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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Allonby v Accrington & Rossendale College & Ors [2001] EWCA Civ 529 (23 March, 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/529.html Cite as: [2001] ICR 1189, [2001] EWCA Civ 529, [2001] 2 CMLR 27, [2001] Pens LR 185, [2007] ICR 523, [2001] IRLR 364, [2001] ELR 679, [2001] Emp LR 613

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL
TRIBUNAL (MR. JUSTICE LINDSAY)

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 23rd March, 2001

LORD JUSTICE SEDLEY :

The issues

1. This case arises out of a contractual arrangement for the services of lecturers entered into by colleges of further education in order to reduce the financial impact of new statutory employment rights. We have to decide to what extent, if any, domestic or European legislation forbids or qualifies such an arrangement where it impacts disproportionately upon women or disadvantages them by comparison with men.
2. The appellant, Ms Allonby, was originally employed by the first respondent, Accrington and Rossendale College, as a part-time lecturer in office technology. She was employed from 1990 to 1996 on a succession of one-year contracts under which she was paid by the hour at a rate determined by the level at which she was teaching. It is not disputed that for present purposes these were continuous contracts of service, carrying with them an employer's statutory obligations.
3. These obligations had by 1996 become financially more onerous because of legislative changes which required part-time lecturers to be accorded equal or equivalent benefits to full-time lecturers. The College employed 341 part-time lecturers. It decided that in order to reduce its overheads it would terminate or not renew their contracts of employment, and instead would retain their services as sub-contractors. This was done in Ms Allonby's case by terminating her employment with effect from 29 August 1996 and offering her re-engagement through Education Lecturing Services (ELS), the second respondent. ELS, a company limited by guarantee, operated as an agency, holding a database of available lecturers on whom colleges could call, by name if they desired, for lecturing services. Ms Allonby, and others like her who had to register with ELS if they wanted to continue to work as part-time lecturers, thereby became self-employed. Their pay became a proportion of the fee agreed between ELS and the College. Their income fell and they lost a series of benefits, ranging from sick pay to career structure, which went with employment. The College, which like most further education colleges was in financial straits, estimated that it would save £13,000 a year.
4. The applicant, supported by her union, NATFHE, and on this appeal by the Equal Opportunities Commission, brought proceedings in August 1996 against the College for a redundancy payment and for redress for unfair dismissal and indirect sex discrimination by reason of the dismissal. In December 1996 she brought a further set of proceedings alleging that the College was discriminating against her as a contract worker contrary to s.9 of the Sex Discrimination Act 1975; that ELS was obliged by law to pay her equally – that is, pro rata – with a male full-time lecturer at the College; and that the state, represented by the third respondent, the Department for Education and Employment, was acting unlawfully in denying her access, as a self-employed worker, to the Teachers' Superannuation Scheme (the TSS). Both sets of proceedings are in the nature of a test case for others similarly affected.
5. The redundancy claim was settled. In July 1997 the Employment Tribunal decided, as a preliminary issue, that Ms Allonby was not entitled to use as a comparator for equal pay purposes a male lecturer employed full-time by the College. In April 1998 the Employment Tribunal decided that the dismissal by the College was unfair but attracted no redress, and that it constituted indirect sex discrimination but was justifiable. It also held that the s.9 claim against the College, and those against ELS and the DfEE, all failed. All these decisions were upheld in March 2000 in a group of interlocking judgments by the Employment Appeal Tribunal which, however, gave permission to appeal to this court on all issues.

Comparisons

6. Necessarily underlying all the appellant's claims is the element of gender. The Equal Pay Act 1970 and the Sex Discrimination Act 1975 lay down detailed mechanisms for identifying sex discrimination in, respectively, contractual and extra-contractual relationships. Further provision is made for the elimination of sex discrimination in relation to occupational pensions by ss. 62 and 63 of the Pensions Act 1995. Broadly speaking, discrimination in pay and pensions is identified, where a woman alleges inequality, by comparing her with a man in an equivalent position. In other fields, if an explicit distinction of sex is not in issue, it is necessary to see if an ostensibly neutral requirement or condition impacts disproportionately and unjustifiably on women such as the applicant.

The sex discrimination claims

7. The most obviously material data, as the Employment Tribunal had them, were that of the 341 hourly-paid part-time lecturers who were made redundant by the College and offered re-engagement through ELS in 1996, 110 were men and 231 were women. This sharp imbalance was not replicated among the college's fulltime salaried lecturers, which had gone from a male:female ratio of 74:40 in the year 1994-5 to 55:50 in 1995-6; the equivalent ratios for salaried part-time lecturers were 4:8 and 12:11.
8. The Employment Tribunal was entitled to have in mind, as a matter of common knowledge in their field, that the substantial imbalance between men and women on hourly-paid part-time contracts with the College in 1996 reflected the national picture in the United Kingdom, where part-time work is overwhelmingly done by women. On the other hand, ELS's database contained almost as many men as women: 18,050 to 19,909 on the most recent count available to the Tribunal, a margin of under 5 per cent. Everything therefore turned on what constituted the alleged discrimination.

Was the appellant's dismissal by the College indirectly discriminatory?

(a) The law

9. The material provisions of the Sex Discrimination Act 1975 as amended are these:

1. Sex discrimination against women

(1) A person discriminates against a woman in any circumstances relevant for the purposes of any provision of this Act if-

(a) on the ground of her sex he treats her less favourably than he treats or would treat a man, or

(b) he applies to her a requirement or condition which applies or would apply equally to a man but -

(i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and

(ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and

(iii) which is to her detriment because she cannot comply with it.

5. Interpretation

……….

(3) A comparison of the cases of persons of different sex or marital status under section 1(1) or 3(1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other. …

6. Discrimination against applicants and employees

…………

(2) It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her-

(a) in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them, or

(b) by dismissing her, or subjecting her to any other detriment.

By s. 82(1) "employment" means employment under a contract of service or of apprenticeship or a contract personally to execute any work or labour.

10. An act of dismissal can constitute sex discrimination: s. 6(2)(b) says so. It is not in dispute that the non-renewal of the last in a continuous series of finite contracts of employment is a dismissal; nor that a condition or requirement for avoiding dismissal must not be sexually discriminatory.

