St Helens Borough Council (Respondents) v. Derbyshire and others (Appellants)
22. The Tribunal does not appear to have had any difficulty in applying the distinction which was identified in these passages to the facts of this case. Its finding, as expressed in the last sentence of para 4(e), was that the appellants' Equal Pay Act case "was not simply the setting for the detriment: its continuance was the efficient cause." The problem lies in what was said about this in the Court of Appeal. Jonathan Parker LJ said in para 49 that he could see no reason in principle why the latitude extended to an employer in the context of the adversarial relationship between employer and employee resulting from pending proceedings should not include an honest and reasonable attempt on the employer's part to compromise the proceedings. This led him to criticise the tribunal for, as he thought, holding that the "by reason that" test was satisfied was because the respondents wanted their employees to abandon their claims. Lloyd LJ pointed out in para 71 that the test proposed by Lord Hoffmann in Khan in para 60 could not be applied in a case such as this where the act in question was directly to do with the proceedings themselves.
23. In my opinion the majority in the Court of Appeal read too much into what was said on this point in Cornelius and Khan, and this led them to embark on a criticism of the tribunal's decision that was not merited and unnecessary. As Lloyd LJ observed in para 63, the conduct at issue in those cases did not relate directly to the course of the proceedings. In this case, of course, it did. The respondents were, as the tribunal put it in para 4(e), not merely seeking to avoid prejudicing their position in the litigation. They acted as they did because they wanted to dissuade the appellants from pressing their claims to an adjudication. So it is clear that the test which was referred to in Cornelius and Khan was met in this case. But the matter does not end there. In neither of those cases was consideration given to the way the issue of victimisation ought to be approached in a case of this kind. In my opinion the test was being taken out of context. In a case of this kind, where the conduct was due directly to the fact that the employees had brought proceedings against the employer under the Equal Pay Act, some latitude must be given to the right of the employer to argue his point of view and, if he can, to achieve a compromise. The fact that he wanted to dissuade the employees from pressing their claims to an adjudication does not, of itself, mean that the employees were being victimised.
Honest and reasonable
24. What is to be said then about the test of "honest and reasonable" conduct? This is not a test which is set out in the statute, and there is a risk that it too may be taken out of context. It has a comfortable ring about it. But it should not be used as a substitute for the statutory test, which is whether the employer's conduct was "by reason that" the employee was insisting on her equal pay claim. Properly understood, it is a convenient way of determining whether the statutory test is satisfied. But it may not fit every case, and in cases where it is used it must be used in the right way.
25. The context is provided by the judgment of the European Court of Justice in Coote v Granada Hospitality Ltd  ICR 100 (Case C-185/97) which, as Lord Neuberger points out, was not cited in Khan. That was another case where the conduct did not relate directly to the proceedings. The case arose out of the employer's refusal to supply the employee with a reference after the employment had ended by mutual consent. The questions which were referred to the European Court were directed to the question whether, having regard to Council Directive (76/207/EEC), retaliatory measures after the employment relationship had ended were to be regarded as prohibited. But the Court took the opportunity to draw attention to the fact that article 6 of the Directive requires member states to introduce into their national legal systems such measures as are necessary to enable all persons who consider themselves the victims of discrimination "to pursue their claims by judicial process." In para 24 the European Court said:
26. The European Court's reference to measures "liable seriously to jeopardise implementation of the aim pursued by the Directive" provides the key to how the matter should be approached. It looks at the employer's conduct from the standpoint of the employee's interest, not that of the employer. What is "honest and reasonable" is an objective test. It is designed to guide the tribunal after the event, not the employer who is trying to work out first what he can and cannot do. It carries with it the implication, which I would regard as sound, that the employer is entitled to take steps to protect his own interests. But he must not seriously jeopardise the employee's right to pursue her claim. It is the employee's interest in pursing the claim that provides test of what is and what is not "reasonable".
