§ 3.10 p.m.
§ The Earl of Swinton
My Lords, I beg to move that the House do adjourn during pleasure for a short interval.
§ The Deputy Speaker (Lord Aberdare)
My Lords, the Question is, That the House do adjourn during pleasure? As many as are of that opinion will say, Content?
§ Lord Leatherland
My Lords, the Question was whether we should adjourn during pleasure. Does that indicate that we are very pleased with the fact that the noble Earl, Lord Gowrie, is missing from the Chamber?
§ On Question, Motion disagreed to.
§ The Earl of Gowrie rose to move, That the draft regulations laid before the House on 6th July be approved.883
§ The noble Earl said: My Lords, I do offer to the House my apologies. I had to leave the House very briefly indeed, and the Lord Chancellor was too fast for me.
§ The subject of this debate is the draft regulations to amend the Equal Pay Act 1970. Your Lordships may know that these arise from the need to amend the Equal Pay Act to conform to our European obligations by providing for equal pay for work of equal value. The regulations are admittedly complex, but I shall explain why this is so, and the Department of Employment has prepared an explanatory note for general use. This is available in the House with the regulations, which were laid on 6th July last. I shall not now go into great detail about the procedure we envisage, but I shall of course respond to any questions which noble Lords may raise if, by leave. I may wind up.
§ Let me say at the beginning that the Government are fully committed to the principle of equal pay for men and women and are firmly against sex discrimination, including that which affects jobs and pay. We are committed to the implementation of the European Equal Pay Directive. We believe that our Equal Pay Act did comply with the directive and, as the Minister who at that time was most immediately concerned, that still remains my view. Nevertheless, the European Court found otherwise, and accordingly we accept the need to amend the Equal Pay Act so as to close the gap between the directive and our Act which was found by the European Court.
§ The European Court judgment obliges us to act without undue delay. The European Communities Act 1972 provides us with the means to do so simply and efficiently through regulations, and it is these that we are now discussing. I know that there has been criticism of the use of regulations because they cannot be amended by Parliament. However, we circulated them very widely in draft for consultation last February, and we have received a considerable volume of comment. A recurring theme in these comments is criticism of the complexity of the regulations. We acknowledge this complexity, but we argue that it is, unfortunately, unavoidable.
§ In the first place, a vague amendment will not do. We have to do justice to women at work to eliminate sex discrimination in assessing the value of work for the purposes of pay, but at the same time we need to allow employers a reasonable chance to defend themselves against claims which might be initiated for purposes other than to eliminate sex discrimination in pay. Secondly, we must bring our law into conformity with European law. This is an extremely tricky task, involving bringing into consistency two wholly differently conceived legal systems.
§ While, therefore, we have been confronted with the need for some complex and painstaking legal drafting, I can assure your Lordships that the operation of the new provision can be described fairly simply. The current Equal Pay Act allows a woman to claim equal pay with a man (or, for that matter, a man with a woman) if she is doing the same or broadly similar work, or if her job and his have been rated equal through job evaluation in terms of effort, skill and decision. But if a woman is doing different work from 884 a comparable man or if the jobs are not covered by a job evaluation study, the woman has at present no right to make a claim for equal pay. This was the gap held by the European Court to be contrary to the European Equal Pay Directive, and the regulations we are discussing this afternoon amend the Equal Pay Act to give effect to the court judgment.
§ The regulations provide that women who cannot make a claim under the current Act may make claims to industrial tribunals that their work is of equal value. Women who may claim include those whose jobs are covered by a job evaluation scheme if there are reasonable grounds for thinking that the scheme is discriminatory. The tribunals will be helped by newly appointed experts who will furnish independent reports on whether the jobs compared are in fact of equal value. In equal value cases the regulations also allow an employer to argue that genuine economic considerations apart from sex justify unequal pay.
§ Could I give one or two examples of this? Let us suppose that a female clerk claims equal pay with a male computer programmer on the grounds that her work is of equal value to his. The employer might admit that the work is of equal value but might argue that he has to pay the computer programmers more in order to retain their services, otherwise they would simply leave for higher pay elsewhere. This is a perfectly valid reason for a difference in pay because it is not based on sex. Another example: local education authorities who need to attract mathematics teachers in shortage areas can offer them a lead in pay over other teachers starting their careers. This is to do simply with the shortage of maths teachers; it has nothing whatsoever to do with sex discrimination—and, of course, it applies to either sex.
