Case law: Statistical analysis showing women clustered at lower end of pay grade not sufficient evidence of disadvantage to women for purposes of equal pay claim

A statistical analysis showing women clustered at the lower end of a pay grade, and men clustered at the top, was not evidence women were ‘particularly disadvantaged’ for equal pay purposes, given there was no significant difference in the average pay of male and female employees, a recent ruling decided.

HM Revenue and Customs employees on pay scale Grades 6 or 7 claimed that the use of length of service as one of the factors for determining pay within those Grades disadvantaged women and breached equal pay laws. It was agreed by both sides that everyone within each pay grade did work of equal value.

Under equal pay laws, if a female employee can show a male comparator doing equal work is paid more, the employer must demonstrate that the difference is due to a material factor that is neither directly nor indirectly discriminatory. If the employee can show that, as a result of that factor, she and others of her sex are put at a particular disadvantage, the employer must show its use is objectively justified – that it is a proportionate means of achieving a legitimate aim.

The employees in this case relied on a distribution analysis showing women clustered at the lower end of each pay scale and men clustered at the top as evidence that women were particularly disadvantaged by use of length of service as a factor in determining pay. They said the employer therefore had to prove that using length of service was objectively justified – that it was a proportionate means of achieving a legitimate aim – or it had breached equal pay laws.

HMRC denied use of length of service as a factor disadvantaged women at all. It pointed out that the difference between the average pay of women and men within each pay grade was minimal – between 1.2% and 3.3%.

The Employment Appeal Tribunal (EAT) agreed with the employer. It ruled that the results of the analysis were not enough of themselves to show that women were disadvantaged by the use of length of service as a factor – although they might be evidence that something could be amiss and further investigation was required. The employees needed to show that there was a disparity in terms of pay, not in terms of an abstract distribution.

As the average pay figures showed there were no significant long-term differences between the basic pay of male and female employees, the use of length of service as factor influencing pay did not put women at a particular disadvantage. There had therefore been no indirect discrimination for the employer to objectively justify.

Operative date

• Now

Recommendation

• Employers using length of service as a factor in determining pay should ensure that there is no significant difference in the average pay of male and female employees doing equal work, or risk potential equal pay claims.

Case ref: McNeil v HMRC [2018] UKEAT 0183_17_2702