FULL RECOMMENDATION
SECTION 8(1)(A), ANTI-DISCRIMINATION (PAY) ACT, 1974 PARTIES : PENNEYS LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - MANDATE DIVISION : Chairman: Mr McGrath Employer Member: Mr McHenry Worker Member: Mr Rorke |
1. Rehearing arising from the High Court Ruling on Labour Court Determination DEP196.
BACKGROUND:
2. The background to this case is as outlined in Equality Officer's Recommendation No. EP6/1994. The Court's Determination No. DEP196 was issued on 5th February, 1996. In it, the Court rejected the Union's appeal and upheld the conclusions of the Equality Officer. The case was referred to the High Court on appeal on a point of law and the judgement of Mr. Justice Barron was delivered on the 12th of January, 1997. The final part of the High Court judgement is as follows:-
"In the circumstances, I am of the opinion that the Labour Court applied the wrong principle. Its function was not to consider merely whether there was a reason unconnected with sex for the difference in remuneration, but whether that difference was objectively justified on economic grounds, and not merely an indirect means of reducing the pay of a group of workers exclusively or predominantly of one sex. What the Labour Court did was to accept the reason for the difference in remuneration without going on to consider whether it was objectively justified on economic grounds. The matter will be remitted to it to consider and determine the issue.
The issue then came before the Labour Court for further determination. A hearing took place on the 26th of August, 1997 at which both parties made written and oral submissions. The following is the Court's Determination:
DETERMINATION:
The issue which is now before the Labour Court is whether there is objective justification on economic grounds for the differences in pay between the claimants and the comparators.
The Court is satisfied, having considered the evidence and the submissions put forward by both parties to this dispute, that the employer is justified in paying different rates to the claimants and the comparators, and that this justification is objectively based on economic grounds.
The differences which now exist between the claimants and the comparators' rates of pay arose in the first instance because the comparator group was able to exert considerable industrial pressure on the employer in the period 1974 to 1979 to achieve increases in pay. There was a history of industrial relations difficulties with a unionised group, which included those workers which now are the comparators. The workers were located during that time at two sites, namely Mary Street and the Dublin Port & Docks area. Demarcation and restrictive work practices caused considerable problems for the businesses of the employer and other employers. The result of the industrial disputes pressure was that five industrial relations agreements were entered into in the period 1974 to 1979. These included agreement to proposals made by the employer for the removal of uneconomic and unproductive work practices. Increases in pay were granted by the employer in return for the agreement to the changes in work practices. The Court is satisfied that, had the company not reached agreement with the work force during that time, there would have been very serious negative economic consequences for the Company’s business. The Court is also satisfied that the changes in work practices generated economic and industrial benefits to the company.
The workers in the comparator group in Penneys had particular negotiating leverage because they were a relatively small group employed in a highly competitive sector. Conceding to their demands achieved industrial harmony, without disrupting the overall competitiveness of the Company, since it was only a small group within the Company. The extent of its leverage can be seen from the fact that the workers were able to bargain for wages on a scale in relation to which the maximum point had originally been less than the maximum point of the scale which was relevant to the claimants. For example, in February 1975, the Storemen were only on £35.80 per week while Sales Assistants were on £23.60 to £37.34 per week. It was the series of Productivity Agreements negotiated with the Storemen during the 1970s which resulted in those workers passing out the maximum point of the Sales Assistants and Clerical Assistants pay scales (which by then, it should be noted, was a unisex scale).
The Sales Assistants and Clerical Assistants themselves benefited from productivity agreements when, in 1979, a bonus was paid for the introduction of Sweda cash registers and there was a productivity deal with Transway staff. It is clear, therefore, that both the comparator and the claimant groups were able to, and did, negotiate increased payments in return for productivity, without any sex-based ingredient in the negotiating process.
In relation to the time at which the superior rates of the comparator group were reached, it has been suggested on behalf of the claimants that, even if the changes in work practices were objectively justifiable reasons in the 1970s for the differences in pay between the claimants and the comparators, they occurred so long ago as to be no longer relevant. The Union asserts that the grounds for the difference must exist at the time the equal pay case comes to be determined by the Labour Court. Mr. Justice Barron, in his judgement of 12th January in this case, appears to support that contention when he says, ‘It seems to me that this should be so since otherwise the employer would be relying upon a factor which no longer exists.’