(b) The requirement or condition

11. The first issue raised by Mr Christopher Jeans QC on behalf of the College and ELS by way of a respondent's notice is what requirement or condition, if any, was imposed in the present case. The Employment Tribunal held that Ms Allonby had made out her case that it was a requirement or condition for continuous employment with the College that an employee must have previously been employed either on a full-time basis or under a contract which conferred proportionate benefits to a full-time contract: I will call this salaried as opposed to hourly-paid employment. The EAT, noting Mr Jeans' engaging concession that his argument was "not philosophically watertight", found it unnecessary to decide the point. In my judgment the Employment Tribunal was right.
12. It is for the applicant to identify the requirement or condition which she seeks to impugn. These words are not terms of art: they are overlapping concepts and are not to be narrowly construed (Clarke v Eley (IMI) Kynoch [1983] ICR 165, 170-1). If the applicant can realistically identify a requirement or condition capable of supporting her case, as Ms Allonby did here to the Employment Tribunal's satisfaction, it is nothing to the point that her employer can with equal cogency derive from the facts a different and unobjectionable requirement or condition. The Employment Tribunal's focus moves directly to the question of unequal impact.
13. Here, for reasons which emerge readily from the figures I have given, Mr Jeans submits that the more natural characterisation of any material requirement or condition was that to be re-engaged an hourly-paid lecturer had to be registered with ELS. This in my view is open to the objection not only that it is not the (equally realistic) requirement or condition which the applicant had advanced, but that it is not a requirement or condition affecting the dismissal, as under s.6(2)(b) it must be. It affected re-engagement. The point about the dismissal was that it fell entirely upon the part-time hourly-paid workforce and not on the salaried teachers, whether full-time or part-time. It made perfectly good sense, therefore, to regard prior salaried employment as a condition which had to be met in order to escape dismissal. This was manifestly a condition with which Ms Allonby, to her detriment, could not comply.
14. The only authority which offers support to Mr Jeans' argument is the decision of the Employment Appeal Tribunal in Brook v London Borough of Haringey [1992] IRLR 478. There it was submitted, in the words of Wood P:

"that there was indirect discrimination because Haringey have applied a requirement or condition that unless someone was a member of one of the trades whose members were not included in the compulsory pool [for redundancy], they were at risk of redundancy and because there happen to have been more men than women in those other trades there is discrimination which requires justification."

The EAT said:

"We cannot think that what occurred constituted the erection of a rule or barrier which had the effect of discriminating against women. Those trades were open to women. There are no biological or social elements concerned. These submissions are not dissimilar to those considered in Enderby v Frenchay Health Authority [1991] IRLR 44.

If this submission is well founded, namely that the mere holding of a job or position can constitute a requirement or condition, and is prima facie discriminatory requiring justification, it could be applied to whole factories."

Adopting its own reasoning in Enderby the EAT concluded that in these circumstances there could be no indirect discrimination.

15. There are two reasons why Brook must be regarded as wrongly decided. One is that the reasoning in Enderby, on which it is explicitly founded, was overset by the European Court of Justice [1994] ICR 112. Applying Article 119 of the EEC Treaty to a national pay structure which gave a predominantly female sector of the health service lower pay than a predominantly male sector doing work of equal value (a situation in any event entirely different from the present one), the ECJ held that this was enough to require the employer to show that it was not discriminatory.
16. The other reason is that the decision of the EAT in Brook is based on an erroneous understanding of the Sex Discrimination Act's concept of indirect discrimination, an understanding which conflates it with direct discrimination. The fact – if it is a fact – that a section of a workforce facing some disadvantage "happens to be" predominantly female may be crucial to the question of direct discrimination but has no bearing on either the initial element of indirect discrimination under s. 1(1)(b)(i) (unequal impact) or the third element under s. 1(1)(b)(iii) (consequent detriment). The establishment of the requirement or condition and the evaluation of its proportional impact depend upon an exact reading of the evidence and nothing more. To say that those affected happen to be, rather than are, predominantly or exclusively men or women is to say nothing which at this stage is material. Nor does it matter that the outcome may affect a whole factory: in such cases as Clarke v Eley (IMI) Kynoch (above) that is exactly what happened. Where the reasons for the imbalance may become relevant, depending on the facts of the case, is in considering damages under s.66(3) or justifiability under s.1(1)(b)(ii). In the former case the employer will be relieved of liability to pay damages if he can show that there was no intention to treat the claimant unfavourably on sexual grounds in applying the requirement or condition, albeit that is what has happened. In the latter case, if the requirement or condition is objectively justified notwithstanding its differential impact on men and women, then it can be fairly said that those disadvantaged simply happen to be women. But that is a conclusion, not a premise.

(c) Differential impact

17. As often happens, once the condition or requirement is identified the "pool" within which its impact has to be gauged falls into place. So here, as the Employment Tribunal held, the pool was "all persons who would qualify for … continuous employment if the requirement or condition had not been taken into account." This meant not simply the dismissed hourly-paid workforce but the entire body of lecturers at the college: a total of 177 men and 292 women. The proportion of men in the pool who could comply with the condition was 67 out of the 177, about 38 per cent. The proportion of women in the pool who were able to comply was 61 out of the 292, about 21 per cent.
18. The EAT held that there was no error of law in the Tribunal's choice of a pool. Lindsay J quoted the decision of Waite P in Kidd v DRG (UK) Ltd [1985] IRLR 190, para. 20:

"The choice of an appropriate section of the population is in our judgment an issue of fact (or perhaps strictly a matter for discretion to be exercised in the course of discharging an exclusively fact-finding function) …"

I would sound a strong note of caution about this. As the EAT's excellent analysis of the possible pools shows, once the impugned requirement or condition has been defined there is likely to be only one pool which serves to test its effect. I would prefer to characterise the identification of the pool as a matter neither of discretion nor of fact-finding but of logic. This was the approach adopted by this court in Barry v Midland Bank plc [1999] ICR 319, 344, and endorsed by Lord Slynn on further appeal [1999] ICR 859, 863. Logic may on occasion be capable of producing more than one outcome, especially if two or more conditions or requirements are in issue. But the choice of pool is not at large.

