John Evans, Head of Employment at Coudert Brothers, London looks at recent high-brow cases and explains what is involved and the likely pay-outs.
Stephanie Villalba, the Merrill Lynch banker who heard just before Christmas that she had lost her marathon sex discrimination case against her former employer, is appealing the decision.
Appeals at Tribunal can only be made on limited grounds, and there is a filtering system to ensure that everyone’s time is not wasted by allowing hopeless appeals to go forward. Villalba will have to therefore demonstrate that the original tribunal hearing her case made an error of law or came to a decision which was ‘perverse’.
The high value put on the compensation sought by Villalba was what attracted so much media attention. Less well-publicised was the fact that she actually won part of the case – that being her claim for unfair dismissal. Where she failed was in proving that she had been less favourably treated because she was female, than a man in her position would have been, and in establishing that she was underpaid compared with men in equivalent roles.
The successful part of her case was to establish that Merrill did not follow proper procedures in terminating her employment. Their HR procedure was criticised by the Tribunal. However, because the compensation for unfair dismissal was capped at £55,000 (considerably less than she had spent on irrecoverable legal fees), this could hardly be seen as other than a pyrrhic victory.
On the other end of the scale from the Villalba case, it was announced in March that some 1,500 women had successfully settled their equal pay claims against the North Cumbria Acute NHS Trust. This was a vindication of the long campaign by UNISON to demonstrate that nursing work was of equal value to that done by joiners, building labourers and maintenance assistants. The implications for other NHS and public sector employers are significant, and further claims and settlements can be expected.
With the continued portrayal – rightly or wrongly – of women employees being given a raw deal compared with men, the North Cumbria case has highlighted the broad application of the equal pay jurisdiction and is likely to encourage an increase in such claims, with a wider range of comparators being given than had previously been thought to be available.
Employers are therefore well-advised to review their pay scales without delay and make adjustments as appropriate. Of course, such adjustments are not going to be downwards – at least, not without having to face the prospect of unlawful deductions from pay claims, or worse, constructive dismissal claims!
HR professionals will get an inkling of potential claims if they receive an equal pay questionnaire asking for details of the pay rates of members of the opposite sex doing work considered to be of the same value, at least in the eyes of the person serving the questionnaire.
Although replying to such questionnaires is not compulsory, a failure to answer is likely to be held against the employer if the case gets to a hearing. An interesting question is the extent to which the Data Protection Act could be used as a basis for arguing that the rates of pay of other employees are confidential personal data which the employer is not entitled to disclose. As this would defeat the objective of the questionnaire, I rather doubt that such an argument would succeed.
Interestingly, the most recent available Employment Tribunal statistics, which cover the period up to March 2004, show that the number of equal pay claims filed in 2003-4 halved as compared with 2001-2. It will be interesting to see if those figures change in the next published statistics. Of the 2195 cases closed in 2003-4, 36% were settled via ACAS Conciliation, 42% were withdrawn (we are not told if such withdrawal followed a private settlement), 3% were successful and 3% were dismissed after being heard.
It is interesting that the number of such cases which reached a hearing was lower than the figure for all cases, where the statistics were:
- total cases closed 126,793
- 38% settled via ACAS
- 31% withdrawn
- 14% were successful at tribunal
- 10% were dismissed at the hearing
- 8% were ‘disposed of otherwise’
Statistics can lie, however, as no doubt Villalba’s case will be cited in the next set of statistics as being successful at tribunal, although as we saw above, this is hardly the case on any realistic assessment.
The statistics also show some interesting figures in terms of awards made. The average award for race discrimination was £26,660, and the highest £635,150. The award was over £50,000 in six cases out of 80 successful ones heard. This contrasts with the average sex discrimination award of £12,971 – roughly half as much – with the highest being £504,433, and five cases out of 221 resulting in awards over £50,000.
The median awards made were respectively £8,410 and £5,425. Bearing in mind the costs for employer and employee in fighting cases to a full hearing, (assuming they use legal representation), it seems that in most cases, there are no real winners – apart from the legal representatives.
Whilst nobody can stop an aggrieved employee from commencing tribunal proceedings, it is nevertheless advisable to move with the times in terms of employment trends, to keep in close touch with the workforce, and to use all means available to resolve disputes, such that winning the case in the tribunal is a last resort!