Equal Pay: material factors don’t just evaporate

In Walker v Co-operative Group Limited, the Claimant was promoted in early February 2014 to the role of Group Chief HR Officer, with a salary of £215,000. This was her first executive role at this level.

At the time, The Co-op was on the verge of financial collapse and decided that it needed to restructure the executive team to deliver a critical transformation project. In March 2014, it placed the Claimant’s role in the same tier as the Chief External Affairs Officer and the Group General Counsel, both male. The Claimant’s salary was increased to £425,000 while her male peers were paid over £500,000 each. The Claimant subsequently brought claims including equal pay.

The tribunal accepted the employer’s reasons for initially setting the pay at this level. Unlike the claimant, the Chief External Affairs Officer and the Group General Counsel were vital to the survival of the Co-op, highly experienced executives and there was a realistic flight risk with them at a time when it was vital to maintain stability.

However, by 2015 the immediate crisis had passed. The employer carried out a job evaluation survey which scored the Claimant’s role higher than her male colleagues. The tribunal therefore found that the reason for the difference in pay had become ‘historical’ and the material factor defence no longer applied.

This was overturned by the EAT and Court of Appeal. The Court of Appeal found that dismissing the pay disparity as ‘historical’ missed the point as it remained the cause of the pay differential at the relevant time.  it further stated that it was well established that a job evaluation study does not have retrospective effect and that the material factors relating to experience and market rate continued to explain the difference between pay even after the job evaluation study.

The Court of Appeal made clear that provided the employer explains the reason for the pay differential and it is not tainted by sex, it does not then need to go on to justify the pay differential.