19. The difference between the two proportions in the present case was fully sufficient to justify a finding that the proportion of women able to comply was considerably smaller than the proportion of men, which is the statutory test. There is nothing in Mr Jeans' complaint that these were simply "snapshot" figures: that is exactly what was necessary in order to gauge the impact at the moment of dismissal. But the Employment Tribunal, whose reasoning is exemplary up to this point, simply recorded that on this basis "a greater proportion of women than men were affected" – not "considerably greater" as the statute demands. The EAT do not deal with the question, evidently assuming an answer in Ms Allonby's favour in order to move on to the key issue of justifiability. Although the correct test is well-known to tribunals, it would not be right to assume that this Employment Tribunal had in mind a different test from the one they articulated. While I am inclined to hold that they could not have failed to conclude, had they posed the question correctly, that this difference was indeed considerable, I prefer in the light of my conclusion on justifiability (which is that the case must go back to the Employment Tribunal) to send this issue back too.

(d) Justifiability.

20. The Employment Tribunal found against Ms Allonby because they considered that the indirectly discriminatory condition was justifiable. They said:

"It was explained to the Tribunal that there were two main purposes to the decision. The first was to save money but the second was to introduce control and the Tribunal had heard evidence as to the lack of central control over the engagement of part-time contract lecturers. This had generally been left to team leaders and budgetary control was, if not non-existent, at least minimal. One of the intentions of the new system was to obtain a firmer budgetary control.

The Tribunal heard evidence of the steps which had been taken by the College. It had had discussions with the union which had resulted in the creation of more fractionalised teaching posts, a voluntary redundancy programme followed by some compulsory redundancies and retirements for ill-health. In spite of these steps the College was faced with a deficit bringing it to the point of eliminating nearly all its reserves and further steps had to be taken as a matter of urgency. The Tribunal recognised that it was not for the Tribunal to say that it preferred some other route. The Tribunal needed to make an objective assessment of whether the decision taken by the College was justifiable irrespective of the sex of the person or persons to whom it applied.

Whilst it appeared from the statistics which were available that the decision affected more women than men the Tribunal were reminded that any decision taken for sound business reasons would inevitably affect one group more than another group of people be they men, women, part-timers or other categories. Bearing these issue in mind, the Tribunal concluded that the decision was justifiable and whilst it may not have been the only solution to the college's problems or even one which would yield the desired results it was taken after a proper analysis of the problems …"

21. The EAT were clearly troubled by this passage. True it was, they said, that the Employment Tribunal never set out in terms what they understood by 'justifiability'; plainly they could have dealt in more detail with it; but they had not made the mistake of treating any one factor as determinative and they had had both Hampson and Barry cited to them. They concluded that the decision on justifiability was not one that no properly instructed tribunal could have reached, and dismissed the appeal on this as on other grounds.
22. Before looking again at the Employment Tribunal's reasoning, it is necessary to remember, as this court has more than once said, that it is not appropriate to expect an analysis of every fact and argument with reasons for accepting or rejecting them (Varndell v Kearney and Trecker Marwin Ltd. [1983] ICR 683, 693); that a tribunal's reasons are not to be construed like a statute or a deed; and that "what matters is whether the decision under appeal was a permissible option" (Piggott Bros. Ltd. v Jackson [1992] ICR 85, 96, 92). This said, there is no point in giving reasons unless they make it possible, at the very least, for parties, advisers and appellate courts to see whether the tribunal has correctly understood the law, has addressed the right questions and has reached its conclusions by permissible means (see Piggott Bros, ante, 94F-G). Beyond this point the nature of the issues and the evidence will call for more or less in the way of explicit findings. To dilute this minimum would not only deplete the duty to give reasons and devalue the election under the Industrial Tribunals (Rules of Procedure) Regulations 1985, Sch. 1, para 9(3) to give full (or "extended") rather than summary reasons; it would risk contravening s.6 of the Human Rights Act 1998 by permitting tribunals' written reasons to fall below the standard, corresponding broadly to our domestic standard, required by Article 6 of the European Convention on Human Rights (see Van de Hurk v The Netherlands (1994) 18 EHRR 481, para. 61; Hiro Balani v Spain (1995) 19 EHRR 566, para. 27).
23. The House of Lords in Barry v Midland Bank plc [1999] ICR 859 endorsed the decision in this court, where Peter Gibson LJ had said:

"[In Bilka-Kaufhaus GmbH v Weber von Hartz [1987] ICR 110, 126, para. 37, the European Court of Justice] held that the employer could exclude part-time workers from the pension scheme on the ground that it sought to employ as few part-time workers as possible only where it was found that 'the means chosen for achieving that objective correspond to a real need on the part of the undertaking, are appropriate with a view to achieving the objective in question and are necessary to that end.'

In our judgment it would be wrong to extrapolate from those words written in that context that an employer can never justify indirect discrimination in a redundancy payment scheme unless the form of the scheme is shown to be necessary as the only possible scheme. One must first consider whether the objective of the scheme is legitimate. If so, then one goes on to consider whether the means used are appropriate to achieve that objective and are reasonably necessary for that end."

24. That approach, as Peter Gibson LJ went on to point out, has the support of the House of Lords in Rainey v Greater Glasgow Health Board [1987] ICR 129 and in Webb v EMO Air Cargo (UK) Ltd. [1993] ICR 175, 182, where the judgment of Balcombe LJ in Hampson v Department of Education and Science [1989] ICR 179, 191, was expressly approved. Balcombe LJ said:

"In my judgment 'justifiable' requires an objective balance between the discriminatory effect of the condition and the reasonable needs of the party who applies the condition."

In Barry in their Lordships' House Lord Nicholls (at 870) amplified this:

"More recently, in Enderby v Frenchay Health Authority [1994 ICR 112, 163 the Court of Justice drew attention to the need for national courts to apply the principle of proportionality when they have to apply Community law. In other words, the ground relied upon as justification must be of sufficient importance for the national court to regard this as overriding the disparate impact of the difference in treatment, either in whole or in part. The more serious the disparate impact on women or men as the case may be, the more cogent must be the objective justification. There seem to be no particular criteria to which the national court should have regard when assessing the weight of the justification relied on."

25. There is further authority, on which Ms Gill relies, for the proposition that where the employer's objective is itself discriminatory, it can never justify discriminatory means: R v Secretary of State for Employment, ex parte Equal Opportunity Commission [1994] ICR 307, 330 (HL); R v Secretary of State for Employment, ex parte Seymour-Smith [1999] ICR 447, 492 (ECJ).
26. In my judgment the Employment Tribunal has failed to apply the scrutiny which the law requires when a discriminatory condition is said to be justifiable. Moreover, such reasons as it gives do not stand up in law.
27. The major error, which by itself vitiates the decision, is that nowhere, either in terms or in substance, did the Tribunal seek to weigh the justification against its discriminatory effect. On the contrary, by accepting that "any decision taken for sound business reasons would inevitably affect one group more than another group" it fell into the same error as the EAT in Brook and Enderby and disabled itself from making the comparison.
28. Secondly, the Tribunal accepted uncritically the College's reasons for the dismissals. They did not, for example, ask the obvious question why departments could not be prevented from overspending on part-time hourly-paid teachers without dismissing them. They did not consider other fairly obvious measures short of dismissal which had been canvassed and which could well have matched the anticipated saving of £13,000 a year. In consequence they made no attempt to evaluate objectively whether the dismissals were reasonably necessary – a test which, while of course not demanding indispensability, requires proof of a real need.
29. In this situation it is not enough that the Tribunal should have posed, as they did, the statutory question "whether the decision taken by the College was justifiable irrespective of the sex of the person or persons to whom it applied". In what are extended reasons running to 15 closely typed pages, there has to be some evidence that the Tribunal understood the process by which a now formidable body of authority requires the task of answering the question to be carried out, and some evidence that it has in fact carried it out. Once a finding of a condition having a disparate and adverse impact on women had been made, what was required was at the minimum a critical evaluation of whether the College's reasons demonstrated a real need to dismiss the applicant; if there was such a need, consideration of the seriousness of the disparate impact of the dismissal on women including the applicant; and an evaluation of whether the former were sufficient to outweigh the latter. There is no sign of this process in the Tribunal's extended reasons. In particular there is no recognition that if the aim of dismissal was itself discriminatory (as the applicant contended it was, since it was to deny part-time workers, a predominantly female group, benefits which Parliament had legislated to give them) it could never afford justification.
30. It is conceivable that the Tribunal misunderstood Lord Nicholls' remark, at the end of the passage quoted above, that "There seem to be no particular criteria to which the national court should have regard when assessing the weight of the justification relied upon". Lord Nicholls was not saying that the question was at large or the answer one of first impression: he was saying that, in the exercise which he had spelt out, no single factor or group of factors was of special weight.
31. I would therefore allow the appeal on this ground. This court is not in a position to say that the outcome of a proper approach will inevitably be in the appellant's favour, and I would therefore remit the case for a further hearing on this issue and that of proportionate impact considered above.

* * *

32. The foregoing are the issues which arise out of the applicant's dismissal. The rest of the case concerns her rights in the contractual relationship with ELS on which she has had to fall back.

Has there been discrimination against the applicant as a contract worker?

33. S.9 of the Sex Discrimination Act 1975 provides in its material parts:

9. Discrimination against contract workers

(1) This section applies to any work for a person ("the principal") which is available for doing by individuals ("contract workers") who are employed not by the principal himself but by another person, who supplies them under a contract made with the principal.

(2) It is unlawful for the principal, in relation to work to which this section applies, to discriminate against a woman who is a contract worker-

(a) in the terms on which he allows her to do that work, or

(b) by not allowing her to do it or continue to do it, or

(c) in the way he affords her access to any benefits, facilities or services or by refusing or deliberately omitting to afford her access to them, or

(d) by subjecting her to any other detriment.

34. The section, which comes within Part II of the Act (Discrimination in the Employment Field), is there to prevent employers from avoiding the effect of the earlier provisions of that Part by bringing in workers on subcontract. It is replicated in its first and second subsections by s. 7 of the Race Relations Act 1976. There is no reason why it should be limited, as the Employment Tribunal and EAT held that it was, to discrimination between male and female contract workers supplied to a particular employer. Nothing in the wording of the section says that it is so limited. It would be remarkable if it, and equally s.7 of the Race Relations Act, permitted an employer, by bringing in black or female workers on subcontract to work alongside a predominantly white or male employed workforce, to give them inferior conditions so long as they were all treated equally badly or (if differentially treated) were all of the same race or sex and so unable to complain. It would be particularly remarkable if this were permitted by legislation which treats the principal's own contracted labour as employees.
35. In my judgment s.9 applies both as between one contract worker and another and as between one contract worker and an employee, so long as they are working for the same principal. So far, and without resistance from Mr Jeans, Ms Gill's argument succeeds. Her problem, however, is to show that in the present case the principal – that is the College – is discriminating against the appellant when it uses her services through ELS. It is ELS, says Mr Jeans, against whom the applicant's complaints lie, because it is they alone who set the terms of her employment.
36. This is largely but not entirely true. There are still some benefits which, Ms Gill would argue, are afforded by the College to its employed staff but not to those brought in through ELS – professional indemnity insurance, for example, and career development support. These are some way from the instances which are usually given, such as an inferior canteen or washroom for contract workers, but - while I share the doubts of Mr Justice Gage on this question - they are in my view capable of ranking under s.9(2) and ought to be considered by the Employment Tribunal to which the outstanding questions under s.1(1)(b) are to be remitted.

The equality claims

Equal pay

37. Ms Allonby next seeks against ELS a rate of pay equal to that of employed lecturers at the College by means of a comparison with a named salaried teacher, Ross Johnson.
38. Such a comparison is the chosen mechanism of the Equal Pay Act 1970 by which the United Kingdom has given effect to the requirements of Council Directive 75/117/EEC, made under Article 119 of the Treaty of Rome, on equal pay for men and women. The Equal Pay Act 1970 as now amended provides:

1. Requirement of equal treatment for men and women in same employment

(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do no include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one.

(2) An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed (the "woman's contract"), and has the effect that-

…………….

(c) where a woman is employed on work which, not being work in relation to which paragraph (a) or (b) above applies, is, in terms of the demands made on her (for instance under such headings as effort, skill and decision), or equal value to that of a man in the same employment-

(i) if (apart from the equality clause) any term of the woman's contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and

(ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed, the woman's contract shall be treated as including such a term.

…

(6) Subject to the following subsections, for purposes of this section-

(a) "employed" means employed under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly;

(b) …

(c) two employers are to be treated as associated if one is a company of which the other (directly or indirectly) has control or if both are companies of which a third person (directly or indirectly) has control, and men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes.

