-fee funding deals by the employees’ solicitors, prudent employers have taken steps to settle potential claims by reaching a global agreement with the unions, before those claims are issued. Normally this is achieved by the payment of compensation and/or by negotiating new terms of employment and is best effected through an appropriate trade union. Unfortunately, not every employee has capitulated and this was the problem that faced St Helens after they received over 500 equal pay claims brought by female catering staff. Although the majority of the claims were settled, about 40 were not.

These claims proceeded to a tribunal hearing but, before the claims were heard, St Helens wrote to all their catering staff warning that if the hearings went ahead redundancies would be inevitable to fund the increased salaries that would be then necessary. The letter went on to urge the remaining claimants to consider settlement.

The claimants argued that the letters amounted to victimisation under section 4 of the Sex Discrimination Act 1975. Their claims succeeded before the tribunal and in the EAT but were dismissed by the Court of Appeal. Now, on a further appeal to the House of Lords, the original decision has been reinstated, the court finding that the letter, written in the course of litigation, amounted to unlawful discrimination.

All of this only serves to make the task of the public sector employer all the more difficult. Prudence suggests that negotiations through a representative body are the best way forward; however, this does not help where employees who are not represented by a union or where they chose to pursue a claim notwithstanding a settlement with their colleagues. What the St Helens decision does tell us, however, is that any communication from an employer should be neutral and the temptation to point out the potential pit falls that a tribunal victory might cause should be avoided.

If this was not enough, claims under age discrimination legislation have already been commenced against the Prison Service and some central government departments. It seems that local authorities and public sector employees may need to brace themselves against possible future discrimination claims.

Adam Swirsky

Deadman v Bristol CC [2007] EWCA Civ 822

This case is of particular interest to Local Authorities and larger employers because the Court of Appeal gives very useful guidance as to when policies, guidance documents and procedural guides are incorporated into an employees’ contract of employment. More general guidance is given concerning the scope of stress at work claims in the context of disciplinary and other procedures.

The Facts
Mr Deadman had been employed by Bristol City Council for over 30 years. On 5th February 1998 a sexual harassment complaint was made against him. The Council commenced a formal investigation under its procedure for dealing with allegations of harassment. The Council failed to follow its own procedures correctly in that the panel convened to consider the complaint comprised of two instead of three members, one of whom was Mr Deadman’s immediate line manager. As a result of the above Mr Deadman successfully challenged the unfavourable decision of the panel and it was set aside. The Council then decided that it would reconvene a new panel to conduct a fresh investigation into the allegation. A letter was left on Mr Deadman’s desk informing him of this decision. Mr Deadman found the whole investigation very stressful and in May 1998 he ceased work permanently suffering from depression.

The Claim
Mr Deadman brought a personal injury claim against the Council arguing that the manner in which it had conducted its investigation breached both the common law duty of care owed to him and his contract of employment. Unusually the trial judge found that the Council had not breached its duty of care towards Mr Deadman but that it had breached his contract of employment.

Mr Deadman’s contract of employment
Mr Deadman’s contract of employment consisted of a Statement of Terms and Conditions issued in compliance with the Employment Rights Act 1996. The issue between the parties was which of the Council’s policies and procedures were incorporated into his contract of employment, in particular:-
1. Whether the Council was contractually bound to conduct the investigation “sensitively” as stated in its Integrated Equality Policy and repeated in its Procedure for Stopping Harassment in the Workplace.
2. Whether the Council was contractually bound to follow the formal procedure for investigating complaints of harassment as set out in its Procedure for Stopping Harassment in the Workplace.
The trial judge found that the both of the above were incorporated into Mr Deadman’s contract of employment and that the Council’s breaches (in particular its duty to deal with the investigation sensitively) caused Mr Deadman’s depression.

The Decision of the Court of Appeal
The Court of Appeal allowed the Council’s appeal holding:-
The trial judge was wrong to find that the Council had a contractual obligation to conduct the investigation “sensitively” because:-
The Integrated Equalities Policy predominantly consisted of policies and aspirations and therefore did not naturally lend itself to incorporation.
The statement that the investigation would be conducted “sensitively” was properly understood as an illustration of the manner in which the Council expected to conduct its relationship with its employees, both in complying with its contractual obligation not to undermine the mutual relationship of trust and confidence and in observing its duty of care towards its employees under contract and at common law.
It was a term of Mr Deadman’s contract of employment that the Council would follow its published procedure in the investigation of any complaints of harassment made against him. The Council had therefore breached Mr Deadman’s contract of employment by convening a panel with only two members.
Mr Deadman’s injury was too remote in law to be recoverable as it was not reasonably foreseeable.
The trial judge’s ruling that the Council had not breached its common law duty of care towards Mr Deadman was upheld.

This case illustrates that Local Authorities and other employers may be held to have breached their employees’ contracts of employments if they fail to follow published disciplinary and investigatory procedures, even where those procedures are not explicitly incorporated into their employees’ contracts of employment. In this case the Court of Appeal held that Mr Deadman’s injury was too remote as it was not reasonably foreseeable that Mr Deadman, described as a person of “robust good health”, would suffer psychiatric illness. However, it is important for employers to be alert to signs of stress and any particular problems or vulnerabilities that their employees may have, as such circumstances could lead the court to conclude that psychiatric illness was reasonably foreseeable and the employee may have a valid claim for potentially unlimited damages against the employer.

LAURA PRINCE