📣EQUAL PAY ESSENTIALS | CAN YOU OBJECTIVELY JUSTIFY THAT? 📣

Imagine this: an employee of yours has brought forward an equal pay case and it’s been found that they haven’t paid in accordance with equal pay legislation. However, you’ve been able to establish a material factor defence to their claim. Surely, you’re now home and dry?

Unfortunately not! ❌ If the employee in question is able to establish that the material factor relied on by their employer is itself indirectly discriminatory, an employer can only successfully defend the claim if they can objectively justify the difference in treatment.

The objective justification test was established back in 1986 during a case heard by the European Union Court of Justice (known as the Bilka case). To be objectively justified, a material factor must:

✔️ Correspond to a real need on the part of the employer;

✔️ Be an appropriate means of achieving the objective pursued;

✔️ Be necessary to that end.

This test has since been codified by the Equality Act 2010, requiring the employer to show that the material factor in question is a proportionate means of achieving a legitimate aim.

Is objective justification always be required?

The role of objective justification depends on whether there has been any discrimination, as well as the type of discrimination that has been found in regard to if a pay practice is tainted by sex:

🙅♀️ If direct discrimination has been established then an equal pay claim will succeed as there is no defence of objective justification.

🙅♀️ If indirect discrimination has been found, and is based on a provision, criteria or practice, then the burden of proof is on the claimant to show that the material factor put forward by the employer is discriminatory. The burden then shifts onto the employer to show that the material factor is objectively justified.

🙅♀️ If there's been no discrimination associated with the material factor, then objective justification is not required as the material factor will succeed on its own merits. 

What might count as a good example of objective justification?

🕰️Length of service – the European Court of Justice has held that length of service goes hand in hand with better performance. Therefore, though women who have had career breaks to look after children might be disadvantaged, pay disparity due to length of service will not be regarded as in need of further justification, unless the claimant can establish that there are ‘serious doubts’ as to whether there is a link between seniority and performance.  

🪧Pay protection schemes – Employers can often attempt to phase out inequalities following a job re-grading by temporarily protecting the pay of employees who would otherwise suffer a sudden pay cut as a result of the re-grading. It has been questioned whether employees of one gender who have been historically underpaid can bring a claim based on a comparator whose pay has been protected. As noted above, if direct discrimination was the cause of the original pay difference, then pay protection cannot amount to a material factor defence. However, if indirect discrimination is at play, pay protection as a temporary means of working towards equality has been found to be a legitimate objective.

 📈Competitiveness and market forces – It is widely understood and accepted that businesses need to remain competitive so that they can survive. If, in a tendering exercise, bidders that pay their employees more than the going rate are likely to find it difficult to win the contract as they will have to potentially charge more than their competitors in order to make a profit. However, if the going rate has been affected by historical perceptions of the value of ‘women’s work’, any attempt by an employer to reduce (or keep) the pay of a predominantly female workforce below the level of a predominantly male group of comparators is likely to be viewed as sex-tainted and will need to be objectively justified. 

As is seen with almost every part of an equal pay claim, it all depends on the facts! As the dialogue around equal pay continues to evolve, it is vital for employers to stay informed and proactive in their approaches, rigorously applying objective justification to support equitable pay practices and any material factors they might wish to rely on in a claim. Thereby paving the way to a more fair working environment for all. ♀️♂️⚖️