27. But the employer who is looking for guidance needs a bit more than that. One can do no more than resort to generalities on such a fact-sensitive issue. However, I think that this much can be said. The employer should reflect on how the way he wishes to conduct himself will be seen through the eyes of the employee - how would she be likely to react if she were to be treated in that way? He is entitled to bear in mind that an unjustified sense of grievance cannot amount to "detriment": Barclays Bank plc v Kapur and others (No 2)  IRLR 87; Shamoon v Chief Constable of the Royal Ulster Constabulary  ICR 337, paras 35 and 105. But he must also bear in mind that the right of the employee to enforce compliance with the principle of equal treatment is protected by the Directive. So he must avoid doing anything that might make a reasonable employee feel that she is being unduly pressurised to concede her claim. Indirect pressure of the kind that the tribunal found established in this case - fear of public odium, or the reproaches of colleagues - is just as likely to deter an employee from enforcing her claim as a direct threat. Sensitivity to the wider effects of what he plans to do will be crucial to the exercise of an informed judgment as to what is reasonable.
28. The question whether the borderline has been crossed is, in the end, a question of fact for the tribunal. It will exercise its judgment, in the way I have suggested, on a consideration of all the evidence. It is not to be criticised if it does not ask itself, in so many words, whether the employer's conduct was "honest and reasonable". On the facts of this case, a finding that the detriment was "by reason that" the employees were insisting on their claims because the respondents went further than was reasonable in protecting their own interests was inescapable.
29. For the reasons which Lord Neuberger has given, and for these further reasons of my own, I would allow the appeal and make the order which he proposes.
BARONESS HALE OF RICHMOND
30. This is a classic case of "blaming the victims". The victims of long-standing and deep-seated injustice should not be made to feel guilty if they pursue their claims for justice. But it is all too tempting to try to do so, especially if their success may have far-reaching consequences. Women workers have suffered injustice in the labour market for centuries. This is not only because they tend to have more interrupted working lives than men. They have been paid less than men for doing the same work. They have been segregated into "women's work" which is paid less than men's simply because it is women's work. There is still a gender pay gap which is far larger than it should be. In November 2006, the gender pay gap stood at 12.6% (using the median) and 17.2% (using the mean) between the hourly earnings of men and women in full time work.
31. But this is a great improvement upon 1975, when the Equal Pay Act 1970 came into force. Then the gap between the hourly average earnings of men and women in full time employment was 30%. The 1970 Act began in a small way by insisting that men and women be paid the same for "like work" or "work rated as equivalent". The machinery chosen was to incorporate an equality clause into their contracts of employment. This gave them a contractual right to equal pay irrespective of what their contracts actually provided. This necessarily entailed "levelling up" and back-dating, rather than a prospective averaging out. That is why success for the women can have such far reaching consequences for everyone. But the 1970 Act did not initially have too dramatic an effect, because it did not tackle the problem of segregation into "women's work".
32. In 1983, the Act was amended to cover "work which . . . is . . . in terms of the demands made on her (for instance under such headings as effort, skill and decision) of equal value to that of a man in the same employment" (Equal Pay Act 1970, s 1(2)(c), inserted by the Equal Pay (Amendment) Regulations 1983, SI 1983/1793, reg 2). Equal value claims are enormously complex, often involve a great many employees and go on for a very long time, as this one has done. During this time, people still have to work together. The whole idea is that they should be able to go on doing so, not only while the case is going on, but also in the future. This makes the protection from "victimisation" given by section 4 of the Sex Discrimination Act 1975 all the more important.
33. The principle that men and women should receive equal pay has always been "an integral part of the establishment and functioning of the common market" (Council Directive 75/117/EEC, The Equal Pay Directive). Although passed before the United Kingdom joined the common market, the 1970 Act (together with its sister, the 1975 Act) is our way of implementing our developing obligations under European Union law to further the cause of gender equality. These have always contained an obligation to "take the necessary measures to protect employees against dismissal by the employer as a reaction to a complaint within the undertaking or to any legal proceedings aimed at enforcing compliance with the principle of equal pay" (ibid, article 5). This protection is necessary to make effective the obligation to introduce measures "to enable all employees who consider themselves wronged by failure to apply the principle of equal pay to pursue their claims by judicial process . . ." (ibid, article 2). Provision to the same effect as article 5 was made in article 7 of the wider ranging Equal Treatment Directive of the following year (Council Directive 76/207/EEC).