§ I mentioned earlier that we had consulted widely about these regulations. A number of points were made by the Equal Opportunities Commission and others concerned that we might not meet our objective of complying with European law. There were three major criticisms. First, we had placed the burden of proving sex discrimination in pay on the woman. We have now removed this. Secondly, women already covered by a job evaluation scheme could not bring a case under the new equal value provision. We have now provided that if there is sex discrimination in such a scheme it will not prevent a woman bringing a claim. Thirdly, we had proposed that the new provision should come into effect twelve months after the Act had been amended. We now propose that it should come into effect from 1st January. I hope your Lordships will accept that we have taken our consultations very seriously and that we have responded most constructively to the criticisms made.
§ As a result of the changes I have just described, the Government are convinced that the regulations are now fully in accord with our European obligations. We have kept the European Commission informed, and took carefully into account their comments on our February draft.
§ In addition to the draft regulations now before the House, provision needs to be made for rules to govern the operation of the independent expert in the regulations concerning the procedure of industrial tribunals. We propose to lay such procedure 885 regulations before Parliament very shortly. They will, unless rejected, come into operation on 1st January 1984. We issued draft procedure regulations for consultation on 6th September. Again we received a considerable number of comments. We have considered these comments most carefully, and in the light of them we propose to make certain changes. These changes have been incorporated in the revised draft procedure regulations and explanatory note which has been made available to the House. It may be helpful, however, if I detail briefly the major ones.
§ Again, there were three main criticisms. First, there was uncertainty about how the expert would work and whether parties to cases would have a chance to comment on facts and the representations of other parties. We have now altered the regulations to ensure that parties get such an opportunity. Secondly, there were anxieties that the independent expert report would be insufficiently open to challenge. Parties may now cross-examine the expert, call an alternative expert witness, and ask the tribunal to put written questions to the expert. Thirdly, there were anxieties that the tribunals would be likely to reject cases on an employer's defence that material factors justify unequal pay before the independent expert is commissioned. We have rephrased the regulations to try to limit instances of this to clear cut cases where it is obvious that the claims cannot succeed. I hope it will be quite clear from this how seriously again we have taken the process of consultation on the regulations.
§ I should perhaps add a few words at this point about the kind of qualities we expect in the independent experts. The experts will be designated by the Advisory Conciliation and Arbitration Service, and they will be expected to have experience in industrial relations. They will not be people who are experts in job evaluation only. There will be a duty on the expert to take no account of difference of sex and at all times to act fairly. ACAS will be looking for people with the necessary experience, and the proven integrity, to command the confidence of both parties and the tribunal.
§ It is obvious that the decision to award equal pay in individual cases may have collective repercussions. We have not however provided any specific mechanisms to deal with those. We did ask employers' organisations and others in the course of our consultations what they felt about the matter, and on the whole they took the view that no statutory provisions were desirable. The services of the Advisory Conciliation and Arbitration Service will of course be available in the usual way to parties who wish to seek their assistance for the resolution of collective disputes.
§ I hope it will be apparent from what I have said that our aim has been to implement the European Court's judgment, having regard to the need to comply with European law, while safeguarding employers from having to give equal pay where there is not sex discrimination. We have responded to criticisms from the Equal Opportunities Commission and others on both the amendment regulations and the complementary procedures, and those draft amendment regulations incorporate amendments which have been made as a result of comment and discussion during the consul- 886 tative period. I commend the regulations to your Lordships.
§ Moved, That the draft regulations laid before the House on 6th July be approved.—(The Earl of Gowrie.)
§ 3.23 p.m.
§ Lord McCarthy rose to move, as an amendment to the above motion, at the end to insert "but that this House believes that the regulations do not adequately reflect the 1982 decision of the European Court of Justice and Article 1 of the EEC Equal Pay Directive of 1975."
§ The noble Lord said: My Lords, in rising to move the amendment which stands in my name on the Order Paper, I should like to begin by congratulating the noble Earl on the superiority of his delivery and the degree of conviction with which he introduced this regulation over the way in which it was presented in another place by the Parliamentary Secretary at half past ten at night.
He said—and I agree that he meant what he said—that he was fully committed to the principle of equal pay. I cannot quite understand, however, on what basis he said that he was convinced that the Government, in following previous legislation, had already complied with Article 1 of the directive which says that equal pay shall be defined as,
the same work or for work to which equal value is attached".
§ There is nothing in our existing legislation which covers equal value. What we have provided for is the same or like work. There can be no doubt whatever that without an effective amendment to the Equal Pay Act 1970 we shall be out of compliance with the EEC directive. Although I accept the noble Earl's sincerity when he says he believes in equal pay for equal work, I am a little a worried that he is still coming to the House and saying that he thinks we do not really need even the regulations and the changes to the Equal Pay Act 1970 which we have before us today.
