Featured case: Employment

The High Court would not be required, under the Equal Pay Act 1970 s.2(3), to strike out a claim in respect of the operation of an equality clause if the claimant failed to provide a reasonable explanation for her failure to present her claim in time to the Employment Tribunal. For the purpose of s.2(3), a claim in respect of the operation of an equality clause could never “more conveniently be disposed of” by the tribunal if it would be time-barred.

Adulla v Birmingham City Council. [2012] UKSC 47. Lady Hale JSC; Lord Carnwath JSC; Lord Reed JSC; Lord Sumption JSC; Lord Wilson JSC. 24 October 2012

Appeal dismissed

The local authority appealed against a decision upholding the dismissal of its application for a direction that the equal-pay claims of the respondents should be struck out. The 174 respondents had brought their claims in the High Court. The claims were founded on an alleged breach of the “equality clause”, which, by the Equal Pay Act 1970, was deemed to have been included in their contracts of employment. They issued their claims outside the time limit that would have applied had their claims been presented in the tribunal.

The issue was the proper construction of s.2(3) of the 1970 Act, the first part of which provided that if an equality clause could more conveniently disposed separately by an employment tribunal, it could direct that the claim or counterclaim should be struck out. The local authority argued that, except where they could provide a reasonable explanation for the claims being brought out of time, the suit should be struck out.

Appeal dismissed. (Lords Sumption and Carnwath dissenting)

The adverb used in s.2(3) was “conveniently”. That qualified the type of disposal addressed in the subsection and mandated a practical inquiry into the forum more convenient for investigation of the merits. For the purpose both of the first part of the subsection and of its successor, namely the Equality Act 2010 s.128(1), a claim in respect of the operation of an equality clause could never more conveniently be disposed of by the tribunal if it would be time barred.

No doubt one aspect of the local authority’s concern related to the court’s general rule to make an order for costs against the unsuccessful party. But the court could make a different order and, in deciding what order to make in respect of costs, it had to have regard to all the circumstances, including the conduct of the parties.

The respondents had invoked the principle of equivalence. However, the decision in Preston v Wolverhampton Healthcare NHS Trust, which some may now consider borderline but from which the court had not been invited to depart, was authority for the proposition that, in its application to what after 2003 was known as the standard case, the six-month rule in s.2(4) of the 1970 Act did not offend against the principle of equivalence, Preston considered.

According to the majority, the notion of “convenience” was directed only to the efficient distribution of judicial business between the available forums. That was far too narrow a test, because it excluded the broader interests of justice.

“Convenient” was used in a sense analogous to that which it had in the expression “forum non conveniens”. The question was whether the disposal of the claim in a tribunal was appropriate in the interests of justice. The fact the claim would be time-barred in the tribunal would be relevant, albeit not conclusive.

For the appellant Birmingham CC

Paul Epstein QC, Cloisters; Louise Chudleigh, Old Square Chambers; Nathaniel Caiden, Cloisters; Birmingham City Council, directly instructed

For the respondent Abdulla & Ors

Andrew Short QC, Outer Temple Chambers; Naomi Ling, Outer Temple Chambers; Chris Benson, partner, Leigh Day & Co

Rachel Dineley

Commentary: Rachel Dineley and Khurram Shamsee

Former Birmingham City Council workers can proceed with civil court claims over missed bonuses.

Most of the Supreme Court rejected the council’s argument that these equal pay claims should ‘more conveniently’ be brought in the Employment Tribunal, albeit that the time limit to bring such claims is six months, so they would be ‘out of time’.

The result is that claims entailing a breach of the ‘equality clause’ in a contract of employment must be brought within six years, as with other breach of contract claims under common law. This is a key ruling with ramifications for employers with a history of equal pay complaints. Indeed, claims are already being pursued.

However, pursuing such a claim is not straightforward and the costs consequences need to be considered. In both the County Court and High Court it is usual for the losing party to be ordered to pay some, if not all, of the costs.

Khurram Shamsee

In contrast, costs orders are rarely made in the tribunal – one of several good reasons for its status as the preferred forum for disputes. Although bad news for some employers, they may have the benefit of insurance.

Insurers too will need to understand the implications of the judgment. Where claims are made as a result of this case, employers may find it challenging to gather evidence of decisions taken years ago.

Rachel Dineley and Khurram Shamsee are employment partners at DAC Beachcroft