34. Then came the decision of the European Court of Justice in Coote v Granada Hospitality Ltd  ICR 100. There, an employee who had complained of sex discrimination left the company's employment by consent, but later complained that the company had refused to supply her with a reference as a reprisal for her previous claim. The Court held that the Directive required that people be enabled to pursue their claims after leaving their employment. More importantly for our purposes, it also held that the measures against which people were protected by article 7 were not limited to dismissal:
In 2002, a Directive of the European Parliament and Council (2002/73/EC) amended article 7 of the Equal Treatment Directive, among other things, to give protection against "dismissal or other adverse treatment" as a reaction to complaints or legal proceedings. Article 5 of the Equal Pay Directive has not been amended, but it is common ground that the Coote decision produces the same effect.
35. European law therefore requires that people who bring equal pay and sex discrimination claims are given effective protection against dismissal or other adverse treatment from their employers as a reaction to their complaints. The purpose is to secure that they are not deterred from pursuing their claims or punished if they have done so. The same now applies to claims of discrimination on other prohibited grounds by virtue of the Race Directive (2000/43/EC, article 9) and the Employment Directive (2000/78/EC, article 11). It is important to recognise that the latter two directives were not in force when this House decided the race discrimination case of Chief Constable of the West Yorkshire Police v Khan  ICR 1169. Accordingly, the House was under no obligation to construe the victimisation provisions in section 2 of the Race Relations Act 1976 (which are mutatis mutandis identical to those in section 4 of the Sex Discrimination Act 1975) in accordance with the Directives or with the Coote decision. They were not therefore cited to the House. The reasoning, if not the result, in Khan must now be revisited in the light of the European law. That reasoning should certainly not be transferred automatically to the sex discrimination context to which the European law has always applied.
36. Neither the Sex Discrimination Act itself nor the European Directives contain any "honest and reasonable employer defence". Nor, indeed, did their Lordships in Khan invent one: they merely pointed to the sort of conduct which would not fall foul of the victimisation provisions. It would be better if the "defence" were laid to rest and the language of the legislation, construed in the light of the requirements of the Directives, applied. There are three relevant questions under the 1975 Act. First, did the employer discriminate against the woman in any of the ways prohibited by the Act? In this particular case, the alleged discrimination was by "subjecting her to any other detriment" (contrary to section 6(2)(b) of the 1975 Act). Secondly, in doing so, did the employer treat her "less favourably than . . . he treats or would treat other persons"? Thirdly, did he do so "by reason that" she had asserted or intended to assert her equal pay or discrimination claims or done any of the other protected acts set out in section 4(1) of the Act?
37. The first question concentrates upon the effect of what the employer has done upon the alleged victim. Is it a "detriment" or, in the terms of the Directive, "adverse treatment"? But this has to be treatment which a reasonable employee would or might consider detrimental. As my noble and learned friend, Lord Hope of Craighead, observed in Shamoon v Chief Constable of the Royal Ulster Constabulary  ICR 337, 349, para 35, "An unjustified sense of grievance cannot amount to 'detriment'". There are some things that an employer might do during a discrimination claim which cannot sensibly be construed as a detriment or adverse treatment. Ordinary steps in defending the claim and ordinary attempts to settle or compromise the claim do no-one any harm and may even do some good.
38. But these were no ordinary attempts to settle the claim. It is worthwhile emphasising how the Employment Tribunal put it in para 4(d) of their Reasons:
The Tribunal had already pointed out that the warnings of dire consequences had been sent, not only to the women who were pursuing their claims, but also to all their colleagues in the catering department, and incurred for them "some odium" from colleagues, as well as causing some of them distress.
39. The Employment Appeal Tribunal drew attention in para 26 of their judgment to
This was ample reason to regard these particular letters as subjecting these particular women to a "detriment" or "adverse treatment". Equal pay claimants are peculiarly vulnerable to reproach, and worse, from colleagues who fear the effects of their claims upon their own positions. However anxious the employers may be to settle, they should not exploit that vulnerability in their attempts to do so.
40. The second question focuses upon how the employer treats other people. There is no equivalent comparison question in the Directives and so we must beware of introducing too many niceties into this aspect of our domestic legislation. But it may be that, without a difference in treatment, it would be difficult to assert that the employer's behaviour was a reaction to the discrimination claim. In any event, it is now common ground that the "other persons" for the purpose of the comparison required by s 4(1) of the 1975 Act are those employees who are not doing the various acts protected under section 4(1)(a) to (d), in this case those who had not brought and continued equal pay claims. They had not been subjected to the particular detriment complained of and so these women have indeed been treated less favourably than others.