39. Plainly Ms Allonby's contract is not with the College but with ELS. Plainly too ELS and the College are not associated employers within the statutory definition. Is Mr Johnson then "employed by her employer … at the same establishment"? The answer, inescapably, is no. He is employed, albeit at the same establishment, by the College.
40. During argument it seemed to me – indeed it still does - that the way s. 1(6) is written makes it possible that this definition, tagged on as it is instead of being slotted in logically as s. 1(6)(b), is expansive rather than exhaustive, making it legitimate to construe "the same employment" in s.1(2)(c) in the sense, adopted in the European case-law, of the same establishment or service. But a look at the Act as originally passed makes this improbable: the same words were initially integral to s.1(2), which required "equal treatment with men in the same employment, that is to say men employed by her employer … at the same establishment …" and were plainly exhaustive. Their relegation to s. 1(6) is not likely (though in the presence of the mysteries of parliamentary drafting one can never be certain) to have been meant to change their effect.
41. Ms Allonby has therefore to fall back on EU law, whether as an aid to the construction of the Equal Pay Act or as directly effective law. There is no doubt that, if the comparison with Mr Johnson is to be made, the inequalities are considerable: he has, but she has not, security against unfair dismissal and dismissal for redundancy, rights to sick pay and so forth. It is not argued that the right to equality with Ross Johnson extends beyond occasions when ELS allocate Ms Allonby to work at the College; but if the argument succeeds there, it will succeed – or at least be available - in relation to other establishments which obtain her services through ELS.
42. Ms Gill begins with the proposition that in EU law Article 141 (as Article 119 has been renumbered) of the Treaty of Rome has direct effect on state bodies and in certain circumstances on private persons and corporations. In McCarthys Ltd v Smith [1980] ICR 672, para. 15, the European Court of Justice held that the right to equal pay for equal work had direct effect where "concrete appraisals" (that is, not hypothetical comparisons) could be made "of the work actually performed by employees of different sex within the same establishment or service". The final phrase is a considered one: it comes, as the Court indicates in para. 10, from its earlier and seminal decision in Defrenne v Sabena [1976] ICR 547, para. 22. Ms Gill submits that it manifestly includes a situation where two people, one male and one female, are lecturing at the same level in and for the same College. If so, then as the EAT held in Scullard v Knowles [1996] ICR 399 the Treaty and its jurisprudence take precedence.
43. Mr Jeans submits, and I agree, that employment in the same industry is not enough to attract the direct effect of Article 141 in the absence of implementing mechanisms in national law. But between this proposition and situations lying clearly within s. 1(6) of the Equal Pay Act 1970 lies a large terrain which is still being mapped. In Lawrence v Regent Office Care Ltd [2000] IRLR 608 this court has recently referred to the ECJ the question whether Article 141 is directly applicable as between school ancillary workers who were dismissed and then employed to do the same work at lower rates of pay by contractors, and who claim that their work is of equal value with that of certain male employees of the school authority. The question has a clear bearing on Ms Allonby's claim, though the answer will not necessarily determine it.
44. For his part Mr Jeans relies on the decision of the ECJ in Ten Oever v Stichting Bedrijfspensioenfonds [1995] ICR 74 where, at para. 65, Advocate General van Gerven, applying McCarthys Ltd v Smith, paraphrased Article 119 as not applying where "workers of one sex work in an undertaking or division of an undertaking". The same word had been used by Advocate General Capotorti in McCarthys (at 677). An undertaking, Mr Jeans submits, is the correct unit, and it is narrower than an employer. This, with respect, is a far-fetched argument. First of all, Advocate General van Gerven nowhere suggests that he is attempting to revise the well-established doctrine of Defrenne and McCarthys. Secondly, an undertaking may well be as wide as or wider than a particular employer: it is a question not of form but of substance. Mr Paines QC, whose knowledge of European jurisprudence is considerable, has confirmed to us that "undertaking" is a term of art. The French text of the report, like the Treaty itself, uses the word "entreprise" where the English version uses "undertaking", in each case signifying an economic entity which may be of any size or shape. An initially better point taken by Mr Jeans is that Article 141 itself speaks only of what the worker receives "from his employer"; but the Article also says "directly or indirectly", and it is this which has given the ECJ the key to its more expansive jurisprudence. As to Mr Jeans' argument that the ECJ has never held the Equal Pay Act 1970 to be non-compliant with the Treaty by its use of a "same employer" test, the answer is that the Act does not use that test: it speaks throughout s.1 of "the same employment" – a door which, but for the apparently restrictive definition now contained in s. 1(6), will open to the same key.
45. The Employment Tribunal concluded as a fact that the College had no control over the terms of the contract between ELS and the applicant, so that s.1(6)(c ) did not cover the case. It also took the view that it had to decide whether Ms Allonby and Mr Johnson had common terms and conditions of employment. This was not correct: the question of common terms and conditions arises only where the two workers are employed in different establishments. Before the Employment Tribunal counsel for ELS conceded, and was plainly right to do so, that Ms Allonby and Mr Johnson worked in the same establishment, even if at times they were doing so on different sites. The problem is that they were not doing so in the same employment. The issue is whether this is as fatal under European law as it is under national law.
46. The EAT, following a thorough consideration of the law on this and the next topic, concluded in their main judgment:

"Although the law is far from clear, the various features we have described together lead us to the view that in Ms Allonby's case, even if 'purely legal analysis' suffices to identify a less favourable treatment of her, the analysis still requires some form of comparison between those who are or have been in the same employment if a complaint under Article 119 is to be upheld. On that basis there is no conflict between the Article and our domestic provisions."

Their judgment on the preliminary issue referred to and adopted this passage. But in my respectful judgment it is flawed because its reasoning is circular. It assumes a negative answer to the thing which has still to be decided, namely whether working in the same service or establishment, albeit under contracts with different employers, is nevertheless working in the same employment for the purposes of Article 141, at least where the work is done for the purposes and benefit of the employer whose establishment it is. Only if the answer is 'No' is there no conflict between Article 141 and s. 1(6).

