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Supreme Court decision could open floodgates for employers in historic equal pay claims

Employers could face a deluge of historic equal pay claims following the decision of the Supreme Court in Birmingham City Council v Abdulla and others [2012] UKSC 47.

The Claimants brought claims for equal pay against Birmingham City Council, for breach of the equality clauses of their contracts of employment under the Equal Pay Act 1970.  Their claims, however, were brought after the limitation period of six months had expired, and would have been struck out had they been brought in an Employment Tribunal.  To get around this restriction, the Claimants instead issued their claims in the High Court, attempting to take advantage of its more generous six year limitation period.

The Council asked the Court to exercise its discretion under section 2(3) of the Act to strike the claims out, on the basis that the claim ‘could more conveniently be disposed of separately by an employment tribunal’.

Birmingham’s application failed for the simple reason that it could never be more convenient for a case to be heard in a forum ‘where the… tribunal could not determine the claim on its merits but would be bound to refuse jurisdiction to deal with the claim because it was time barred.’[1]

On appeal, Birmingham altered its position, and now suggested that the test in section 2(3) could be modified, such that the case should be struck out ‘except where a claimant could provide a reasonable explanation’ for not bringing her claim to a tribunal within the six month limit.

Mummery LJ, giving the main judgment ([2011] EWCA Civ 1412), dismissed the appeal.  He held that the ‘basic assumption’ of the Act was that there would be concurrent jurisdiction between the Court and the Tribunal, with section 2(3) simply determining ‘the forum more fitted for its resolution’.   Accordingly, absent any allegation of an abuse of process, a Claimant’s reason for not claiming in the Tribunal could not be relevant to an exercise of the Court’s discretion.  Mummery LJ did not, however, consider the issue of time bar to be one that would automatically result in allowing a claim to be heard in the Court.  Rather, he gave a ‘more qualified’ judgment, holding that such a point was simply ‘a circumstance of considerable weight in most cases’.

Birmingham appealed the same point to the Supreme Court.  The Council asked what Parliament’s intention could have been in imposing a strict time limit, when it could be circumvented using the method the Claimants had employed.  In answering that question, the Court reviewed the legislative history of the Equal Pay Act.  Lord Wilson, giving the judgment of the majority, considered it ‘a striking feature’ of the legislation that the limitation period for equal pay claims, unlike other causes of action, had never been made extendable.  This made it ‘strongly arguable that Parliament tolerated an unusually absolute time limit… only because it recognised that, were she to fall foul of that time limit, the claimant would nevertheless be likely to remain in time for making her claim in court.’

As the statutory objective of section 2(3) was simply ‘the distribution of judicial business for resolution in the forum more fitted for it’, principles relating to forum non conveniens were not relevant.  Upholding the ‘categorical’ decision of the High Court, the reasons for failing to bring a claim in time to the Tribunal could not be relevant to the exercise of the Court’s discretion under this section.  The decision of Slade J on this point in Ashby v Birmingham City Council [2011] EWHC 424 (QB) was expressly disapproved.

Accordingly, ‘an equality clause can never more conveniently be disposed of by the tribunal if it would there be time-barred’.  The Court also suggested that Parliament should consider relaxing the absolute time bar in the 1970 Act and successor legislation.

Lords Sumption and Carnwath, dissenting, argued that this approach frustrated the limitation period imposed by the Act; Parliament’s purpose in conferring jurisdiction on the Tribunals was to take advantage of their special expertise, and the time limit was to provide the employer with a degree of protection in an area particularly sensitive to it.  Questions of convenience had to go further than the narrow approach favoured by the majority, and treating limitation as a technicality, rather than a defence, was not the correct approach to take.

This decision is likely to have significant ramifications for employers, as section 2(3) was replicated in section 128(1) of the Equality Act 2010.  The Supreme Court has opened the door to equal pay claims from as far back as six years ago, and businesses will need to take measures to ensure that they retain sufficient evidence to be able to respond to such historic claims.

Some consolation can, however, be found in the ensuing costs regime.  Lord Wilson indicated that the usual rule, that a losing party pay the winner’s costs, may not apply here.  He suggested that where ‘instead of bringing it in court, a claimant should, in all the circumstances, reasonably have presented her claim, in time, to the tribunal’, such a matter ‘might well be very relevant’ to what costs order might be made.

Moreover, even were the costs rules to be the same as those of ordinary civil litigation, employers could still benefit.  The ability to recover costs against an unsuccessful claimant may offer tactical advantages in reaching a negotiated settlement that would be unavailable in Tribunal, and could potentially work to limit a proliferation of claims in this area.

[1] Issues were also taken on points of EU law, but these are of only tangential interest to the central issue of limitation.
Related link:  Profile of Ben Gray
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