Landmark court ruling on equal pay bargaining

In July 2008, the Court of Appeal issued its judgement in a legal case concerning a trade union’s handling of women members’ equal pay claims within the context of negotiations over the broader restructuring of employees’ terms and conditions. The court ruled that the trade union had indirectly discriminated against the women by agreeing a low settlement in respect of past pay inequalities in order to prioritise pay protection for other workers and higher future pay levels.

On 16 July 2008, the Court of Appeal of England and Wales issued its judgement in a key legal case, Allen versus GMB, concerning sex discrimination and equal pay. The case pertains to the GMB trade union’s handling of women members’ equal pay claims within the context of negotiations over the broader restructuring of local authority employees’ terms and conditions.

Background

In 1997, trade unions and local authority employers negotiated a national ‘single status’ agreement intended to bring all employees within a common pay and grading structure (UK9703119N). Actual pay scales and rates were devolved to local agreements in the light of local job evaluation studies designed to eradicate historical inequalities between the terms and conditions of different categories of employees, including gender-based pay inequalities.

The case

At Middlesbrough council in the northeast of England, a job evaluation study was carried out and new terms and employment conditions were agreed between the council and a number of trade unions, including GMB, which took effect in April 2005. Mrs Sheila Allen and 25 other women pursued an employment tribunal case against GMB, claiming that its approach to the negotiations had discriminated against them by not seeking to maximise back-pay settlements for women with past unequal pay claims. The agreement provided some women with compensation for historical inequalities at some 25% of the full value, and others with none. Instead, the trade union had given priority to ensuring pay protection for groups of workers adversely affected by the new framework and to achieving better pay for the future.

The employment tribunal found that GMB had indirectly discriminated against the claimants. The trade union’s aims of ‘representing the interests of all members’, avoiding job losses and contracting out and assisting the ‘losers’ in the new pay structure were legitimate, but its means of pursuing these aims were ‘disproportionate’. Such means included downplaying the issue of back pay, failing to give a fully informed choice to the women concerned and ‘manipulating’ them into accepting the low – or for one group, zero – back-pay offer.

On appeal by GMB, the Employment Appeal Tribunal (EAT) subsequently ruled (133Kb MS Word doc) that the trade union had not indirectly discriminated against its women members, arguing that – once it was accepted that the trade union’s objective was legitimate – it was difficult to see how it could be alleged that the means used were inappropriate. However, the Court of Appeal has now overruled the EAT. The court concluded that the employment tribunal was right to find that the means adopted by the GMB to persuade members to accept the deal – amounting to ‘mis-selling’ – were disproportionate to the trade union’s legitimate aim of protecting ‘losers’ to the greatest extent possible.

Commentary

The Allen case has attracted widespread press coverage and has major implications for trade unions. Reportedly thousands of similar tribunal claims are outstanding against local authority unions; these claims have been delayed pending the outcome of this case, and could cost the trade unions millions of pounds. However, the appeal court emphasised that the case is ‘unusual’ because of the ‘unusually strong and adverse findings of fact’ concerning the trade union’s methods of achieving acceptance of the agreement. The court’s ruling recognises that ‘whenever a union negotiates on behalf of members who may have conflicting interests … more for one group often means less for another’. Moreover, the judgement states that ‘when [unions] seek to achieve legitimate aims by proportionate means they have nothing to fear’.

Nevertheless, GMB contended that the appeal court’s ruling

would leave unions and employers negotiating the introduction of equal pay unclear about the correct way to strike the balance [between collective bargaining and individual rights] and so the union is seeking an appeal to the House of Lords to try to establish absolute clarity.

Some observers consider that the case will deter trade unions from bargaining over equal pay issues and encourage them to support litigation-based strategies instead on the grounds that recommending acceptance of anything less than full retrospective compensation might lead to legal challenge. Nonetheless, the appeal court ruling appears to give continuing scope for bargained solutions provided that trade unions obtain the informed consent of those who may be settling for less than their potential legal entitlement.

Mark Hall, IRRU, University of Warwick

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