47. Tempting though it is to turn directly to this issue and to decide whether the answer is acte clair, it is more appropriate to await the answer of the ECJ to the questions put in Lawrence. These, however, will not necessarily determine the question before this court. I would therefore propose that with the assistance of the parties a question be referred to the ECJ which adopts but refines the first question referred in Lawrence so as to focus it on the facts of the present case. If, as may be the case, the ECJ decides to take the two cases together, its answers will make the map of the unknown terrain that much more complete.

Pension rights

48. In her employment with ELS Ms Allonby, having only a contract for services, has no access to the occupational pension scheme for teachers, the TSS. This is because the Teachers' Superannuation (Consolidation) Regulations 1988 confine pensionable employment to employment under a contract of service. Although in her years of employment from 1990 to 1996 Ms Allonby had not joined the TSS, there were intelligible reasons for this sufficient to make it hard to say that she has suffered no loss by now being excluded.
49. The Pensions Act 1995 contains new provisions which the United Kingdom has been required to adopt as a result of the decision of the ECJ in Barber v Guardian Royal Exchange Group [1990] ICR 616 and of a number of decisions which followed. S. 62, which s.63(4) requires to be construed as one with s.1 of the Equal Pay Act 1970 (the ECJ having held that occupational pensions are pay), provides in its first four subsections:

62. The equal treatment rule

(1) An occupational pension scheme which does not contain an equal treatment rule shall be treated as including one.

(2) An equal treatment rule is a rule which relates to the terms on which-

(a) persons become members of the scheme, and

(b) members of the scheme are treated.

(3) Subject to subsection (6), an equal treatment rule has the effect that where-

(a) a woman is employed on like work with a man in the same employment,

(b) a woman is employed on work rated as equivalent with that of a man in the same employment, or

(c) a woman is employed on work which, not being work in relation to which paragraph (a) and (b) applies, is, in terms of the demands made on her (for instance under such headings as effort, skill and decision) of equal value to that of a man in the same employment, but (apart from the rule) any of the terms referred to in subsection (2) is or becomes less favourable to the woman than it is to the man, the term shall be treated as so modified as not to be less favourable.

(4) An equal treatment rule does not operate in relation to any difference as between a woman and a man in the operation of any of the terms referred to in subjection (2) if the trustees or managers of the scheme prove that the difference is genuinely due to a material factor which-

(a) is not the difference of sex, but

(b) is a material difference between the woman's case and the man's case.

50. If Ms Allonby can rely on Mr Johnson as her comparator, she will be entitled in principle to succeed in this aspect of her claim. Indeed it was in large part the impending effect of this enactment which led the College to dismiss her and the other non-salaried lecturers. Whether she can do so falls to be decided under the preceding head. But whether or not she can do so, Ms Gill submits that she is entitled to equality of treatment without providing a male comparator. She adopts the EAT's decision (with which I respectfully agree) that, contrary to the view of the Employment Tribunal, Ms Allonby's contract with ELS is by virtue of s. 1(6)(a) of the Equal Pay Act 1970 a contract of employment for occupational pension purposes.
51. In view of the conclusion I have reached, which is that this issue too should be referred to the European Court of Justice, I will set out no more than the outlines of the respective arguments; I will also give my conclusion where necessary on issues of national law which they canvass.
52. First, Ms Gill points out that by virtue of s.63(4)(b) the trustees or managers of the scheme are substituted for the employer as the party responsible for any discrimination, and that it is correspondingly they and not the employer who are entitled under s.62(4) to establish a material causative factor unrelated to gender. In Defrenne the ECJ held that there were forms of direct discrimination which could be identified as violating Article 119 "on the basis of a purely legal analysis of the situation". Discrimination arising from the express provisions of legislation, Ms Gill submits, is a plain instance: she cites as examples Ex parte Equal Opportunities Commission (above), Ex parte Seymour-Smith (above), Rinner-Kuhn v FWW Spezial-Gebäudereinigung [1989] IRLR 493, Liefting v Universiteit van Amsterdam [1984] ECR 3223 and Bestuur v Beune (Case C-7/93). Although figures were before the Employment Tribunal which, Ms Gill says, showed broadly though less markedly the same gender imbalance nationally as had been established locally, she accepts that there is as yet no finding as to whether the exclusion of teachers employed on contracts for services has a disparate impact on women, so that if she succeeds on the law the case will require remission to a fact-finding tribunal.
53. The EAT considered that the pension must be referable to the same employment relationship as that of the comparator, but also said:

"Article 119 may very well not require a common employer in all cases. There may be exceptional cases not yet the subject of ECJ decisions such as where complainant and comparator, although in different employ, are both within the provisions of, say, an industry-wide agreement or a sector-wide statutory scheme. But a complainant would hardly be able to complain under Article 119 of a failure to be admitted to membership of a collective or statutory scheme if the only way in which he or she could pray in aid the benefits conferred by the Article was by being a member already."

