THE INDUSTRIAL TRIBUNALS

CASE REFS:   1219/05
1220/05
1221/05

CLAIMANTS:		Mary Fearnon
				Margaret Patterson
				Judith Toland

RESPONDENT:		Smurfit Corrugated Cases Lurgan (Limited)

DECISION ON A PRE-HEARING REVIEW
The unanimous decision of the tribunal is that the respondent is entitled to rely on the defence of genuine material factor for the purposes of Section 1(3) of the Equal Pay Act (Northern Ireland) 1970 and the claimants’ claims therefore fail.

Constitution of Tribunal:
Chairman:		Mr Kinney
Members:		Ms Ferguson
			Mr Hunter

Appearances:
The claimants were represented by Mr McEvoy, Barrister-at-Law, instructed by Agnew Andress Higgins, Solicitors.
The respondent was represented by Mr P Bloch, of Engineering Employers’  Federation.

The issue

1.	The issue for the tribunal to decide is:-

“Whether the respondent is entitled to rely on the defence of genuine material factor for the purposes of Section 1(3) of the Equal Pay Act (Northern Ireland) 1970 as between the claimants’ contracted employment and that of their comparator, Mr Wesley Warnock.”

2.	For the purposes of this issue the respondent has conceded that the comparator and the claimants performed like work. 

3.	The tribunal heard submissions from Mr McEvoy and from Mr Bloch and were presented with two bundles of papers and had regard to those documents that were referred to it.  

The facts

4.	In their submissions the parties referred to a chronology of agreed facts:-

(1)	In approximately 1969, Mr Warnock, the claimants’ comparator, began working for Ulster Paper Mills.  The claimants began working for Ulster Paper Mills in 1983.  

(2)	Mr Warnock, who originally was employed as a Costing Clerk, was promoted to Sales Office Manager in and around 1988.  In the following years, Mr Warnock’s pay was increased for a variety of reasons which included additional qualifications and additional responsibilities and also to ward off an approach by a competitor.  

(3)	In and around 1994, Ulster Paper Mills was purchased by the respondent and a TUPE transfer took place.  

(4)	By virtue of the TUPE transfer, Mr Warnock’s job and salary were protected although the post that he had previously held at a supervisory level was removed.  This process is called red-circling.  

(5)	Mr Warnock’s salary was red-circled in and around 1994 from the time of the TUPE transfer.  His salary has only subsequently been increased by means of the annual increment or percentage that was applied to others in the respondent’s workforce.

(6)	In 1997 there was an internal memo sent from Ian Simpson to Wesley Warnock headed ‘Appraisal October 1997’ which describes the work then carried out by Mr Warnock and the regard in which he is held by his colleagues.

(7)	In or around June 2004, the claimants began a grievance with the respondent concerning their pay and in particular seeking equal pay and naming as their comparator Mr Warnock.  The claimants then presented their claims to the tribunal on 25 August 2005.  

Submissions

5.	On behalf of the claimants, Mr McEvoy made it clear that there was nothing contentious in the agreed facts.  The claimants accepted that it was legitimate and there were good reasons for the red-circling of Mr Warnock’s pay in 1994.  He conceded and accepted there was a legal requirement to protect Mr Warnock.  Mr McEvoy, however, took issue with the fact that there had been no review of the red-circling of Mr Warnock’s pay since 1994 and in the following 11 years.  He invited the tribunal to consider why there had been no re-consideration of the situation and that the disparity in pay had been allowed to continue.  He contended that the difference in pay cannot presently be justified on the grounds of the red-circling in 1994.  

6.	Mr Bloch, in the alternative, submitted that there was a genuine and material reason for the difference in pay.  Those reasons were still legitimate in 2005 and today.  In this case the reason for red-circling Mr Warnock’s pay was to maintain the protection afforded under the TUPE Regulations and time is not a relevant issue.

The law

7.	The tribunal was referred to Harvey on Industrial Relations and Employment Law, Division K, Paragraphs 200FF and to the cases that appear therein.  The tribunal also referred the parties to the recent EAT decision of Middlesborough Borough Council  v  Ms M Surtees & Others [UKEAT/0077/07/CEA].

8.	For the employer to succeed in maintaining a genuine material factor defence it must show that the variation between the woman’s contract and the man’s contract is not tainted with sex, that is, that it is genuinely due to a material factor which is not the difference of sex.  To do this the employer must show that the explanation for the variation is genuine, that the more favourable treatment of the man is due to that reason and that the reason is not the difference of sex.

The tribunal’s conclusions

9.	The claimants’ case rests on the length of time for which the red-circling of the comparator’s pay has continued.  The tribunal is satisfied that the reason for the variation being the TUPE transfer in 1994 and the legitimate and lawful protection afforded to the comparator’s salary at that time is a genuine reason.  

10.	The tribunal is further satisfied that the more favourable treatment of the comparator is due to that reason.  The mere fact of the red-circling continuing is not sufficient to make a case for the claimant.  As Philips J said in Snoxell v Vauxhall Motors [1977] 3 All ER 770 at 781:

“Does it make any difference that the ‘red-circling’ is continued, even continued indefinitely?  In principle, we do not see why it should.  Assuming there are no additional factors, and that in other respects affairs are operated on a unisex, non-discriminatory basis, the situation will continue to be that the variation is genuinely due to a material difference other than the difference of sex. The ‘red-circling’ will persist, ageing and wasting until eventually it vanishes.”

11.	The tribunal is mindful that a considerable period of time has elapsed since the red-circling of the comparator’s pay, but in the particular circumstances of this case and the involvement of the TUPE transfer regulations, the tribunal find that the more favourable treatment of the comparator is genuinely due to that reason.  Finally, therefore, the tribunal find that the reason for the variation between the claimants’ pay and the comparator’s is not the difference of sex.

12.	The tribunal therefore find that the respondent is entitled to rely on the defence of genuine material factor for the purposes of Section 1(3) of the Equal Pay Act (Northern Ireland) 1970 and the claimants’ claims therefore fail.

Chairman:

Date and place of hearing:	30 August 2007, Belfast

Date decision recorded in register and issued to parties: