Clause
64Defence
of material
factor Question
proposed, That the clause stand part of the
Bill.
The
Chairman: With this it will be convenient to discuss new
clause 25 Defence of material factor (No.
2) (1) The sex
equality clause in As terms has no effect in relation to a
difference between As terms and Bs terms if the
responsible person shows that the difference is because of a material
factor (a) which does
not constitute discrimination because of sex within the meaning of
section 13, and (b) which is
within subsection (2). (2) A
factor is within this subsection
if (a) as a result of
the factor, A and persons of the same sex as A are or would be put at a
particular disadvantage when compared with persons of the opposite sex,
but (b) the responsible person
shows that relying on the factor is objectively justified by a
legitimate aim and the means of achieving that aim are appropriate and
necessary. (3) A sex equality
rule has no effect in relation to a difference between A and B in the
effect of a relevant matter if the trustees or managers of the scheme
in question show that the difference is because of a material factor
which (a) does not
constitute discrimination because of sex within the meaning of section
13 and (b) which is within
subsection (2). (4)
Relevant matter has the meaning given in section
62. (5) For the purposes of
this section, a factor is not material unless it is a material
difference between As case and
Bs..
Lynne
Featherstone: As currently worded, the clause allows
employers defending equal pay claims to avoid the need to justify
discriminatory pay objectively. Subsection (l)(a) allows
employers to defend a claim by simply pointing to another reason for
the pay differential that is not sexnot a protected
characteristic, that is, sex. An employer only needs to refer to
paragraph (a) because there is an or at the moment,
rather than an and. If the employer cannot find or
identify another reason, it is only then that the obligation kicks in
to justify the differential in pay
objectively. That
is inconsistent with European law and the decisions of the European
Court of Justice in equal pay cases appealed from the UK. In practice,
it means that where there is a female-dominated group, such as cleaners
or home care workers, in local government, where it has been
established that they should be paid the same rates of pay and bonuses
as a comparable male-dominated group, such as road sweepers and refuse
collectors, all the employer has to do to get out of equalling the pay
is to identify a reason for the difference which is not sex. That
reason could be something like the need to improve productivity or a
need to recruit and retain staff in an environment where one particular
gender was difficult to recruit. Once the reason has been identified,
there will be no imperative for the employer to justify that reason
objectively, and no obligation for them to show
that there is a genuine need to improve productivity, that
recruitment of a particular gender is difficult, or that the need is a
proportionate or necessary reason to perpetuate the discrimination in
pay. All the employer needs to do is to cite the other reason without
any
examination of the strength or veracity of that
reasoncarte-blanche really, so long as it is not covered by
subsection 1(a).
The important
point is that the female and male worker groups do jobs of equal value,
and that equal value, by that stage, should have been evaluated as
being equivalent under a recognised job evaluation scheme. It is only
after that equality has been proved that the employer is able to raise
the defence of material factor. It is important that the defence is
fair and complies with European
law. The
clause replicates the worst aspects of the judgment made in law under
the Equal Pay Act 1970, a decision that has been roundly criticised and
is currently under appeal in two cases at the Employment Appeal
Tribunal and Court of Appeal. This is therefore a golden opportunity to
bring United Kingdom equal pay law back into line with European
law. 11.30
am We
have left out from our new clause subsection (3) on pay protection. I
understand that the Governments intention is not to scare the
horses. For example, when pay has to be equalled up, if the disparity
is huge and public sector organisations are faced with levelling pay,
clause 64(3) allows for the long-term objective of reducing inequality.
The Liberal Democrats want to test the Minister on that because it
seems very much like letting them off the hook. Subsection (3) attempts
to deal with the pay protection for groups of workers whose pay is
reduced as a result of removing discrimination in
pay. For
the majority of negotiated equal pay outcomes that seek to bring the
pay of underpaid groups up to the level of the rates enjoyed by the
comparable higher-paid work groups that does not simply involve raising
the pay of the lower paid to that of the higher paid. It is important
to note that many women and men have their pay reduced as a result of
job evaluation in local government, and it is not always simple to
state that it is necessarily men who are highly paid and that only
women are underpaid. That said, there are often situations when large
male-dominated groups are the subject of dramatic pay reductions and
receive pay protection. As a result, what generally happens is that the
higher-paid groups have their pay reduced and underpaid groups have
their pay increased. In pay protection, the pay of groups rated as
equal in a job evaluation is set somewhere in the middle of those two
positions. To
have a system that requires employers to bring the pay of underpaid
workers up to the level previously enjoyed by the higher-paid groups
would be financially very difficult. I understand completely why, three
years in, the majority of employers would find it hard if such a
process had to be carried out immediately. I assume, therefore, that
subsection (3) is about transitional arrangements, but the use of the
phrase long-term would give far too much power and
timing to the employer and less consideration to the
employees. Pay
protection will be acceptable only if it is for a limited period, and
the clause as drafted makes pay protection that perpetuates
discrimination in pay unlawful. That is because such protection cannot
be seen to have the purpose of reducing the gender pay gap and would
therefore not be justifiable. It would make it difficult for all
parties who genuinely desire a negotiated resolution
of pay discrimination, and will create uncertainty. I should welcome the
Minister exploring that long-term measure so that I can understand
better if something in the clause will protect against an open-ended,
kick-into-the-long-grass outcome. I await her
response.
The
Solicitor-General: I am struggling to identify the case to
which the hon. Lady referred. Can she give me more information so that
I can take it on board?
Lynne
Featherstone: I am trying to find the reference. I was
assured that I had it, but I do not now seem to have it to
hand.
The
Solicitor-General: Okay, I will press on without the
reference, although I might not be able to deal with the point made
without the case being identified. New clause 25 would replace clause
64, which restates and clarifies the existing position of the
definition of a general material factor. They are not a massively
different remit. First let me concentrate on three aspects of the hon.
Ladys amendments, and then deal directly with the pay
protection points. It may be that she can find the case in the
meantime. If not, we will have to correspond about the precise
terms. New
clause 25(2)(a) deals with the hypothetical comparator point again, as
it says
that A
and persons of the same sex as A are or would be put at a particular
disadvantage when compared with persons of the opposite
sex. That
would stop us taking on the new clause in the first place, as it is
about the hypothetical comparator.
Lynne
Featherstone: I am not sure that it is quite of that
nature. The first part of the wording is taken directly from clause
64(1).
The
Solicitor-General: This is subsection
(2)(a).
Lynne
Featherstone: I apologise. I was looking at the wrong
subsection.
The
Solicitor-General: I thought I had said (2)(a), but I may
not have said the right section. What the hon. Lady has drafted, as a
result, in subsection
(2)(a) A
factor is within this subsection
if (a)
as a result of the factor, A and persons of the same sex as A are or
would be put at a particular disadvantage when compared with persons of
the opposite
sex is
a direct reference back to the hypothetical comparator
point.
Lynne
Featherstone: If the Minister returns to
subsection (1) of both clause 64 and new clause 25, she will
see that the only difference is the word and instead of
or.
A
factor is within this subsection
if is
the argument about and and or rather
than the hypothetical comparator. If one leaves in the
or, the issue is in subsection (2), which is
objectively
justified by a legitimate
aim. The
aim here is not to address simply a hypothetical comparator, but the
ability of an employer to point at any reason for a differential in pay
other than sex as the protected characteristic covered by paragraph
(a).
The
Solicitor-General: The summary of the way the defence
operates was not entirely accurately put by the hon. Ladywhere
a factor directly discriminates against women, the defence fails; where
it indirectly discriminates, it must be objectively justified. A factor
that is not gender discriminatory must be material and significant, but
where there is no discrimination, there is no need for a justification.
