Equal pay claims: Court of Appeal gives guidance on "material factor" defence

Equal pay claims can have significant financial implications for employers, especially as they are often brought on a large-scale. The Court of Appeal has considered the application of the material factor defence, where “equal work” has been established and an employer seeks to defend the claim by demonstrating that the pay disparity is because of non-sex related reasons.

Blake Morgan Employment law solicitor Madeleine Mould examines the issues in an article first published in Reward Strategy on 28 September.

The Court of Appeal has recently given judgment in Walker v Co-Operative Group Ltd [2020], relating to, among other things, a claim for equal pay.

When pleaded as a breach of contract, equal pay claims can stretch back to six years and can have significant financial implications.

Recent focus has been on the large-scale equal pay claims brought against a number of well-known supermarkets. In fact, we are awaiting the Supreme Court’s judgment in one case brought by female shop-floor workers, arguing that they are doing equal work to male warehouse staff.

In Walker, the court was considering the application of the material factor defence where “equal work” has been established and an employer seeks to defend the claim by demonstrating that the pay disparity is because of non-sex related reasons.

Importantly, it is a reminder to employers that whilst material factors may well explain a differential in pay in a moment of crisis or particular economic pressure, this should be scrutinised carefully at the next pay review. Employers need to carefully consider whether those material factors continue to explain the difference in pay, or whether there are any new causative factors at that point (and, if so, whether they are tainted by sex).

Read the article about equal pay claims and a material factor defence in full here in the Reward Strategy Magazine.

If the respondent fails to establish a material factor, the claim will succeed.