§ Secondly, I cannot agree with the noble Earl's suggestion that he has met all the points. It is perfectly true that the Government have met many points—but then, a very large number of points were made. When the Government first published the first draft last year, considerable volumes of representation were made on the unsatisfactory nature of the draft regulations. The Equal Opportunities Commission made representations, the TUC made representations, the NCCL made representations, and the Select Committee of another place dealing with employment criticised the draft. The draft, which was then changed in a number of respects, was severely criticised outside this Chamber—as the noble Earl well knows—when it was first scheduled to be discussed in this House last October.
§ It is true that as a result of all those representations a number of changes were made. As the noble Earl said, the Government changed back the burden of proof. They removed the original delay of 12 months. They accepted—although not entirely satisfactorily—that an applicant can challenge an existing job evaluation scheme on grounds of discrimination. Most important of all, since the draft was placed before this House last October (and as the noble 887 Earl said) very significant changes—which I welcome on behalf of this side of the House—were made in the procedural rules dealing with the role of the expert.
§ It is now clear that the expert can be cross-examined. It is now clear that the expert can be challenged by at least one expert witness. I readily admit that, in broad terms, those parts of the procedures now comply with at least Article 2 of the EEC directive and represent a fair judicial process. But that was not all we said. We said many other things. We did not simply say that we wanted to do something about the procedures. We said that we wanted to do something about the regulations themselves. I and my noble friends will no doubt mention many of the respects in which the regulations themselves, as against the procedures (although they are not completely correct and appropriate), are still defective. In the time available to me, I wish to deal with two of the major ways in which the regulations are defective still.
§ The first of these I call the device of the a priori pre-hearing pre-hearing. That is to say, that there is in these regulations set out in Paragraph 3, to provide a new subsection (3)(b) of the Equal Pay Act 1970, a strange kind of a priori special check before the process begins. Indeed, it is stated there that the tribunal can dismiss a case altogether if it considers that there are no reasonable grounds.
§ I wish to ask three questions about that point and I hope that the noble Earl will be able to answer them when he comes to reply to this debate. How does that strange additional pre-hearing pre-hearing relate to the existing pre-hearings which are perfectly normal in industrial tribunal procedures? It is now the case that if one of the parties before an industrial tribunal on an unfair dismissal case, let us say, asks for a pre-hearing to see whether there is a prima facie case, then that takes place. If it turns out that the tribunal believes that no case has been made, then the tribunal's members will report on that fact.
§ The difference is—and this brings me to my second question—that in the case of the present pre-hearings, the appellant or the defendant, if they want to, can say that they nevertheless want to go on to a full hearing. But that does not seem to be the case with this regulation. My question is: is this strange extra pre-hearing a substitute for the existing pre-hearing, and can it result in the case being dismissed without any appeal and without any reasons being given? What is the purpose of that strange procedure if it is not to make it much more difficult for any applicant to sustain a case?
§ Another question I should like to ask about the a priori pre-hearing pre-hearing is: what evidence can be advanced at this stage? Presumably—although it was not completely clear from the speech made by the Parliamentary Secretary in another place—one cannot really at this stage discuss whether or not there is in fact equal work of equal value. That would be to prejudge the work of the expert; that is his job; that is a question of fact; that cannot be rehearsed at the pre-hearing, can it?
§ So maybe the employer will be able to recite his defence. He will be able to say that, even if there is subsequently proved equal work of equal value, he has 888 a non-sexist justification. What kind of evidence will he pray in aid at that point? And is he not in fact having two bites at the cherry? Cannot he try out his defence at this stage, at a time when the applicant has very little evidence to rebut it, and knowing very well that if he falls at this hearing he can come back subsequently if the expert decides in the applicant's favor? So why do we have this strange, weird, and, I am told by my lawyer friends, totally unprecedented a priori pre-hearing pre-hearing put into the regulation?
§ Secondly, I come to the nature of the defence, which comes up, I would remind noble Lords, in the third case. In the first case the applicant has to establish that she has a reasonable case under the new Section 2A(1)(a). Secondly, the expert has to come along and has to regard the work as of equal value and being paid less. That is the second test. Thirdly, the employer has a defence; he has to say, perhaps for the second time, that there is a difference which is not sex based. He then prays in aid a material factor defence which is not a material difference.