54. I do not think that this can be right: s.62(2) explicitly applies the equal treatment rule not only to members of the scheme but to "the terms on which … persons become members of the scheme". This being so, Ms Allonby can claim to be within the class identified by the EAT, albeit speculatively, as not requiring a common employer. Whether on this ground or on wider grounds of principle, Ms Gill submits that as much of s.62(3) as purports to confine the operation of the equal treatment rule to persons in the same employment – if that phrase means the same contractual employment – should be disapplied.
55. Mr Nicholas Paines QC for the DfEE submits that the only cases where pay discrimination can detected by a purely legal analysis are "those where a single pay-setter is responsible for the setting of a rate of pay of x for a man and y for a woman for equal work" – that is, as I understand it, cases of direct or overt pay discrimination. He accepts that employment in a single establishment or service can be wider than employment by a single legal person, but points to the requirement of common control (see above) in s. 1(6). There must in all cases, he submits, be a single discriminator. He does not deal directly with Ms Gill's point that in the occupational pension field there is always a single discriminator, namely the body of managers or trustees; he deals with it obliquely by submitting, accurately, that pensions are pay only because they emanate from an employer and that the ECJ, for example in Coloroll Pension Trustees Ltd v Russell [1995] ICR 179, has stressed that it is the employer's obligations which the trustees are discharging. But this does not, as it seems to me, answer the provision of ss.63(4)(b) of the Pensions Act 1995 which expressly substitutes trustees or managers for employers for equal treatment enforcement purposes.
56. Mr Paines relies in particular on Coloroll as authority for the proposition that a comparator is always necessary in a case such as this. There the ECJ's answer to the sixth question put by the High Court was that Article 119 did not apply to schemes which have at all times had members of only one sex, since no material comparison was possible. This gives some force to Mr Paines' argument; but it is not this case, and a large question remains about its ambit and significance. It would take more, in my view, than the brief reasoning in paragraphs 101 to 104 of Coloroll (which concerned a one-undertaking scheme, not a sector-wide one) to shut out of the pension field the logic of Defrenne and the cases following it. But the apparent conflict between the two does call for clarification.
57. Since ELS is not a contributing employer, Mr Paines submits that Ms Gill must go as far as establishing that it is obliged to participate in and contribute to the scheme; and even then, ELS itself will not be guilty of any sex discrimination. (This, as I understand it, Ms Gill accepts: it is why her case on pension inequality is directed against all three respondents, including the College as indirect employer.) Mr Paines disputes Ms Gill's reading of Liefting and Beune. He submits also that, whatever the position as between members of the scheme, there is no way in which a non-member can use the prohibition on discrimination to force her way in.
58. In the course of argument Lord Justice Ward asked Mr Paines what the position would be if the Regulations provided in black and white that the scheme was not open to women. Even here, said Mr Paines, citing Coloroll, it would become unlawful only where an employer used it in order to discriminate in a sexually mixed workforce. If this is right, either Article 119 can be defeated in pension schemes by overt discrimination, or the equal treatment provisions of the Pensions Act 1995 are ineffectual, or both. Equally, if it is the logical extension of the DfEE's position, then there has to be something wrong with that position. If, on the other hand, the answer is that such a provision would be unlawful, it must be because a bar on women's entry would be a rule relating to the terms on which persons became members (s.62(2)(a)) and is therefore overridden by the equal treatment rule imported by s. 62(1). It would follow without difficulty that any woman who met the other eligibility criteria must be able to join the scheme. We have not heard full argument on what would follow in relation to her employer. But it is clear that the TSS must conform to the non-discrimination requirements of Article 141 and the Pensions Act 1995. The outstanding issue is the reach of the former.
59. The question of a comparator remains unresolved here, as in relation to equal pay. In referring that question to the European Court of Justice, and although much of the case on the pension scheme does seem to me to be acte clair, I would also refer the question whether a sector-wide pension scheme which excludes workers employed under contracts for services discriminates contrary to Article 141 if a significantly greater number of women than of men is thereby excluded. Mr Paines has suggested that this ought not to be done until the material facts are found and it can be seen what, if anything, is at stake. I see the force of this, but as Ms Gill points out the Employment Tribunal, which had the figures, did not suggest that they could not support her case, and there would be an unhappy duplication of effort if, following remission, a further reference had to be made. On balance the least inconvenient course is to refer the question and then, if the answer makes it appropriate to do so, let the material facts be found.

Conclusions

60. I would therefore allow the appeals on sex discrimination to the extent of remitting them to an Employment Tribunal to be decided in the light of the judgments of this court, and would refer to the European Court of Justice the questions on equal pay and pension equality identified earlier in this judgment.

MR. JUSTICE GAGE:

61. I gratefully adopt the background to the issues in this appeal as set out by Sedley LJ in his judgment.

THE SEX DISCRIMINATION CLAIMS

Was appellant's dismissal by the College indirectly discriminatory?

62. I have nothing to add to Sedley LJ's judgment on the law and on the requirement or condition, with which I respectfully agree. So far as the arguments on differential impact are concerned again I agree with Sedley LJ that in the main the Employment Tribunal's reasoning was impeccable and not open to criticism. I am inclined to the view that when the tribunal expressed itself in the terms -

"Based on these figures the condition or requirement effected a greater number of women than men".

- it must have had in mind that the statute required a finding that the proportion was "considerably" greater. I suspect that this was simply a slip in the written decision. But, like Sedley LJ, it seems to me important that a Tribunal demonstrates in its written decision that it has applied the correct test. Since I too conclude that the issue of justifiability must go back to the Employment Tribunal, I agree that this issue should also be remitted.

Justifiability

63. The principle upon which the Employment Tribunal must act on this issue is not in dispute. In Hampson v Department of Education and Science 1989 ICR 179 Balcombe LJ in a dissenting judgment said [page 191]:

"In my judgment "justifiable" requires an objective balance between the discriminating effect of the condition and the reasonable needs of the party who applies the condition"

64. This principle was approved and amplified by the House of Lords in Barry v Midland Bank plc 1999 ICR 859 [see the speech of Lord Nicholls at page 870].
65. It is also not in dispute that the tribunal's attention was drawn to these passages in submissions by counsel. In its decision on this issue the Tribunal makes specific reference to Barry [see page 10 the decision].
66. Ms Gill's submission is that the Tribunal did not in its decision properly demonstrate that it had applied this principle. She submits that it failed to direct itself that an objective balance between the discriminatory effect of the condition and the reasonable needs of the party applying the condition, had to be struck. In short, her submission is that the Tribunal's findings of fact and conclusions under the heading "Justifiability" are all concerned with the College's reasons for the requirement but nowhere mentioned the detriment to Ms Allonby. Further, the Tribunal have not considered whether the measures taken were necessary and requisite to achieve their stated aim. Ms Gill also argues that the reasoning of the Tribunal in the penultimate paragraph on page 10 of its decision demonstrates that the tribunal did not properly carry out the balancing exercise. Her submission is that in that paragraph the Tribunal appear to be seeking to justify the College's decision on some basis other than as a balancing exercise.
67. Mr Jeans submits that the decision of the Tribunal was one which it was entitled to make. He relies on the finding of fact set out in the written decision. In particular Mr Jeans points to a number of facts found by the tribunal and set out in its decision. He relies on the following matters. The College was faced with a need to make savings as a matter of urgency. The decision to engage ELS was necessary to introduce budgetary control. There is reference to the fact that Ms Allonby put forward alternative suggestions for dealing with the crisis which were considered and rejected by the tribunal [see page 6 of the decision]. Mr Jeans points to the fact that the Tribunal accepted that there was a detriment to Ms Allonby [see page 9] and was referred to the relevant legal principles. So, submits Mr Jeans, there is no reason to suppose that the Tribunal did not properly apply the principles to the facts as found by it.
68. Mr Jeans referred to a number of authorities which show that the decision of a tribunal is not to be approached in too critical a fashion; a tribunal's reasons are not to be construed in the same way as a statute or deed [see Varndell v Kearney & Trecker Marwin Ltd 1983 ICR 683 and Piggott Bros Ltd v Jackson 1992 ICR 85].
69. Mr Jeans submits that what the tribunal has to do is to explain in ordinary language what its decision is and in ordinary language why it reached that decision. He submits that in this case that is what the Tribunal have done.
70. For my part, I accept the submission that the Tribunal's decision should not be approached with an over fastidious eye. But that does not mean that clear errors can be ignored and a failure to demonstrate a correct approach to the legal principles involved glossed over. As Sir John Donaldson said in Alexander Machinery (Dudley) Ltd v Crabtree 1974 ICR 120, in a passage referred to by Eveleigh LJ in Varndel [see page 694]:

