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Birmingham City Council v Abdulla

Kerry Norval, solicitor in the employment team at national law firm Dundas & Wilson, explores the fallout from this landmark decision.

There has been another instalment in the long-running saga of equal pay claims. A recent Supreme Court decision could in theory expose councils to multi-million pounds of liability. In Birmingham City Council v Abdulla the Court granted employees a second chance to raise an equal pay claim, this time in the civil courts. The fear is that thousands of new claims could now surface from employees who were previously out of time to raise a claim in tribunal. It’s this uncertainty over the number of future litigants that has led to speculation over the extent of the liability.

Background

As many will be all too aware, equal pay claims have had a long and frustrating history in the public sector.

Public bodies have, to date, borne the brunt of equal pay claims. In contrast to the private sector, the transparent nature with which public sector pay grades have been evaluated on a national level has made it easier for claimants to identify potential inequalities and raise claims.

Not only have local authorities had to deal with ‘first wave’ equal pay claims – that is, claims relating to pay prior to the implementation of the Single Status job evaluation scheme – but they have also received thousands of ‘second wave’ claims brought as a result of Single Status. Further, many councils face additional liability in respect of ‘piggy back’ claims from male claimants.

One thing which has remained constant throughout, however, is the way in which claims are raised: claimants may choose to take advantage of either the tribunal system or the civil courts.

Historically, claimants have preferred to use tribunals as they are normally cheaper and quicker. However, there is one significant drawback with this approach: that is, the time limit within which a claim must be raised. In civil courts, claimants have six years – or five years in Scotland – to lodge a claim from the date upon which they last received unequal pay.

In contrast, claimants only have six months to raise a claim in a tribunal.

Birmingham City Council v Abdulla

Up until now, a question remained as to whether individuals who had missed the strict tribunal deadline would have a second opportunity to raise their claim in court.

However, the decision in Abdulla has confirmed the answer is yes – an individual shall not be prevented from raising a claim in the civil courts despite being out of time in the tribunal.

Implications

This will, no doubt, come as a daunting proposition to any local authority who may already be dealing with a back-log of claims – particularly where councils have identified their potential liability and have determined a budget to fight or settle as appropriate. However, the decision is likely to have less of an impact in practice than it might first appear.

Firstly, claimants have a major incentive to raise their claim early: that is, money. This is because the compensation which a claimant may receive if successful can only be backdated to six years (again, five years in Scotland) from the date the claim is raised. It is therefore not in a claimant’s interests to be tardy. A claim raised timeously is potentially worth a lot more than a claim which is allowed to gather dust for years.

Secondly, civil litigation is more expensive than the tribunal system. In civil courts the legal cost of an action is typically paid by the loser. This factor alone should deter claimants from raising a claim unless they have a reasonable prospect of success. Further, the judges in Abdulla confirmed that the reasons why a claim had not previously been raised in tribunal may be relevant when assessing how to award costs.

Thirdly, in the context of the public sector, liability for first wave claims may have already crystallised. Employers who addressed historic gender pay disparity by implementing Single Status more than six years ago (or five in Scotland) will already know the extent of their liability. For local authorities who implemented Single Status more recently, their exposure will be declining by the day.

Lastly, the Abdulla decision only helps individuals get their claim heard in court.

The more difficult hurdle – that of showing any regime was discriminatory - will still have to be satisfied.

It remains to be seen whether trade unions and claimant advisers have the appetite to identify further claimants in order to launch a new wave of claims in the civil courts in light of the Abdulla decision. Employers with workforces whose employment has transferred as a result of TUPE or who have experienced a lack of engagement by the unions to date, may be the worst affected by the decision.

Whilst this is frustrating and likely to cause uncertainty for those trying to deal with the problem of equal pay in the public sector, it is unlikely to be the devastating blow which the original headlines may have suggested.

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