§ Now, what I want the noble Earl to tell me is how far this new subsection (3)(b) takes us beyond the existing defence in like work comparisons, which continues in the regulation and is provided in the new subsection (3)(a)? Because, as we know, the old defence to the like work comparison was narrowed significantly by the decision in the Clay Cross case. It was decided in that case that a material difference defence is restricted to what was called the personal equation; that is to say, it is not to include extrinsic factors, objective, measurable factors, such as length of service, level of performance, red circling arrangements and so on. Because to go further than that, said the court, would he to allow the employer to say, "I paid her less because she was willing to come for less". But, of course, if such an excuse were permitted, the Act, said the court, "would be a dead letter".
§ After all, those are the very reasons why there was unequal pay before the statute; they are the very circumstances in which the statute was intended to operate. The court said that if the employer was allowed to say, "I asked her to come, but for that sum, which was what she was getting in her previous job, because she was the only applicant for the job, so I had no option", then, if such an area were permitted as an excuse, the door would be wide open and every employer who wished to avoid the statute could walk straight through.
My question is, do the Government intend by the new subsection (3)(b) to allow the employer to walk straight through? If they do not, then what is the meaning of the statement made in another place by the Parliamentary Secretary to the Department of Employment about the "labour market defence"? He spoke as though the new subsection (3)(b) was to provide the employer with a very broad labour market defence. He said:
What we have in mind are circumstances where the difference in pay is not due to personal factors between the man and the woman, but rather to skill shortages or other market forces"—
that is the significant phrase, "other market forces".
If a man is paid more than a woman for work of equal value because his skills are in short supply"—
as the noble Earl suggested—
that is not sexually discriminatory, provided that the reason is genuine and the employer can show that".—[Official Report, House of Commons, 20/7/83; col. 486.]
§ What is meant by "other market forces"? If we are talking about skill differences, surely skill differences can be taken into account, if they are significant enough, in the job evaluation, if they are part of the job specification. But if the skill differences are personal they are surely covered by the Clay Cross rule. If, on the other hand, we allow general market forces, then we are allowing much wider factors to be taken into account.
§ What, after all, are market forces in this context? They are a difference in price, or pay, which is assumed to be due to a difference in the conditions of supply and demand. If one allows an employer merely to say it was due to market forces, and this is not examined by the tribunal, then it justifies any kind of discrimination or prejudice which is the result either of worker prejudices or employer prejudices, or both, if it is to be quite unexamined by the tribunal. But, if the tribunal tries to examine it on the basis of what the Parliamentary Secretary says, and to some extent what the noble Earl says, they may very well find that, in the short term at least, a shortage, for example, arises because there are no trained women to do this job or because there is a surplus because there are a large number of untrained, unemployed women; so they may say "Well, this is a market factor". But we all know, if we know anything about the labour market, that such shortages derive from earlier institutional or social barriers to the progress of women, their training, their appointment, their recruitment, their placement in the labour market. So behind these short-term market reasons are longer-term factors which most of us would say were at least partly sex based. Is the tribunal to be allowed to go into all of these; are they to be allowed to judge them and award accordingly? I do not think that is a practical way to look at it.
§ It is quite right, and I accept this, that a simple application of the like work test as developed in the Clay Cross case would take us further than recent European court decisions—for example, Jenkins v. Kingsgate. That went beyond the personal equation and suggested a commercial benefit to the employer kind of defence. But I suggest that, if that is admitted, it is not a general market defence. What is being said there is that one would need to look and see what the consequence of granting equal pay for equal value in this particular case would be for the employer's business—for example, for his pay structures, for his general structure of costs, for his industrial relations. These are internal factors which a court might be able to assess, but they are not the kind of general factors which the Parliamentary Secretary in another place says would be perfectly possible under the present regulation. Of course, they would be possible under the present regulation because it does not specify any grounds at all. It merely says you may use the defence which is used in the like work comparison, but then again you may not. So I am suggesting that the Government should, before they ask us to accept this order, modify that general passage and place in it some more objective, limited qualification.
§ I come to my final point, which is the question of the way in which this is generally related. We feel that this 890 is a highly complicated and extremely difficult regulation to understand. We believe that, although the procedures are in many ways better than they were, there remain very considerable deficiencies in the regulations. Therefore, we shall be asking the House to divide. We shall be asking the House to support our amendment. We believe that, on the first major issue left, the Government have done extremely well. We believe that, on the second major question and the third major question, they have done virtually nothing. They do not provide in terms of the EEC Equal Pay Directive for the elimination of all discrimination on grounds of sex, and they do not provide even in the terms of Article 2 a solution by judicial process. Therefore, we ask the House to reject these regulations.
§ Moved, as an amendment to the above Motion, at the end to insert "but that this House believes that the regulations do not adequately reflect the 1982 decision of the European Court of Justice and Article 1 of the EEC Equal Pay Directive of 1975."—(Lord McCarthy.)