You probably caught Monday’s headlines: “Country’s largest authority hit by £757 million equal pay bill”; “Birmingham taxpayers face massive service cuts to pay for growing compensation bill”; “Council bankrupt if Government withholds borrowing permission”.
If so, they may have prompted a feeling of déjà vu – both recent and distant. Recent, because these November 12th headlines reported only Birmingham City Council’s delayed official reaction to the genuinely headline-meriting event a fortnight earlier: the Supreme Court’s landmark ruling against the Council and in favour of 174 former employees seeking compensation under the Equal Pay Act 1970 (now the Equality Act 2010). Distant, because – to the shame of all those materially responsible – this lamentable case has been dragging on, chapter by chapter, for a good proportion of the 42 years since Barbara Castle’s historic legislation was passed in the final days of the 1960s’ Wilson Governments.
It’s inevitably a complex story, and the basis of the Supreme Court’s 3-2 majority judgement exceptionally so. But it also has potentially huge implications for other public and private sector employers. A bit of background, therefore, may be useful.
The Equal Pay Act outlawed unequal treatment of men and women, by permitting equal-pay claims to be made by women in the public and private sectors, who were engaged in the same or broadly similar work as men. Though passed in 1970, the Act’s implementation was put back until 1976, thus allowing employers what many felt was a generous period in which to make the necessary ‘adjustments’. Don’t laugh!
It took local government decades seriously to consider its adjustments, but in 1997 the National Joint Council for Local Government Services (NJC) – representing local government employers and the main trade unions: UNISON, UNITE and GMB – negotiated a Single Status Agreement, intended finally, or at least by 2007, to implement the Act without wholesale recourse to employment tribunals. The aim was to develop, through systematic job evaluation schemes, a common pay and grading scale for all manual, administrative and clerical jobs, based on the principle of equal pay for women employed in jobs of equal value to those typically done by men.
Whatever may have been fondly imagined, Single Status could never be cost-neutral. With (in Birmingham) men earning up to four times more than women doing identically pay-graded jobs, there would be losers as well as winners, with local authorities having to find very large sums of money on top of their required efficiency savings, and without jeopardising their primary task of improving local services. They had to devise and negotiate a more expensive unified structure, and compensate those discriminated against under the existing regime, while also ensuring that the now ‘downgraded’ bin men and road sweepers would not be penalised excessively – either through pay cuts or the withdrawal of the supposedly output-based bonus payments that tended to be the preserve of male-dominated jobs.
Righting a major long-term injustice is inevitably difficult, but 10 years was a fair time-frame. Nevertheless, in 2010, three years after the deadline, one in five councils had still not implemented a Single Status Agreement. Few emerge from the saga with much credit. Ministers set no staged timetable, enabling them to refuse to provide extra funding for back-pay settlements. They also capped, initially at a hopelessly inadequate £200 million, the total ‘capitalisation’ sum councils could borrow against their own assets: a figure that, even in 2006, would barely have covered the then estimated costs of Birmingham City Council alone.
The generally male-run unions resisted any national campaign, giving the impression of putting men’s wages – and Labour councils’ interests – above those of their women members. ‘No win, no fee’ lawyers rushed in to fill the vacuum, taking action against recalcitrant councils, against unions who had settled for less than maximum compensation, and trousering up to 25% of any payout. In a particular irony, employment tribunals, which Single Status was designed to bypass, eventually took centre-stage. One decreed that up to six years’ compensation should be paid for past injustice, instead of the two years that had become the norm – thereby adding further huge sums to councils’ pay bills.
Then, in April 2010, 4,000 women won potentially the biggest pay-out of all in a tribunal judgement against Birmingham City Council. The tribunal found that thousands of women workers – cooks, cleaners, carers, clerks – were entitled to the same pay as men working as gardeners, refuse collectors and grave diggers, who had earned several times as much through large and discriminatory cash bonuses ‘awarded’ for tasks such as picking up refuse sacks and completing rounds on time. Adding insult to the financial injury of conceivably up to £3 billion, the tribunal criticised the Council for wasting public resources in misguidedly incurred legal fees, and its senior management for having continually pushed the problem to one side ‘like a disagreeable sprout on a Christmas dinner plate’.
Obviously, given where we are today, the advice was not heeded. Christmases came and went, the sprout increased in size and disagreeability, but the Council persisted in pushing it around. It took the above case to the Employment Appeal Tribunal, where it was dismissed. Meanwhile, it was facing other cases in the courts – brought by former-employee claimants, unable to go to employment tribunals because of the rules limiting their jurisdiction to cases brought within six months of the termination of the claimant’s employment.
This was how the present case started, and what it is essentially about. The Abdulla Group, as it became known after the first alphabetically listed claimant, comprised 170 women and 4 men who had missed out on the Council’s equal pay compensation payments paid to women still working for the Council in 2007/08 or who had recently left and taken their cases to an employment tribunal. The 174 had all left more than six months earlier, which the Council cynically decided meant that, since they would be time-barred from going to a tribunal, they could be safely excluded from the compensation scheme.
The Council’s case was that ordinary courts should refuse to consider such claims. In the words of the 1970 Act, the court should “direct that the claim be struck out”, on the grounds that it “could more conveniently be disposed of separately by an employment tribunal” – as indeed all previous equal pay claims had been, generally to the considerable benefit to the claimants, in costs, time and accessible expertise.
In the High Court, however, the deputy judge was less concerned with precedence than with Parliament’s intended meaning of ‘more conveniently’. Grossly oversimplifying the literally hours of judicial time since expended on this innocent little phrase, the judge’s interpretation was that a tribunal could hardly dispose of a case more conveniently, if it was time-barred from considering it at all, and that this surely cannot have been Parliament’s intention.
Nearly a year later, in November 2011, the Court of Appeal took the same view, and so two weeks ago did three out of five Supreme Court judges. Former employees have the right to bring claims in the civil courts, where the relevant time limit is not six months, but six years – which, with this case having started in 2010, includes anyone who was still working for the Council from 2004.
The District Auditor estimates that the Council will need to find £757 million to cover actual and potential equal pay settlements, which will mean going cap in hand to Communities and Local Government Secretary Eric Pickles for permission to borrow £325 million on top of the £430 million already secured to help fund the pay claims.
At the same time, struggling finally to digest their wretched Christmas sprout, the Council’s leaders have the nerve to moan at the long succession of referees who’ve ruled against them: “Employment tribunals and the courts have changed their opinion around the law over this period of time always in one direction, which has added significantly to the amount of claims we have had and the cost of them.” To which the thousands of exploited women employees will surely chorus: well, you could always have settled sooner, or even not discriminated in the first place.
Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.