The Floodgates Will Shortly Open

Will we now see a flood of equal pay claims?

On Wednesday the Supreme Court gave its Judgment in the case of Birmingham City Council v Abdulla [2012] UKSC 47 SC.  The appeal was concerned with applicable time limits for issuing equal pay claims.

The usual forum for bringing an equal pay claim is the Employment Tribunal and the claims normally have to be issued at the Tribunal within six months of the employee leaving the employment. However, there does exist jurisdiction for the Courts and the Employment Tribunal to hear an equal pay claim founded on breach of contract.  This is what Mrs Abdulla’s case and 173 other female workers at Birmingham City Council did when they brought equal pay claims outside the six month limitation period applicable in the Employment Tribunal. They had all left the Council’s employment between August 2004 and November 2008 and were within the six year limitation period that exists for breach of contract claims, so they issued their claims in the High Court.

Birmingham then sought to have the claims struck out on the basis that as they should have been presented to an Employment Tribunal they were out of time and should not be allowed to proceed. It relied upon s. 2(3) of the Equal pay Act1970;

 “Where it appears to the court in which any proceedings are pending that a claim or counterclaim in respect of the operation of an equality clause could more conveniently be disposed of [my emphasis] separately by an employment tribunal, the court may direct that the claim or counterclaim shall be struck out; and (without prejudice to the foregoing) where in proceedings before any court a question arises as to the operation of an equality clause, the court may on the application of any party to the proceedings or otherwise refer that question, or direct it to be referred by a party to the proceedings, to an employment tribunal for determination by the tribunal, and may stay or sist the proceedings in the meantime.”

The six month limitation period in equal pay claims cannot be extended.  In unfair dismissal cases the Tribunal has discretion (sparingly exercised) to extend the three month limitation period if it was not reasonably practical to have presented the claim within three months of the date of termination and will do so (a little more readily) in discrimination cases if it is just and equitable to do so. Lord Wilson, who gave the lead judgment, commented;

“It is strongly arguable that Parliament tolerated an unusually absolute time limit for the presentation to the tribunal of a claim under the Act only because it recognised that, were she to fall foul of that time limit, the claimant would nevertheless be likely to remain in time for making her claim in court.”

 And

 ”I would hold that the present claims cannot more conveniently be disposed of by the tribunal and that Birmingham’s invocation of section 2(3) of the Act was rightly rejected both by the deputy judge and by the Court of Appeal …

I would hold, for the purpose both of the first part of the subsection [2.3] and of its successor, namely section 128(1) of the Equality Act 2010, that a claim in respect of the operation of an equality clause can never more conveniently be disposed of by the tribunal if it would there be time-barred.”

The effect of this is that even employees who left up to six years ago from the employment can now bring claims under the Equality Act for equal pay in the civil courts. Only if it is held that their claim is an abuse of process should the claim be struck out.  There is potential for large numbers of claims to be brought and for the Judges’ most feared event to take place: the opening of the floodgates.

But will it?  Probably, but High Court litigation is not something to be undertaken lightly. Court fees are much more than they will be (when introduced) in the Employment Tribunal and there is also a costs-shifting regime in the Courts, unlike the Tribunal.  In other words, the loser in Court pays the winner’s costs whereas in the Tribunal each side bears its own win or lose, unless one side is deemed to have acted unreasonably. In the Courts the employer will have the Part 36 settlement mechanism open to them to make settlement offers with binding costs consequences, which could lead to many claim being settled without the need for a hearing.

Equal pay claims are also notoriously slow to progress and expensive to pursue, even in the Tribunal. Some cases need expert evidence to assess the comparator jobs and that can be very expensive unless the Tribunal’s own expert is used, for which there is usually a long waiting list. The current system does not work well and there is still great inequality of pay between the sexes, as I wrote about back in 2010.  According to the ET’s own statistics in 2011-12 there were 23,800 equal pay claims issued, 10,300 were withdrawn (most presumably settled but not necessarily), 8,80 were settled with the help of ACASand 4,500 were struck out.  Somewhat incredibly only 32 cases were successful at the final hearing, and 35 unsuccessful: those are absolute numbers not percentages as well.  I’m not quite sure where those figures feature in the  statistics but if I am understanding them correctly it is a tiny number which suggests that because the overwhelming majority of claims settle and for those that don’t there is about a 50/50 success rate, the law provides too high a hurdle to overcome.

This in turn suggests that in a costs shifting regime there is likely to be little difference to these figures and claims are just as likely to settle sooner rather than later.