That is fairly
straightforward. Clause
64 reflects the position under European law, and if I have
misunderstood subsection(2)(a), I will just pass over it. The next
point is that the objective justification test for indirect
discrimination would, in the new clause, replace the concept of
proportionate means of achieving a legitimate aim with the preferred
usage appropriate and necessary. That
is a block that we have already run round a couple of times. We worry
that the term necessary can be, and has been given a
overly narrow interpretation domestically. For that reason, and among
others that I cited earlier, we do not want to make that
change. Lastly,
the new clause is directive because the word and
between subsections (1)(a) and (1)(b) requires a responsible person to
show that the factor that he seeks to rely on is neither directly nor
indirectly discriminatory as set out in subsection (2). On the other
hand, clause 64(1)this is the point that I have just
madeprovides that a responsible person must show that the
factor is not the difference of sex or indirectly discriminatory within
the meaning of subsection (2). We do not think that there should be a
burden on the responsible person to disprove any indirectly
discriminatory effect of a material factor, unless the claimant puts
forward some evidence suggesting that there is such an effect. The
and, as opposed to the or, would be
unnecessarily onerous on the responsible person, unless there was
evidence to suggest that there was a discriminatory effect.
Obviously
there is a need for a material factor defence, and I do not think that
the hon. Lady is saying anything different from that. The explanatory
notes give one example, which is about a bonus payment. It would
largely benefit male employees in this example, and can be justified
because it is a proportionate means of achieving the legitimate aim of
encouraging employees to work unsociable hours. There are almost fine
shades of distinction between the hon. Ladys clause and our
clause, when we are driving at the same purpose, but the two aspects
that I have referred to make her clause unacceptable.
I should draw
to the Committees attention points about clause 64. It removes
the word genuine, which many of us are used to when
describing the material factor defence, but it does not change the
substance of the current law. I want to make that clear. Employers will
still have to show that the factor is not a sham or
pretencesubsection (1) makes it clear that the difference must
be because of the material factors. It will have to be real. Secondly,
subsection (2) incorporates the effect of European Community law in
respect of objective justification of indirectly discriminatory
factors.
Finally,
subsection (3) contains a new provision, stating that the long-term
objective of reducing pay inequality is always to be considered a
legitimate aim for the purposes of subsection (2)the hon. Lady
characterised that as the long grass provision. It is intended to
acknowledge that strategies to reduce long-term pay
inequality may need a reasonable time to work before equality is
achieved. It is not intended to be a get out of jail
free card for discriminatory employers. Any action taken to
achieve that aim has got to be proportionate, but we intend to
encourage those on both sides of pay negotiations to move
forward. The
hon. Lady talked about pay protection. As she rightly said, where there
is unequal pay, the availability of consensual
arrangementsnegotiationsis important in coming to a
situation in which the move, albeit direct, deliberate and steady,
towards equal pay is done at a rate that is realistic for the employer
in question. To drive that agenda, we put the provision in, making it
clear that there is, as it were, a statement about that being a
practical and acceptable way forward. The provision is certainly not
intended to let employers off the
hook. In
the example referred to by the hon. Lady, unless the pay protection had
the effect of gradually bringing the parties closer within a
foreseeable time, all that would be done is to re-entrench the previous
discriminatory unequal pay. Theoretically, a further action could be
brought. Unequal pay will always have to be drawing nearer to equality;
the provision just acknowledges that there is sometimes a need for
delicacy, but we intend that process to happen as quickly as it
can.
Lynne
Featherstone: I have listened carefully to the Minister
and we are not miles apart, to be honest, except on that interpretation
of the first differential between or and
and. I shall go back and have a look at it in light of
what the Minister has said. I shall be looking at what might be termed
transitional arrangements but, for the moment, I am happythe
Minister has tried to answer my questions. On that basis I shall not
press for a
Division. Question
put and agreed
to. Clause
64 accordingly ordered to stand part of the
Bill.
Clause
65Exclusion
of sex discrimination
provisions Question
proposed, That the clause stand part of the
Bill.
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