41. The third question focuses upon the employers' reasons for their behaviour. Why did they do it? Was it, in the terms of the Directives, a "reaction to" the women's claims? As Lord Nicholls of Birkenhead explained in Khan's case  ICR 1065, 1072, para 29, this
If one asks the simple question - "why did these employers send the letters?" - there can only be one answer: because these women were pursuing their claims for equal pay even though the others had settled. The employers wanted them to settle too. There is, of course, nothing wrong with that. But it was undoubtedly the reason why the letters were sent. That was, in my view, all that the Tribunal were pointing out in paragraph 4(e) of their Reasons. They were also right to point out that the reason for the adverse treatment could be the continuation as well as the commencement of proceedings. It would make no sense to prevent an employer from treating an employee badly because she had brought proceedings but not to prevent him from treating her badly if she continued them. The more difficult question for the Tribunal was whether these employers had gone too far in their attempts to induce the women to settle and the Tribunal had already addressed that question in the passage quoted from paragraph 4(d).
42. For these reasons, in addition to those given by my noble and learned friend, Lord Neuberger of Abbotsbury, I would allow this appeal.
43. I have had the advantage of reading in draft the opinion prepared by my noble and learned friend Lord Neuberger of Abbotsbury. For the reasons which he has given I too would allow the appeal and make the order proposed.LORD NEUBERGER OF ABBOTSBURY
44. The appellants, Mrs Derbyshire and 38 other women, appeal against the decision of the Court of Appeal, reversing the Employment Appeal Tribunal ("EAT"), remitting a decision of the Employment Tribunal ("the Tribunal") for reconsideration. The decision of the Tribunal was that the appellants had been discriminated against pursuant to section 4 of the Sex Discrimination Act 1975 ("the 1975 Act") by their employer, the respondent St Helens Borough Council ("the Council").
45. The appellants, together with some 470 other women employed by the Council as catering staff in its school meal service, brought equal pay claims against the Council pursuant to section 2 of the Equal Pay Act 1970, during the autumn of 1998. The Council settled the claim of the 470 other claimants by paying an agreed lump sum which was shared between them. However, the 39 appellants did not join in the settlement, and proceeded with their claims before the Tribunal (where in due course they were all ultimately successful, and there was no appeal by the Council).
46. On 19th January 2001, some two months before the equal pay claim was due to be heard by the Tribunal, the Council's acting Director of Environmental Protection, Mr Sanderson, sent out two letters ("the two letters"). The first letter was addressed and sent to all members of the catering staff; the second letter was addressed and sent only to the 39 appellants, i.e. those female members of the catering staff who had not settled their equal pay claims. I do not propose to quote the contents of those letters: they are helpfully appended in a schedule to the judgment of the Court of Appeal,  EWCA Civ 977,  ICR 90,  IRLR 801.
47. The longer of the two letters, sent to all the catering staff, ("the first letter") ran to over two full pages, and said that "the continuance of the current claims and a ruling against the Council will have a severe impact on all staff", and explained in some detail why this would be so. This letter included the statement that "the Council fully acknowledges and respects the right of individuals to pursue employment matters via the courts or tribunals, and others should respect this also". However, the first letter immediately went on to say that it was "important to ensure that all affected staff are fully aware of the longer term employment consequences" of the appellants' equal pay claims succeeding, and that separate letters were being written to the appellants (although they were not identified).
48. In the letter written only to the appellants ("the second letter"), references were made to an earlier proposal to settle the equal pay claim, and to the more recent settlement offer (which had been accepted by the other 470 claimants), which was renewed. In the second letter, Mr Sanderson described himself as "greatly concerned about the likely outcome of this matter as stated in the letter to catering staff".
49. Each of the appellants then brought a claim in the Tribunal on the basis that she had been "victimised" as a result of the two letters contrary to section 4 of the 1975 Act.
50. Section 4 is in Part I of the 1975 Act which is entitled "Discrimination to which Act applies", and it provides as follows, so as far as relevant:
The allusive words "in any circumstances relevant for the purposes of any provision of this Act" refer to the subsequent Parts of the 1975 Act, and in particular, to Parts II, III, IV which are respectively entitled "Discrimination in the employment field" "Discrimination in other fields", and "Other unlawful acts". This case, of course, is concerned with Part II. It is necessary to refer to the first section of that Part, namely Section 6, of which only subsection (2)(b) is relevant for present purposes; it is in these terms: