Equality Bill

My Lords, I am very grateful to the Minister; I shall endeavour in a single speech to speak to all these amendments, including Amendments 71, 73, 74, 76 and 77 in my name. I will try to do this in a way that explains to those who are not lawyers the context of what we are talking about. The Equal Pay Act 1970—Barbara Castle’s Act—was enacted before we joined the European Community. It limited the right to claim equal pay restrictively to cases where a claimant compares her work and pay with those of a worker of the other sex working in the same employment. That is still the position today, and under the Bill, but it does not accurately reflect the wider comparison to which workers are entitled under EU equality law. There is a mismatch between what the law says and what EU law requires. When the Sex Discrimination Act 1975 was enacted, it did not affect that aspect of the Equal Pay Act, but it allowed claims of discrimination in employment to be made where the employer treats a woman employee less favourably than he treats, or would treat, a worker of the other sex. In other words, a sex discrimination claim in employment does not require an actual comparator, where, but for her sex, the claimant would have received the same benefit as a man, actual or hypothetical. But, read literally, the Equal Pay Act rules out any hypothetical comparison at all. Clauses 64 and 79 are intended to maintain what the Government consider to be the effect of current law, so that a person seeking to make an equal pay claim must still use a comparator of the opposite sex whose pay is the responsibility of the same person. The comparator must be a person doing the same or similar work, and must, as the Minister said, be a real and not a hypothetical one. Domestic legislation, however, such as the Equal Pay Act and the Sex Discrimination Act—and now this Bill—must be read and given effect in accordance with EU equality legislation, which is broader. That is made quite clear in the current version of the equal pay directive, which deals with other matters too. Article 33, as is normal under directives, requires the United Kingdom to bring into force the laws, regulations and administrative provisions necessary to comply with the directive by a particular date—the idea being that domestic law should state what EU equality law requires. There is an obligation to notify the Commission and so on. The first problem, as the Minister said, is that, read literally, the Equal Pay Act and, until now, the Equality Bill do not permit a woman to compare her work and pay with those of a man previously employed in the same undertaking. An example is the Wendy Smith case, in which I appeared many years ago. She was a manageress in a pharmaceutical firm and there was only one job, so she could not compare her work and pay with those of her predecessor, who was a man. Lord Denning and co decided that the case should go to Luxembourg because there was a mismatch between what the Equal Pay Act said and what the Court of Appeal realised was required under EU law—namely, that you should be able to compare your work and pay with those of a male predecessor. I tried to persuade the court that this should include the hypothetical comparator but it said that that was too broad. However, you must be able to compare your work and pay with those of your predecessor or successor. My Amendment 74—I think that this is still one of the few issues of contention between me and the Government—would state in the Bill the true position. It is not suggested by the Minister that it does not state the true position, and it is not said that it is not required by the judgment in McCarthy Ltd v Wendy Smith, but in my view, when a ruling of the Luxembourg Court was interpreted and applied by the Court of Appeal, it is not satisfactory to leave the matter to ministerial statements, explanations, Explanatory Notes or codes or whatever. The law needs to provide employers and employees with legal certainty, which is meant to be one of the main purposes of the Bill. Therefore, I very much hope that this open-minded Minister will at least agree to take away Amendment 74 and consider whether, in compliance with our EU obligations, it should be accepted on Report, when I shall certainly bring it back. That is the first problem. The second problem is that Clause 64 as it stands is even narrower than Barbara Castle’s Equal Pay Act—what is known in the trade as "regression". In Clause 64 the drafter has managed to use "colleague". It requires that the claimant be employed on work that is equal to the work that a "colleague" of the opposite sex does. The word "colleague" is not appropriate for someone who is not working contemporaneously with the claimant. A person cannot be a colleague if he or she no longer works there. That is why my Amendments 71 and 73 substitute "person" for "colleague" and why the government amendment substitutes "comparator". I am perfectly happy to accept "comparator" rather than "person"; there is no difference. The amendments simply ensure that the Bill echoes the Equal Pay Act. However, as I said, they do not give effect to the ECJ’s judgment in McCarthy Ltd v Smith, which is why I still respectfully insist that Amendment 74 is needed to make it quite clear that the references to the work in Clause 74 are not restricted to work done contemporaneously by the claimant. This is an important area where the Government have done something creative. I greatly welcome that, so I shall move on. However, it is important that we understand what is going on. Where a sex equality clause will not operate because there is no actual comparator with whom a claimant can compare his or her pay or other terms, Clause 71 commendably enables the person who is treated less favourably than another—by being paid less because of the claimant’s sex—to bring a claim for direct sex discrimination using a hypothetical comparator. By way of explanation, if the noble Baroness, Lady Howe, wished to bring an equal pay claim but could not do so because there was no actual comparator, then if there were direct discrimination, which explained why she was paid less than she should be, she could bring a direct sex discrimination claim under Clause 71. That is good and new. However, Clause 71 does not enable a claim of indirect sex discrimination in relation to pay to be brought where there is no actual comparator. In my view, that is not compatible with EU law, although I accept that the circumstances in which EU law does or does not require an actual comparator are not clear. That is why I shall not press that point: it is not fair to expect the Government to operate on the basis of unclear law. I gather that there may be a case that deals with that point. There are other bits of unclarity. For example, EU law talks about not only the same establishment but the same service, and it is not absolutely clear what is meant by "service". I shall not continue with this legal analysis, so, to cut a long story slightly shorter, I agree that, where the Government have dealt with the problem of "colleague", replacing it with "comparator", that seems to be absolutely fine. I think that the Government’s amendment on the so-called material factor defence has the same effect as mine. I naturally prefer my own drafting but I am not so stupid as to think that it must prevail over the Government’s drafting, which achieves the same effect. In all other respects, I am grateful to the Government for what they have done. However, I insist that Amendment 74 should be included. That change should have been made when all those years ago Lord Denning’s Court of Appeal said that what is on the face of the Act does not represent Community law. That is when it should have been amended under the European Communities Act. It was not but we now have an opportunity to do so, unless my amendment is defective in not stating the law correctly, in which case I shall happily look at an alternative on Report.