Supreme Court can hear equal pay cases when time limit in Tribunal has run out

In what is seen as a landmark decision, the Supreme Court has recently confirmed that equal pay cases that would have been out of time to be brought in an Employment Tribunal, can now hear the cases as breach of contract claims in the High Court.

A large number of employees of Birmingham City Council brought equal pay claims.  Normally, such claims should be brought within six months of the employment relationship ending.  However, in the civil courts the period for bringing a breach of contract claim is six years.  The Council argued that such claims should more conveniently be disposed of by an Employment Tribunal.  The former employees disagreed.  Both the High Court and Court of Appeal rejected the Council’s position.  The Supreme Court agreed with both previous Courts.  The consequences of this case could be significant for Further Education Colleges, who may see more equal pay claims brought by former employees who consider that they have an equal pay case.

A decision of the Supreme Court in late October 2012 may shift the involvement of employment tribunals on disputes arising on equal pay to civil courts.

A compulsory provision for any employment agreement is an ‘equality clause’, which is aimed at modifying any term of an employment agreement that is comparatively less favourable than, for instance, employees with an equal role but of a different gender. In effect, breach of this clause would amount to a breach of a contract clause and therefore a claim that could be brought before a civil court.

Equal pay disputes are usually dealt by employment tribunals, which must be presented within six months from the end of the contractual relationship, with certain exception such as cases where the event of breach has been concealed by the employer.

By contrast, the time limit for bringing a claim in the civil courts on the basis of a breach of contract would be six years. In Birmingham City Council v Abdulla & Ors, several former employees of Birmingham City Council brought civil proceedings in the High Court against the Council. As often happens in practice, former employees found out that other former employees had received different compensation payments.  However, the six month time period had already passed from the end of their employment relationship.

The Equal Pay Act 1970 (now the Equality Act 2010) provides a civil court with the power to strike out a claim and redirect this to an employment tribunal if doing so is considered ‘more convenient’. The Council invited the Court to consider the application of this provision. However the High Court confirmed its interest in hearing the case, as passing it to a tribunal would have meant that jurisdiction on this would have been rejected on the basis of the expiry of the six month time limit, with the claim definitely stricken out.  On appeal, the Court of Appeal held the same position, claiming that involving the employment tribunal in these circumstances could hardly satisfy the definition of ‘more conveniently’ under the Act. On this occasion, the Court also doubted that Parliament’s intention, when legislating on a jurisdictional choice between the civil courts and the employment tribunals, wished to leave equal pay claimants without the possibility of determining their claims on the merits.

The Supreme Court laid a final stone on the issue when ruling in favour of the former employees on the basis that the time limit for equal pay claims in the tribunal was not intended to clash with the time limits of the civil courts. The Court also held that the reason behind a failure to bring proceedings in the Tribunal within the time limit was irrelevant.

However the Court provided that the approach will be different with claimants that attempt the civil court route as an abuse of process, namely to be awarded legal costs which otherwise would not be awarded in the employment tribunal. To this end, a court will be considering the behaviour of each party when awarding costs, for instance, by understanding whether the claimant was still in time to issue proceedings in the tribunals instead of the civil courts.

The Court accepted that the employment tribunal remains the most convenient place to hear a claim on equal pay, and that a claim should be directed to the courts when the time limit has passed in the tribunals. In the event that a civil court was hearing an equal pay claim, the court would also have the power to refer to the employment tribunal for questions on the application of the ‘equality clause’.

This decision is therefore of relevance for FE colleges as they may see more claims being brought against them in civil courts when the time limit has expired in the tribunals. While the Court realises that this decision may open the floodgates for claims deriving from events some years old, this is thought to be balanced by the fact that a claimant in the courts, unlike in employment tribunals, will have to account for some possibly significant costs if unsuccessful.

Matthew Kelly is a partner at law firm Thomas Eggar, which handles a wide range of related litigation, such as issues relating to FE governance and capital projects