Somerset County Council & Anor v Pike

Equality of treatment is predicated upon comparison. In cases of indirect sex discrimination, the first question is whether an apparently neutral provision, criterion or practice

“disadvantages a substantially higher proportion of the members of one sex.”

Those are the words of Council Directive 97/80/EC. They presuppose an advantaged group and a disadvantaged group. The comparative exercise is crucial but the identification of appropriate groups has given rise to recurrent difficulty.

Mrs Christine Pike worked for many years as a teacher. In December 1993 she took early retirement from her full-time post on grounds of ill-health, intending to return to the same school in January 2004 on a part-time basis. From January 2004 she received a pension, calculated by reference to incapacity and enhanced by added years, pursuant to the Teachers’ Superannuation (Consolidation) Regulations 1988 (the Regulations). Under the Regulations, her part-time employment from January 1994 was not pensionable. Although part-time teaching was in principle pensionable, it ceased to be so if the teacher was in receipt of a teacher’s pension. On the other hand, if a retired teacher in receipt of a pension returned to full-time teaching, the position would be pensionable. This would not happen often because of an abatement rule. Mrs Pike is one of a group of 74 teachers who claim that the non-pensionable aspect of their post-retirement part-time teaching amounts to indirect sex discrimination because it disadvantages a substantially higher proportion of women than men. If they are right about that, their claims will succeed unless the employer can establish the defence of justification.

The application to the Employment Tribunal in this case was lodged as long ago as February 1995. It seems that one of the reasons for the long delay related to the gathering of statistical information. Be that as it may, I can pick up the subsequent history in March 2007. The employer had issued an application to strike out the application of Mrs Pike pursuant to Rule 18(7)(a) of the Employment Tribunals (Rules of Procedure) 2004 on the grounds that she is unable to establish that the rule which excluded part-time teachers who had already retired from rejoining the pension scheme had a disproportionately adverse impact on women. The employer’s application was listed before a Chairman, sitting alone.

In his determination, the Chairman identified two issues:

“The first is the correct identity of the pool for determining disproportionate impact; the second is whether the statistical evidence which applies to that pool is sufficiently reliable for me to be able to draw any conclusions and, if so, what those conclusions are.”

On the first issue, he decided (at paragraphs 18 and 19):

“The requirement or condition under challenge in this case applies to all teachers, albeit in the case of pre-retirement teachers, only contingently …

… the requirement not to be in receipt of a retirement pension and to be teaching part-time in order to be eligible for membership of the Teachers’ Pension Scheme is applied to all members of the teaching profession. The correct pool, therefore, must be the entirety of teachers, embracing those who can comply with it and those who cannot.”

In reaching this conclusion, the Chairman relied upon the decision of the Court of Appeal in Rutherford v Secretary of State for Trade and Industry (No.2) [2004] EWCA Civ 1186 but, surprisingly, he made no reference to the subsequent decision of the House of Lords in that case [2006] UKHL 19, [2006] ICR 785), even though the decision of the House of Lords preceded the hearing in the Employment Tribunal in the present case by almost a year. At the hearing in the Employment Tribunal, both parties were represented by leading and junior counsel and it seems that they, too, were content to argue the case without regard to the decision of the House of Lords.

On the second issue, the Chairman concluded that, on the basis of his identified pool – “the whole of the teaching profession” – there was an extremely slight (0.3%) adverse disparate impact. He accordingly struck out the claim as having no reasonable prospect of success. However, if he had defined the pool in accordance with the submission on behalf of Mrs Pike (“teachers who returned to work having retired and obtained a pension”), he observed that Mrs Pike “appeared able” to prove “disproportionate impact”.

Mrs Pike appealed to the Employment Appeal Tribunal. Her appeal was heard by HHJ McMullen QC, sitting alone (UKEAT/0046/08/ZT). He took full account of the decision of the House of Lords in Rutherford and it drove him to the conclusion that the correct pool excluded pre-retirement teachers. The essence of his judgment is to be found in these passages (at paragraphs 20, 21 and 24):

“Those who are in the Teachers’ Pension Scheme but have not retired are uninterested in post-retirement rules … the pool consists of returners; the disadvantaged group within the pool is part-timers and the advantaged group is full-timers …

… it is necessary in my view to choose a pool where the disadvantage could be illustrated and that did not occur if poured into the pool were all those under retirement age and working, whether full-time or part-time. To describe them as an advantaged group, for the purposes of juxtaposition against the disadvantaged group of part-time returners, is an abuse of language. These people had no advantage out of the post-retirement rule favouring full-timers; it simply did not apply to them. They could only distort the view of the pool …

… For the purposes of this appeal it seems to me the only logical pool is as I have described it: returners … I do not accept as logical the pool … covering all those in the Teachers’ Pension Scheme. All those … are … affected by every rule of the Scheme but only returners have the offending rule applied to them.”

