Equality Act: Choosing a suitable comparator - two recent cases

Employment tribunals should not weigh themselves down with extensive fact-finding exercises on the issue of whether the comparators would be employed on the same terms at the claimants’ establishment as at their own establishment.

The tricky issue of comparators has hit the headlines recently. Crowley Woodford and Sarah-Jane Gemmell take a closer look.

There have been two recent decisions, in quick succession, considering the thorny issue of comparators in equal pay and direct discrimination claims. In this article, we will explore the implications of these decisions and take a closer look at the comparator hurdle which claimants must clear.

Who is a comparator?

The Equality Act 2010 provides that when a claimant brings equal pay or certain sex discrimination claims, they must show that they have been treated less favourably than someone else (a ‘comparator’) and that this treatment is based on a characteristic which is protected under the Act, such as sex. The question then arises of whether that comparator has to be a real person or whether a hypothetical comparator can be used.

Broadly, to bring a successful equal pay claim, the claimant must show that a real (and not hypothetical) comparator of the opposite sex exists. That comparator must be on higher pay and be doing the same work as the claimant or work that is equivalent or of equal value. Also, the comparator must be employed by the claimant’s employer or an associated employer and work at the same establishment, or, if they work at another establishment, common terms must apply. The Equality Act does not define ‘common terms’, so this is subject to interpretation by the courts.

In contrast to equal pay cases (and subject to a limited exception), claimants alleging direct discrimination can use both actual and hypothetical comparators. They must show that they have been treated less favourably than the real or hypothetical comparator because of a protected characteristic such as sex.

Asda Stores Ltd v Brierley [2021]

The Supreme Court’s recent decision in this case has hit the press headlines because of the potential far-reaching impact it has for other retail employers. We already know that similar equal pay claims are in the pipeline against other supermarket giants and, if these are all successful, it is reported that the retailers could have to pay an eye-watering £8bn in back pay.

In Asda, the court confirmed in March this year that the claimants, who work on the shop floor and are mainly women, can compare themselves with distribution depot staff, who are paid more and are mainly men, for the purpose of bringing an equal pay claim. However, this is by no means the end of the story as there remains a long legal road ahead for the claimants. The main issue of whether retail staff and distribution staff are in fact comparable, in the sense that their work is of equal value, is yet to be decided. Asda can still deploy a number of defences to escape liability, such as the difference in pay being due to a genuine material factor (such as different skill sets) which was not itself sex discriminatory. This decision was only on the preliminary issue of an appropriate equal pay comparator but, nevertheless, the claimants have cleared this often-difficult hurdle.

In reaching its decision, the central question considered by the Supreme Court was whether the retail and distribution staff were employed on ‘common terms’, given that they worked at different establishments. The court applied a previously established test, the so called North hypothetical test (named after North v Dumfries & Galloway Council [2013]). This test is used when there are no employees from the comparator’s group at the claimants’ establishment. It considers whether the comparator’s group would have been employed on broadly similar terms to those which they have at their own establishment if they were employed at the same site as the claimants. If their core terms are not changed by the hypothetical relocation, then the common terms requirement is satisfied and the one group may be a comparator for the other. For the purposes of the Asda case, the Supreme Court decided that the test had been met.

Price v Powys County Council [2021]

March was a busy month as the Employment Appeal Tribunal (EAT) judgment in Price was also published. The EAT considered the comparator issue in a direct discrimination claim involving a male employee on shared parental leave (SPL) and a female comparator on adoption leave. The Court of Appeal has previously considered a similar issue and determined that male employees on statutory shared parental pay cannot use women receiving enhanced maternity pay as a comparator (see Ali v Capita Customer Management Ltd (Rev 2) [2019]).

In Price, the main issue before the EAT was whether it was direct discrimination to pay Mr Price, a male employee on SPL, less than a female comparator on adoption leave. The council’s policy provided that staff on SPL were to receive an amount equivalent to statutory maternity pay, whereas those on adoption leave were entitled to enhanced pay. The EAT dismissed Mr Price’s appeal on the basis that the predominant purpose of adoption leave is not simply to facilitate childcare and it is not the same as SPL.

In the employment tribunal, Mr Price initially relied on two comparators: a female worker on maternity leave and a female worker on adoption leave, both of whom received an enhanced rate of pay compared with the statutory regime. After the tribunal dismissed both comparators, the EAT had to consider the direct discrimination claim in relation to the second comparator. In this context, the question which it needed to determine was whether there was any material difference between Mr Price’s circumstances and those of the comparator on adoption leave.

The EAT considered various differentiating factors between the two types of leave, including when they commence. SPL can begin, for example, at any stage during the first year of a child’s birth. However, adoption leave starts, at the latest, on the date of the placement. This difference confirms the need for the adopter to have time at the beginning of the placement to prepare and maintain a safe and stable environment for the child and to develop a parental bond. Furthermore, the flexible nature of SPL is consistent with giving parents (whether birth or adoptive) greater choice when it comes to childcare responsibilities. Ordinary maternity leave and adoption leave may only be taken by the birth mother or adopter for a continuous period of up to 26 weeks and goes beyond the facilitation of childcare.

The EAT therefore agreed with the employment tribunal and rejected Mr Price’s chosen comparator of a woman on adoption leave because her circumstances were materially different to those of a man on SPL. A more appropriate comparator would be a female employee on SPL and as she would receive the same pay under the council’s policy as the claimant, there would be no prima facie case of discriminatory treatment.

Why are these cases helpful to employers and their advisers?

In Asda, the Supreme Court provides a very helpful summary of the law on the common terms requirement at the end of its judgment. This offers a useful guide for advisers to employers who are faced with an equal pay claim in which the claimants are based at a different establishment or site from their chosen comparator. The court describes the common-terms requirements as a ‘threshold test with a limited function’. This limited function eliminates comparators when the differences in pay are based on geographical or historical factors.

The Supreme Court also provides much-needed clarity around case management. Employment tribunals should not weigh themselves down with extensive fact-finding exercises on the issue of whether the comparators would be employed on the same terms at the claimants’ establishment as at their own establishment. This is helpful to all parties as it means they will need to disclose fewer documents and pay fewer costs. The court said that:

… the fact-finding exercise can and should be kept within tight bounds. The employment tribunal should not countenance a prolonged enquiry into this threshold test.

It added that appeals should be discouraged.

Advisers to employers should not be concerned that this approach dilutes the potential to defend the claim. Employers will still have sufficient opportunity to show that any pay disparities are justified due to the value of the claimants’ work being lower or a genuine material factor. Claimants will also still need to prove the fundamentals of an equal pay case. However, it is to be hoped that protracted discussions in the employment tribunal over tiny variations between relevant employment terms will be avoided from now on.

The whole operation of SPL is difficult enough for employers without having to worry about a possible challenge because they have decided not to enhance pay for that particular benefit. Although there can be no cast-iron guarantee that claims will not be brought, advisers to employers can now take some comfort from the fact that we have both a Court of Appeal decision and a recent EAT decision rejecting the arguments that those on SPL can compare themselves with those on maternity and adoption leave.

Citation reference:

Crowley Woodford and Sarah-Jane Gemmell, 'Equality Act: Choosing a suitable comparator – two recent cases', (May 2021 #220) Employment Law Journal, https://www.lawjournals.co.uk/2021/05/04/employment-law-journal/equality-act-choosing/.

This article was first published in the May 2021 edition of the Employment Law Journal.