Constructive dismissal based on breach of the sex equality clause does not amount to sex discrimination

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Summary

The case of BMC Software Ltd v. Shaikh UKEAT/0092/16 has held that while breach of a "sex equality clause" can constitute a constructive dismissal, this cannot then form the basis of a sex discrimination claim. This has an impact on remedy for a claimant, as the remedy for a sex discrimination claim includes injury to feelings, whilst an award for an equal pay claim does not.

Issues

Where an employee does work that is equal to that of a comparator of the opposite sex, her contract is modified, as needed, so it is no less favourable (unless the difference is due to a material factor). This is the effect of a "sex equality clause". Sex discrimination claims cannot be brought in relation to a contractual term which is modified or inserted because of the sex equality clause.

An award for an equal pay claim can include a declaration by the employment tribunal of the claimant's rights, payment of any arrears or damages. A sex discrimination award may include payment of compensation, injury to feelings, recommendations and a declaration.

In BMC Software Ltd v. Shaikh, Ms Shaikh was considered a good worker and was given various pay rises. By July 2013 her salary was £60,000. Ms Shaikh compared herself to two male colleagues. Mr A, who was paid £75,000 by 2010, and Mr B who was paid between £60,000 and £68,000 after 2010. Ms Shaikh raised a grievance, partly based on the fact she became aware Mr A had a higher basic salary than her. The grievance was not upheld, neither was an appeal. In her resignation letter she complained among other things that she was paid less than Mr A and Mr B. BMC argued that material factors existed. For Mr A this was that he had been promoted to Account Executive. For Mr B this was that a higher salary was necessary to recruit him. 

Ms Shaikh brought an equal pay claim in the employment tribunal (ET). The ET found in her favour. BMC's defence failed, in part, because they had no records and were inconsistent in the accounts they gave for justifying the pay differentials. The ET also upheld her claims of constructive dismissal based on breach of the sex equality clause, wrongful dismissal and discrimination by constructive dismissal.

BMC appealed to the Employment Appeal Tribunal (EAT). The question arose as to whether the ET had the power under the Equality Act 2010 to conclude that BMC's breach of the implied sex equality clause constituting a constructive dismissal was also discriminatory.

Decision

The EAT held the ET had been wrong to find that a breach of the sex equality clause, constituting constructive dismissal, also constituted sex discrimination. It considered that section 70 of the Equality Act 2010 precluded the discrimination provisions from applying in the event of a breach of a sex equality clause. Since there was no sex discrimination claim, a remedy could only be made under section 132 of the Equality Act 2010, which is relevant to equal pay claims.

What does this mean for employers?

This is an important appellate decision which summarises the causes of action and remedy available to an employee who believes there has been a breach of the sex equality clause.

Employers should bear this decision in mind when defending claims of equal pay, constructive unfair dismissal and discrimination to ensure that any invalid claims are struck out. In particular, employers should make sure that a sex discrimination claim is not being pursued on the back of a constructive unfair dismissal claim brought for breach of a sex equality clause.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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