Having so held, Judge McMullen examined the statistical evidence and concluded that Mrs Pike had established disparate impact. The figures “show disparate adverse impact which is statistically and legally significant”. The disparity in relation to returners over a 13 year period showed that some 15% more women than men were in non-pensionable employment and that a comparison of the proportion of advantaged men to the proportion of advantaged women over the same period showed that 38% more men than women were advantaged. On the basis that he found disparate impact to have been proved, he remitted the case to the Employment Tribunal on the single issue of the defence of justification. On the appeal to this Court, the employer challenges Judge McMullen’s conclusion as to the pool and his decision on disparate impact.

I described the conclusion of Judge McMullen as having been “driven” by the decision of the House of Lords in Rutherford. It is therefore necessary to consider what Rutherford decided and how it affects the present case. It is no secret that this Court has confessed on more than one occasion to experiencing difficulty in interpreting and applying Rutherford: see British Medical Association v Chaudhary [2007] EWCA Civ 788, [2007] IRLR 800, at paragraph 193, per Mummery LJ giving the judgment of the Court which also comprised Smith LJ and myself; and Grundy v British Airways PLC [2007] EWCA Civ 1020, [2008] IRLR 74, per Sedley LJ at paragraph 23, Carnwath LJ at paragraphs 43-46, and Waller LJ at paragraph 47. The applicants in Rutherford were men who were dismissed when they were over 65. The Employment Rights Act 1996 precluded claims in relation to statutory rights by persons over 65. The applicants complained that the statutory age bar discriminated against men because more men than women work, and therefore become vulnerable to dismissal, after the age of 65. Their case was that the age bar contravened the principle of equality contained in Article 141 of the EC Treaty. They succeeded in the Employment Tribunal, but failed in the Employment Appeal Tribunal, the Court of Appeal and the House of Lords.

As I noted earlier, it was the decision of the Court of Appeal in Rutherford that influenced the Employment Tribunal in the present case. There ([2004] EWCA Civ 1186), Mummery LJ, having considered the authorities, including Seymour-Smith [1999] ICR 447 ECJ, concluded (in paragraph 25) that:

“… in general the relevant statistical comparison involves … taking as the pool ‘the workforce’ (ie the entire workforce) to whom the age limit is applicable, not taking just a small section of the workforce confined to those who are adversely affected by being over 65 or within 10 years of the age of 65.”

Although the House of Lords unanimously dismissed the men’s appeal, the House did not speak with one voice. On the face of it, Lord Scott, Lord Rodger and Baroness Hale expressed agreement with each other, whilst Lord Nicholls and Lord Walker considered themselves to have reached the same conclusion but on a different basis. The approach of the minority (Lord Nicholls and Lord Walker) was differentially expressed inter se but described by Lord Walker (at paragraph 69) as “largely but not entirely the same” as that of the Court of Appeal. The majority each set out their reasoning in detail before opining that it was “essentially the same”: Lord Scott: “essentially the same” as Lord Rodger and Baroness Hale (at paragraph 23; Lord Rodger: “essentially the same” as Baroness Hale (at paragraph 35); and Baroness Hale: “essentially the same” as Lord Scott and Lord Rodger (at paragraph 83). For his part, Lord Walker commented (at paragraph 70):

“… the grounds on which my noble and learned friends would decide the appeal were not argued below or in this House. Nor do I find it easy to extract from their opinions a single easily-stated principle.”

This is fertile ground for imaginative advocates and in Chaudhary, Grundy and the present case, attempts have been made to drive wedges between the ostensibly harmonious opinions of the majority in Rutherford. This led us in Chaudhary to take as the ratio of the majority the words of the headnote in the report of Rutherford in the Industrial Cases Reports:

“the appropriate groups for comparison … comprised all those still in the workforce at age 65.”

Plainly there was equal treatment of men and women on that basis: the age bar applied to them all.

On close analysis, the language of the headnote is concerned with a conclusion, rather than with the arguably differential reasoning that underlay it.

When the present case was before the Employment Appeal Tribunal, Judge McMullen concentrated on the opinion of Baroness Hale, which includes these passages:

“76 … it matters not that there are other men and women who have left the workforce at an earlier age and are thus uninterested in whether or not they will continue to be protected. The people who want the protection are the people who are still in the workforce at the age of 65 …

77 … in my view we should not be bringing into the comparison people who have no interest in the advantage in question.

