The Court of Appeal has held that an employer can in principle continue to rely on a valid material factor defence to an equal pay claim for a period after the date of the initial decision - the material factor does not simply evaporate due to the passage of time. It may continue to be the cause of the continuing pay difference and therefore provide a defence, even if it may no longer justify the difference.
The employer had carried out a job evaluation study identifying a pay disparity in the claimant’s salary, but had successfully established a material factor defence explaining the pay one year earlier. The defence relied on four factors explaining why male comparators in the employer's executive team were paid more than the claimant in her role as Group Chief HR Officer at the earlier date: market forces, executive experience, flight risk and the importance of the role to the immediate survival of the employer. The tribunal had found that the defence had ceased to be relevant at some point part way through the year prior to the job evaluation study, but the EAT ruled that the employer’s defence continued to operate until a further decision or omission to decide pay could be identified. On the facts there had been no pay round in the intervening period, and the claimant had not made any request for her pay to be reviewed.
The Court of Appeal agreed that the tribunal had erred. The tribunal's conclusion overlooked the fact that in respect of each of the comparators there was at least one material factor (market forces, executive experience, or flight risk) which remained causative of or which explained the difference in pay at the end of the year. The Court emphasised that a material factor need only explain the cause of the difference, it does not need to be fair or to justify it to be relied upon, provided it caused that difference and is not ‘tainted by sex’.
The Court did not accept that the employer was under a duty to keep comparative pay under continuing review once the business rescue plan had started to succeed.
Males LJ also considered that the tribunal had failed to make a finding that the claimant was employed in work of equal value at the earlier date, and therefore the issue of material factor should not have arisen.
(Walker v Co-operative Group Ltd)
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