The Labour Court is satisfied, however, as a matter of fact, that the changes which were made in work practices relevant to the comparator group continue to be applied and continue to generate economic benefits for the Company. Some of the changes have been listed by the company at page 27 of its submission, and the Court accepts that these are valid benefits. The Court has no doubt but that if those work practices were to be altered back to their original state, the Company would face increased costs and a reduction in productivity.
Furthermore, the company had to bargain with extra pay for the changes in work practices, which said extra pay could not now be removed from the workforce without serious industrial consequences.
It is for this Court to decide whether the economic benefits which led to the differential in pay between the two groups continue to objectively justify that differential. The Court is satisfied on the facts in this case, on the history of industrial relations affecting the comparator group, and on the normal industrial relations practices of holding on to the benefits you have acquired, that the continuance of the benefits to the comparator group is objectively justified on economic grounds. (See Jenkins v. Kingsgate (Clothing Productions) Ltd (1981 IRLR 228).
In accordance with the principles laid down in the case of Bilka-Kaufhaus GmbH v. Weber Von Hartz (1986) IRLR 317), this Court is satisfied that the measures taken by the employer in the 1970s corresponded to a real need on the part of the Company, were appropriate with a view to achieving the economic viability of the Company and were necessary and that they continue today to be necessary to that end.
Much of the argument put forward on behalf of the claimants before the High Court and in the course of this re-hearing, relies on the case of Enderby v. Frenchay Health Authority (C127/92 of 27 October 1993). The Court notes that no reference at all was made to that case in the course of the original hearing before it, as a result of which the Court did not address itself to the principles to be derived from the Enderby decision of the European Court of Justice. Having now considered the Enderby case in the course of this re-hearing, the Court believes that there is an important distinction to be made between the facts of this case and those in the Enderby case.
In the Enderby case, the parties in dispute were represented by the same trade union, albeit by different groups within the union. The very question posed by the Court of Appeal of England and Wales was whether the employer could rely on the fact that the rates of pay in question were decided by collective bargaining processes which,although carried out by the same partieswere distinct. The European Court of Justice, in answering the question, said that a finding of discrimination was not precluded where the results of the bargaining processes show that two groupswith the same employer and the same trade unionare treated differently.
In the case now before the Labour Court, however, the bargaining was not done by the same parties. The claimants and the comparators are represented by different unions. The parties’ representatives carry out different types of negotiations, and both of these types of negotiations end up with unisex rates of pay. The comparators negotiate through their Union directly with the company employer. But the claimants negotiate on a very different basis, and not directly with the company at all. The claimants’ rates of pay are fixed on an industry-wide basis through an industrial relations process which results in a Registered Employment Agreement for the whole of the drapery trade (namely the Dublin and Dun Laoghaire Drapery, Footwear and Allied Trades Registered Employment Agreement). The Union MANDATE negotiates with the Irish Business and Employers’ Confederation (IBEC), as a result of which pay rates are fixed for all the workers to whom the Agreement applies, and those rates are then to be paid by all the employers in establishments’ selling certain classes of goods in the Dublin area.
In the Court’s view, these bargaining processes are so different from each other as to make any analogy with the rationale of the Enderby judgement quite unjustified. With the comparators the company negotiates directly and makes its own judgement about the viability or otherwise of the pay demands. In relation to the claimants, the company is only one of a number of companies which collectively, under the umbrella of IBEC, have a say in the pay structures applicable to those workers who are covered by the Registered Employment Agreement. It has no direct say in the process, and once the rates are fixed, the company has no choice but to pay them to its particular workers. The two pay bargaining processes are simply not comparable, in the Court’s view.
For all of the above reasons, the Court is satisfied that the difference in pay between the claimants and the comparators is justified on economic grounds. The Court again upholds the conclusions of the Equality Officer and rejects the appeal of the Union.
Signed on behalf of the Labour Court
Tom McGrath
7th November, 1997______________________
C.O'N./D.T.Chairman
NOTE
Enquiries concerning this Determination should be addressed to Ciaran O'Neill, Court Secretary.