78.

This approach, defining advantage and disadvantage by reference to what people want, chimes with [Canadian authority] …

82.

The common feature is that all these people are in the pool who want the benefit – or not to suffer the disadvantage – and they are differentially affected by a criterion applicable to that benefit or disadvantage. Indirect discrimination cannot be shown by bringing into the equation people who have no interest in the advantage or disadvantage in question … ”

Lord Scott and Lord Rodger having expressly agreed with the reasoning of Baroness Hale, it was effectively her approach that was adopted, obiter, in Chaudhary (at paragraph 202). It seems to me that it is also what underlies the judgment of Sedley LJ in Grundy, where he said (at paragraph 27):

“The correct principle … is that the pool must be one which suitably tests the particular discrimination complained of … ”

And, at paragraph 28, having observed that a tribunal “will be concerned to make a comparison which illuminates such … questions as seem to them potentially critical …, and to find a pool which best helps them to do this”, Sedley LJ added:

“A pool so narrow that no comparison can be made at all is unlikely to serve this end; nor a pool so large that the comparison is no longer of like with like … ”

What are the implications of all this for the present appeal? Although Mr Paines QC, on behalf of the employer, submits that the approach of the Employment Tribunal to the identification of the appropriate pool was free from legal error, I cannot accept his submission. The Chairman based his approach on the decision of the Court of Appeal in Rutherford and, in my judgment, that did not survive the approach of the majority in the House of Lords, as subsequently understood by this Court in Chaudhary and Grundy. Essentially, the Chairman was wrong to reject the narrower pool advocated on behalf of Mrs Pike. By adopting as the appropriate pool the entire teaching profession, he was, in the words of Baroness Hale, “bringing into the equation people who have no interest in the advantage or disadvantage in question”. In my view, the reasoning and conclusion of Judge McMullen on the pool issue are correct. Accordingly, I would dismiss the appeal on this issue. In so doing, I do not disagree with the observations of Sedley LJ in Grundy (at paragraphs 27 and 31) to the effect that there may not be a single suitable pool for every case. In the present case, however, I agree with Judge McMullen that there is only one logical pool.

This brings one to the second issue raised by Mr Paines. On the hypothesis that Judge McMullen was correct in his identification of the pool, Mr Paines submits that he was wrong to come to his own conclusion about disparate impact and that, as a matter of jurisdiction, his obligation was to remit that issue, and not just the issue of justification, to the Employment Tribunal. Mr Paines seeks to found this ground of appeal on section 35(1) of the Employment Tribunals Act 1996, which provides:

“For the purposes of disposing of an appeal, the Appeal Tribunal may

(a)

exercise any of the power of the body … from which the appeal was brought, or

(b)

remit the case to that body … ”

The complaint is that neither the finding of disparate impact nor the giving of directions as to the service of evidence on the issue of justification was done “for the purpose of disposing of the appeal”. The hearing before the Employment Tribunal was of a strike out application pursuant to rule 18(7)(b). The Chairman had struck the claim out because of his finding on the pool issue and his consequential finding that Mrs Pike did not have a reasonable prospect of successfully establishing disparate impact.

Mr Paines frankly acknowledges that this ground of appeal is fundamentally unattractive because, as he wisely concedes, once the pool is identified as post-retirement returners, one cannot conceive of a failure to establish disparate impact on the basis of the statistical evidence. Nevertheless, the Employment Appeal Tribunal is a creature of statute and, if Judge McMullen exceeded his jurisdiction, this Court should so find. However, in my judgment he did not. Although it was an application pursuant to rule 18(7)(b) that gave rise to the hearing before the Chairman, the parties were content for him to identify the correct pool and, if appropriate, to “draw any conclusions” about the statistical evidence in the light thereof: see paragraph 4 , above. It is plain that, if he had identified the pool correctly, he would have concluded the disparate impact issue in favour of Mrs Pike: see paragraph 7 , above.

Indeed, it is upon such a hypothesis that Mr Paines makes the concession to which I have referred. In these circumstances, it seems to me that Judge McMullen did no more than exercise powers which the Chairman would have exercised if he had identified the pool correctly. In effect, having concluded that there was only one logical pool and only one permissible conclusion about disparate impact on the basis of that pool, Judge McMullen exercised his powers properly and constructively, bearing in mind (as he did) the overriding objective, the delay of 14 years, the real remaining issue of justification and the need to move towards finality in relation to it. I detect no jurisdictional deficit.

For the reasons given, I would dismiss this appeal with the result that the case stands remitted to the Employment Tribunal on the basis of the order and directions of the Employment Appeal Tribunal.

I agree.

I also agree.