Sex Discrimination:

SEX DISCRIMINATION IN THE CITY - IT'S LEVEL FOOTING NOW.

By Philip Landau, employment law solicitor and partner in London law firm Landau Zeffertt Weir (pl@lzwlaw.co.uk, 020 7357 9494)

Employees have traditionally found it difficult in proving sex discrimination. Although the Tribunals gave weight to failings in employer's explanations and procedures when drawing inferences of unlawful discrimination, the position was far from uniform or clear.

In October 2001, an amendment to the Sex Discrimination Act came into force (Section 63(a) of the Act) which explicitly introduces a shifting burden of proof in sex discrimination claims. Essentially, where the Applicant proves basic facts (such as unequal pay), the Tribunal can conclude that unlawful discrimination had taken place "in the absence of an adequate explanation from the Respondent".

In the much publicised and recent Barton v Investec Henderson Crosthwaite case in April 2003, this was the first time the Employment Appeals Tribunal (EAT) were faced with the task of updating the sex discrimination position . Ms Barton had been employed as an analyst by the City Bank Investec. She brought an equal pay and sex discrimination claim in respect of differentials in salary, long term incentive payments, share options and bonus payments made to her and her two comparatives. The EAT set out fresh guidance in the light of the statutory changes and confirmed, inter alia:-

(1) It is for the Applicant who claims sex discrimination to prove, on the balance of probabilities, facts from which the Tribunal could conclude (in the absence of an adequate explanation) that the Respondent had committed an act of discrimination.

(2) In deciding whether the Applicant has proved such facts, that it is unusual to find direct evidence of sex discrimination. Few employers would be prepared to admit such discrimination, even to themselves. In some cases the discrimination will not be an intention but merely based on the assumption that "he or she would not have fitted in".

(3) The instances of discrimination can include an evasive or equivocal reply to a Questionnaire (see below).

(4) Where the Applicant has proved such facts, from which emphasis could be drawn that the Respondent has treated the Applicant less favourably, on the grounds of sex, then the burden of proof moves to the Respondent.

(5) It is then for the Respondent to prove that he did not commit, or as the case may be, is not to be treated as having committed that act.

(6) Since the facts necessary to prove an explanation would normally be in the possession of the Respondent, a Tribunal would normally expect cogent evidence to discharge that burden of proof. In particular, the Tribunal will need to examine carefully explanations of failures to deal with Questionnaire procedure and/or any relevant code of practice.

The EAT further said in the Barton Decision, in a statement that certainly caught the public eye, that "this court would certainly wish to make it clear that no Tribunal should be seen to condone a City bonus culture involving secrecy and/or lack of transparency, because of the potentially large amounts involved, as a reason for avoiding equal pay obligations".

The EAT also held that there is an obligation on Respondents relying on a material factor in equal pay claims to show an objective justification for any difference in pay, not simply to show that there was no discriminatory reason.

Such robust and broad guidance from the EAT on the new burden of proof provisions in the Sex Discrimination Act means that Barton is likely to be seized upon enthusiastically by lawyers acting for employees who consider they are the subject of sex discrimination.

On the issue of transparency, the practical effect of the burden of proof considerations means that an employer operating a discretionary pay scheme, that is characterised by large differences in the amounts awarded, (and in which there was no way of showing what criteria was applied in reaching that decision), will mean that employers will probably have to disprove discrimination. This in turn is likely to be a difficult task without documentary evidence.

EQUAL PAY ACT QUESTIONNAIRES

From 6th April 2003, provisions in the Equal Pay Act Legislation has meant that individuals are now able to use the Equal Pay Act Questionnaire if they believe that they have not received equal pay. They can request key information from their employers to establish whether this is the case, and if so, the reasons why. The focus of the Questionnaire is to establish whether an individual is receiving less pay, and if so, whether the employer agrees that the people being compared are doing equal work. In the Questionnaire the term "equal work" is used to describe work that is the same, or broadly similar, (known as "like work") or work of equal value.

The term "pay" in the new Questionnaires include bonuses and therefore an employee is able to use the Questionnaire if it is considered that the bonus being paid is less than to a comparative.

In light of the ruling in Barton, employers should be careful not to simply ignore the Questionnaires, as an inference can be drawn from their failure to respond. Employers may, however, have a get out. Although they are expected to answer the Questionnaire as fully as possible, if they are asked to provide information that is confidential to another person (for example the exact details of a colleague's pay package or appraisal review) the employer may have a justifiable excuse in withholding the information if the colleague insists that the information is confidential and should not be disclosed. Furthermore, in many cases, employers will be able to answer detailed questions in general terms, which still preserves the anonymity and confidence of their employees.

Conversely, however, a Tribunal can order specific disclosure of relevant information if they believe it is in the interests of justice to do so.

As can be seen, there are a number of balances and checks in place to ensure the new Equal Pay Questionnaire runs as smoothly as possible. Although it is still early days for the use of the new Questionnaire, employers certainly seem to be at risk of having exposed any hitherto unsavoury practices in the realms of how they remunerate their employees.

Philip Landau, Landau Zeffertt Weir

Disclaimer

Feel free to contact Philip on pl@lzwlaw.co.uk or 020 7357 9494 for a free consultation on this or any other employment law issue.