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Employment Law

Legal guidance - compliance - software

30 NOV 2011

Equal Pay Forum-Shopping

Julian Milford

The casual observer might have wondered how things could get any worse for Birmingham City Council in its defence of equal pay claims by thousands of mainly female employees. They just have. The Court of Appeal in Birmingham City Council v Abdulla & ors [2011] EWCA Civ 1412 has confirmed that the claimant employees, who were out of time to bring equal pay claims in the Employment Tribunal ("ET"), were permitted to bring those claims in the civil courts. Not just the result, but the reasoning of the Court of Appeal, will send a shiver down the spine of other employers faced with the prospect of mass equal pay claims.

In the ET, equal pay claims must be presented on or before the "qualifying date", which means in most cases 6 months after the last date on which the claimant was employed in the relevant employment. The ET has no power to extend that period, whether under the Equality Act 2010 or (previously) under the Equal Pay Act 1970.

However, a claim for equal pay is a claim for breach of an employee's contract, as modified by the statutory equality clause. That claim may be brought like any other contract claim in the civil courts. In such a case, the limitation period is the normal limitation period for breach of contract claims i.e. 6 years.

The interplay between the two possible avenues of claim was previously dealt with by s.2(3) Equal Pay Act 1970, and is now contained in s.128 Equality Act 2010, which is to similar effect. Section 128 Equality Act 2010 states:

 "(1) If it appears to a court in which proceedings are pending that a claim or counter-claim relating to an equality clause or rule could more conveniently be determined by an employment tribunal, the court may strike out the claim or counter-claim.

 (2) If in proceedings before a court a question arises about an equality clause or rule, the court may (whether or not on an application by a party to the proceedings)-

(a) refer the question, or direct that it should be referred by a party to the proceedings, to an employment tribunal for determination, and

 (b) stay or sist the proceedings in the meantime."

 The Abdullah claimants brought their claims in the High Court. The Council's case before the High Court was that the equal pay claims should be struck out, as they could more conveniently be disposed of by the expert and specialist ET. The Council said that the expiration of the time limit applicable to equal pay claims in the ET was an irrelevant factor in the exercise of the court's discretion under s.2(3) Equal Pay Act 1970. The judge rejected the Council's case that the ET time limit factor was irrelevant to the exercise of the court's discretion, and allowed the cases to proceed.

In the meantime, the High Court issued another judgment on claims against Birmingham Council brought in the civil courts: Ashby v Birmingham City Council [2011] IRLR 473. In Ashby, Slade J similarly allowed equal pay claims to proceed, which had been brought in the county court by claimants who were out of time to claim in the ET.

However, the High Court in Ashby stated that the reason why claimants had not brought their claims in the ET could be relevant to the exercise of the court's discretion whether to strike out the claims. The EAT relied on Spiliada Maritime Corporation v Consulex Ltd [1987] AC 460 HL, arguably the leading domestic case on forum non conveniens, in which Lord Goff stated (at 483G) that "a strong theoretical argument can be advanced for the proposition that if there is another clearly more appropriate forum for the trial of the action, a stay should generally be granted even though the plaintiff's action would be time barred there."  Reasoning from Spiliada, Slade J stated at para 78 of the judgment in Ashby:

"Claimants cannot rely on letting the limitation period for claims to an employment tribunal go by in order to ensure that their equal pay claims are heard in the courts. It cannot be said that because such claims to an employment tribunal would be out of time a judge could not decide that it would be more convenient for them to be disposed of in the employment tribunal and to strike out the claims in the county court or High Court. In my judgment applying the approach of Lord Goff in Spiliada practical justice would require the reason for not commencing employment tribunal proceedings to be taken into account".

Here was at least a crumb of comfort for employers. If claimants simply sat on their hands with no good excuse, let the ET limitation period drift by, and whacked in a county court claim for equal pay 3 years down the line, then the employer might have a strong argument that the claim should be struck out. Conversely, if claimants had a reasonable excuse for missing ET limitation periods, their claims should proceed in the civil courts.

Before the Court of Appeal in Abdullah, the Council modified its case to take account of the reasoning in Ashby. It no longer contended that the court should ignore the expiry of the ET time limit. Rather, it said that a number of factors should be taken account of, including the specialist expertise of the ET, and the interests in the administration of justice in the allocation of court resources. Complex equal pay cases, said the Council, really belong in the ET. The fact that the ET would dispose of them on time bar grounds rather than on the merits was not a decisive factor in the exercise of the court's discretion whether to strike out the claims. Claimants should not be able to go forum shopping. The burden was on them to show they did not act unreasonably in letting the ET time limit expire.

Unfortunately for the Council, and for other local authorities in a similar position, the Court of Appeal in Abdullah has adopted a rather different approach from the High Court in Ashby, and one which is significantly more favourable to claimants.  According to the Court of Appeal:

 (1)  The expiration of the ET limit was not merely a factor in favour of allowing claims to proceed in the civil courts, but a factor of considerable weight in most cases;

 (2)  Importantly, the claimants' reasons for not bringing claims in the ET were unlikely to make any difference. That is because on the face of it there would be no abuse of process in claimants simply exercising their undoubted right to institute proceedings in the civil courts instead of the ET.

 (3)  The analogy with Spiliada was not helpful. These were not forum non conveniens cases. Parliament had given claimants the right to choose whether to bring claims in the ET or civil courts. The claimants were simply exercising that choice.

 (4)  Following on from (2) above, the reason why claimants had not brought ET claims would be relevant only in "exceptional cases", in which it was contended that it would be an abuse of process for a claimant to present an equal pay claim in the civil courts.

 The practical result of Abdullah is that claimants who have missed the ET time limit for equal pay claims will in the vast majority of cases be able to bring those claims in the civil courts. The Court of Appeal has mentioned "abuse of process" as an exception to that rule. Nevertheless, it is difficult to imagine what might amount to "abuse" for these purposes: and certainly, merely missing the ET time limit will not.

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