Employment News: equal pay, redundancy, GDPR

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If it ain't broke – material factor still explained pay disparity after job evaluation

Employers have a defence to an equal pay claim if they can show that a difference in pay between an employee and their comparator is because of a material factor that does not involve direct or indirect discrimination. In Walker v Co-Operative Group Ltd the Court of Appeal overturned an earlier tribunal decision that material factors relied on by an employer no longer provided a defence once an employee's job had been rated higher than those of her comparators in a job evaluation scheme.

When Ms Walker was appointed to the role of Group Chief HR Officer in March 2014 her salary was fixed at a lower rate than that of her male comparators. At the time the business was in a parlous state and her comparators' salaries reflected their vital roles in rescuing the business, existing executive experience, the fact that they were viewed as a flight risk and market forces. Those factors provided a non-discriminatory explanation for the pay differential at that point.

However, by February 2015 the "rescue phase" of the turnaround plan had been completed and Ms Walker's role had been graded higher than those of her comparators in a job evaluation exercise. In her subsequent equal pay claim, the tribunal found that the historical explanations for the pay differential ceased to operate at some point between March 2014 and February 2015.

The EAT upheld the employer's appeal and the Court of Appeal has now agreed with the EAT's decision. It is well established that the outcome of a job evaluation exercise cannot be used to support an equal pay claim in relation to a period before the evaluation was carried out. The key issue for the tribunal was whether the material factors that had applied in March 2014 still explained the pay differential from February 2015 onwards. They did. Although the relative importance of the roles occupied by Ms Walker and her comparators had changed, at least one of the other material factors in respect of each comparator continued to apply. The tribunal was wrong to find that the "historical" explanations for the pay differential had ceased to operate by February 2015. The equal pay claim failed.

The case is a useful reminder that a material factor does not have to explain a pay differential in the sense of justifying it; it simply has to be a non-discriminatory cause of the differential in order to provide a defence.

In the alternative – not giving employee option of ad-hoc work did not make redundancy unfair

One of the "golden rules" of a fair redundancy dismissal is for the employer to investigate whether it has suitable alternative employment that it could offer an employee instead of dismissing them. In Aramark (UK) Ltd v Fernandes the EAT found that an employer's failure to place a redundant employee on a list of individuals who could be offered casual work did not make his redundancy unfair.

It was agreed that there was a redundancy situation and the employee does not appear to have argued that his selection for redundancy was unfair. However, he claimed that the employer had failed to offer him suitable alternative employment because it did not put him on the list of individuals who could be offered work on an ad-hoc basis. This was unreasonable, because putting him on the list would have given him a reasonable opportunity to obtain some work and this was better than nothing. The employment tribunal upheld his claim.

The EAT overturned the tribunal's decision. It had overlooked the fact that the concept of suitable alternative employment is something that is an alternative to dismissal. In this case the employee would still have been dismissed for redundancy even if he had been placed on the list. As such the employer's failure was not one that could render the dismissal itself unfair. It had not acted unreasonably in treating the redundancy situation as a reason to dismiss.

Nice try – disciplinary investigation not a breach of GDPR

When the GDPR came into force there were questions about whether the new rules would affect an employer's ability to use employee data in the context of disciplinary investigations. The High Court has now confirmed that it may be difficult for an employee to argue that GDPR requirements make the use of data in disciplinary investigations unlawful in Hopkins v The Commissioners for HMRC.

The claimant was arrested for various serious offences. She informed her line manager of this, as required by her contract. The police also notified HMRC. Her line manager disclosed the information to HMRC's Internal Governance department, and the information was shared with HR and the Press Office so they could advise on the issue and process. The claimant was suspended on full pay pending a disciplinary investigation.

The claimant subsequently raised a grievance and contacted the ICO to complain that the investigation was unfair, unlawful and in breach of the GDPR. Although the ICO rejected her complaint, she proceeded to issue a claim in the High Court alleging that HMRC was in breach of contract and of the GDPR. HMRC asked the Court to strike out the claim as having no reasonable prospect of success.

The Court struck out the majority of the claimant's claims, finding:
  • It was not inconsistent with HMRC's staff privacy notice to require the claimant to inform her employer of her arrest. The privacy notice made it clear that criminal offence data would be processed, including in connection with HMRC's employment-related rights.
  • The suspension was not a breach of contract. That argument had no reasonable prospect of success, given the serious nature of the alleged offences. In the circumstances there was no sensible basis to challenge the decision to start a disciplinary investigation and to suspend the claimant while inquiries were made.
  • Processing the claimant's criminal offence data was not unlawful under the GDPR. HMRC was the controller of the data and had a lawful basis for processing it. Processing was necessary for the performance of the employment contract under Article 6(1)(b) of the GDPR and for HMRC to exercise rights conferred on it by law in connection with employment under Article 10 of the GDPR and paragraph 1 of Schedule 1 of the Data Protection Act 2018.
  • HMRC had an appropriate policy document in place as required, allowing it to process criminal offence data.
  • There was no merit to the claim that sharing the data within HMRC for the purposes of the disciplinary investigation was a breach of the GDPR.

Two aspects of the claimant's claim were allowed to proceed. It appeared that HMRC had failed to respond to the claimant's request for information or seek an extension for responding within the primary one month time limit. Further, by the date of the judgment the claimant's suspension had been in place for two years and the disciplinary investigation had not been completed. It was at least arguable that the suspension had not been effectively reviewed and had not been kept as short as possible and that aspect of the breach of contract claim was not struck out.
 

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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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