EQUAL PAY FORUM-SHOPPING

November 30th, 2011

The casual observer might have wondered how things could get
any worse for Birmingham City Council in its defence of equal pay claims by
thousands of mainly female employees. They just have. The Court of Appeal in Birmingham City Council v Abdulla & ors [2011] EWCA Civ 1412 has confirmed that the claimant employees, who were out of time
to bring equal pay claims in the Employment Tribunal (“ET”), were permitted to
bring those claims in the civil courts. Not just the result, but the reasoning
of the Court of Appeal, will send a shiver down the spine of other employers
faced with the prospect of mass equal pay claims.

In the ET, equal pay claims must be presented on or before
the “qualifying date”, which means in
most cases 6 months after the last date on which the claimant was employed in
the relevant employment. The ET has no power to extend that period, whether
under the Equality Act 2010 or (previously) under the Equal Pay Act 1970.

However, a claim for equal pay is a claim for breach of an
employee’s contract, as modified by the statutory equality clause. That claim
may be brought like any other contract claim in the civil courts. In such a
case, the limitation period is the normal limitation period for breach of
contract claims i.e. 6 years.

The interplay between the two possible avenues of claim was
previously dealt with by s.2(3) Equal Pay Act 1970, and is now contained in
s.128 Equality Act 2010, which is to similar effect. Section 128 Equality Act
2010 states:

 

“(1) If it appears to a court in which
proceedings are pending that a claim or counter-claim relating to an equality
clause or rule could more conveniently be determined by an employment tribunal,
the court may strike out the claim or counter-claim.

 

(2) If in proceedings before a court a
question arises about an equality clause or rule, the court may (whether or not
on an application by a party to the proceedings)-

(a) refer the question, or direct that it
should be referred by a party to the proceedings, to an employment tribunal for
determination, and

                (b) stay or sist
the proceedings in the meantime.”

 

The Abdullah claimants brought their claims in the High
Court. The Council’s case before the High Court was that the equal pay claims
should be struck out, as they could more conveniently be disposed of by the
expert and specialist ET. The Council said that the expiration of the time
limit applicable to equal pay claims in the ET was an irrelevant factor in the
exercise of the court’s discretion under s.2(3) Equal Pay Act 1970. The judge
rejected the Council’s case that the ET time limit factor was irrelevant to the
exercise of the court’s discretion, and allowed the cases to proceed.

In the meantime, the High Court issued another judgment on
claims against Birmingham Council brought in the civil courts: Ashby v
Birmingham City Council [2011] IRLR 473. In Ashby, Slade J similarly allowed
equal pay claims to proceed, which had been brought in the county court by
claimants who were out of time to claim in the ET.

However, the High Court in Ashby stated that the reason
why
claimants had not brought their claims in the ET could be relevant to
the exercise of the court’s discretion whether to strike out the claims. The
EAT relied on Spiliada Maritime Corporation v Consulex Ltd [1987] AC 460 HL,
arguably the leading domestic case on forum non conveniens, in which Lord Goff
stated (at 483G) that “a strong theoretical argument can be advanced for the
proposition that if there is another clearly more appropriate forum for the
trial of the action, a stay should generally be granted even though the
plaintiff’s action would be time barred there.”  Reasoning from Spiliada, Slade J stated at
para 78 of the judgment in Ashby:

“Claimants cannot rely on letting the
limitation period for claims to an employment tribunal go by in order to ensure
that their equal pay claims are heard in the courts. It cannot be said that
because such claims to an employment tribunal would be out of time a judge
could not decide that it would be more convenient for them to be disposed of in
the employment tribunal and to strike out the claims in the county court or
High Court. In my judgment applying the approach of Lord Goff in Spiliada
practical justice would require the reason for not commencing employment
tribunal proceedings to be taken into account”.

Here was at least a crumb of comfort for employers. If
claimants simply sat on their hands with no good excuse, let the ET limitation
period drift by, and whacked in a county court claim for equal pay 3 years down
the line, then the employer might have a strong argument that the claim should
be struck out. Conversely, if claimants had a reasonable excuse for missing ET limitation
periods, their claims should proceed in the civil courts.

Before the Court of Appeal in Abdullah, the Council modified its case to take account of the
reasoning in Ashby. It no longer
contended that the court should ignore the expiry of the ET time limit. Rather,
it said that a number of factors should be taken account of, including the
specialist expertise of the ET, and the interests in the administration of
justice in the allocation of court resources. Complex equal pay cases, said the
Council, really belong in the ET. The fact that the ET would dispose of them on
time bar grounds rather than on the merits was not a decisive factor in the
exercise of the court’s discretion whether to strike out the claims. Claimants
should not be able to go forum shopping. The burden was on them to show they
did not act unreasonably in letting the ET time limit expire.

Unfortunately for the Council, and for other local
authorities in a similar position, the Court of Appeal in Abdullah has adopted a rather different approach from the High
Court in Ashby, and one which is significantly
more favourable to claimants.  According to the Court of Appeal:

 

(1)  The expiration of the ET limit was not merely a factor in favour of allowing claims
to proceed in the civil courts, but a factor of considerable weight in most
cases;

 

(2)  Importantly, the claimants’ reasons for not bringing claims in the ET were unlikely to make
any difference. That is because on the face of it there would be no abuse of
process in claimants simply exercising their undoubted right to institute
proceedings in the civil courts instead of the ET.

 

(3)  The analogy with Spiliada was not
helpful. These were not forum non
conveniens
cases. Parliament had given claimants the right to choose
whether to bring claims in the ET or civil courts. The claimants were simply
exercising that choice.

 

(4)  Following on from (2) above, the reason why claimants had not brought ET claims would be relevant
only in “exceptional cases”, in which
it was contended that it would be an abuse of process for a claimant to present
an equal pay claim in the civil courts.

 

The practical result of Abdullah is that claimants who have
missed the ET time limit for equal pay claims will in the vast majority of
cases be able to bring those claims in the civil courts. The Court of Appeal
has mentioned “abuse of process” as
an exception to that rule. Nevertheless, it is difficult to imagine what might
amount to “abuse” for these purposes: and certainly, merely missing the ET time
limit will not.

JULIAN MILFORD

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