"The over-riding test must always be: is the tribunal providing both parties with the materials which will enable them to know that the tribunal has made no error of law in reaching its findings of fact?"

71. It is possible in different passages in the decision of the Employment Tribunal to discern findings which, if plucked from the context in which they are expressed, could be construed as assisting the College's argument that the Tribunal considered all the relevant matters and reached a decision after asking itself the correct question. However, in my judgment, the difficulty is that in a crucial passage of the decision the tribunal does not refer to these other passages. On the contrary, the passage which reads -

"Bearing in these issues in mind the Tribunal concluded that the decision was justifiable …"

- seems to refer only to the matters set out under the heading "Justifiability". The whole of that sentence, to my mind, indicates that the Tribunal had not weighed in the balance all the relevant factors. It is significant that nowhere in the section of the decision under the heading Justifiability is there a reference to the detriment to Ms Allonby. For this reason, in my judgment, the decision of the Tribunal on this issue is flawed and cannot stand.

72. I too would allow the appeal on this ground and direct that this issue be remitted for a further hearing.

Has there been discrimination against the applicant as a contract worker?

73. I respectfully agree with Sedley LJ that section 9 of the Sex Discrimination Act 1975 applies both between one contract worker and another and as between one contract worker and an employee so long as they are working for the same principal. I further agree that where a complaint is made about matters which are essentially contractual a complaint, if any, lies against the employer and not against the principal as defined in section 9.
74. As it seems to me, the question on this ground of appeal is whether the matters complained of by Ms Allonby in paragraph 3.3 (1) are contractual matters or benefits, services or facilities denied her by the College.
75. In my judgment there can be no doubt that the matters in particulars (1)(a) to (h) are contractual matters. In my opinion, the likelihood is that the same applies to those in (i) to (l). It seems to me that professional insurance indemnity is the sort of matter which is likely to be the subject of a contractual term. However, I accept that it is arguable that some of these matters might be properly categorised as benefits afforded by the College to its employed staff but not to those brought in through ELS. In the circumstances, I also agree that this issue should be remitted to the Employment Tribunal to which the outstanding questions under s.1(1)(b) are to be remitted.

The Equality Claims

Equal Pay.

76. In my judgment Ms Allonby can only succeed on this issue by invoking Article 141 of the Treaty of Rome. Despite valiant efforts by Ms Gill to impugn the Employment Tribunal's findings that the College did not have sufficient control over ELS to satisfy the requirement of section 1(6)(a) and (c), those findings in my judgment are unassailable. On the Article 141 point Mr Jeans submissions are simple. He submits that Article 141 is concerned with those who have the same employer. He argues that there is no suggestion in any of the decided cases on this point that the requirement of the same employer infringed Article 141 (or 119 as it used to be). He further relies on the fact that at no stage has any enforcement action been taken to suggest that the Equal Pay Act was defective in that it infringed Article 141.
77. Article 141 states:

"Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work.

For the purpose of this Article, "pay" means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives, directly or indirectly, in respect of his employment from employer."

78. In my judgment the terms of the Article lend support to Mr Jeans' argument. It seems to me that references to pay "from his employment" is indicative of the importance of the relationship of employer and employee underlying the requirements of the Article. However as Sedley LJ points out the Article also refers to pay which the employee receives "directly or indirectly". Since I agree with Sedley LJ that, for the reasons he states, the Pension Rights claim should be referred to the European Court, it seems sensible to me to refer the issue arising on equal pay as well.

Pension Rights.

79. As I have already said for the reasons expressed by Sedley LJ, with which I respectfully agree, I too would refer this question to the European Court.

LORD JUSTICE WARD:

80. I have had the advantage of reading in draft the judgments of Sedley L.J. and Gage J. I shall set out shortly my reasons for disposing of the appeal along the lines agreed by them.

Indirect Sex Discrimination under s.1(1)(b) of the Sex Discrimination Act 1975.

81. Firstly, as to the requirement or condition which the College applied to her: Her case, as recorded by the Industrial Tribunal, was that:-

"the College had indirectly discriminated against her in as much as it imposed a requirement or condition for continuous employment with the College in the academic year 1996/1997 for an employee to have previously been employed either on a full time basis or under a contract of employment which conferred proportionate benefits of a full time contract."

82. Mr Jeans Q.C. submits that the College was not applying to her any requirement or condition but merely implementing a decision about the way in which to run its business. He submits that the indirect discrimination provisions are addressed to cases where, for example, an employer stipulates that certain criteria must be met in order that a person can be appointed to a post, e.g. the erstwhile minimum height required to work in the police force, or a requirement that a person have a degree in a particular subject. He submits the law should not be contorted so that every commercial decision can be described as applying a requirement or condition. The Tribunal rejected that submission dealing with the problem of good business reasons under the issue of justifiability. It concluded that:-

"The changes namely the requirement that hourly paid contract workers would in future only be employed through E.L.S. was the application of a requirement or condition."

83. In my judgment they were fully entitled so to regard it. The reality is that the College told its former employee that it was no longer willing to accept her back as a part time lecturer unless she came either on a full time basis or through E.L.S. Although the imposition of that threshold may well have been the implementation of a commercial decision forced upon it by changes in the law, it nonetheless was a threshold for her to cross and it was in that sense a requirement or condition which they applied to her when considering upon what terms she would be permitted to resume her teaching. I see no error in their approach and like my Lords I reject Mr Jeans' submissions.
84. Secondly, was the application of that requirement or condition justifiable? I confess that I have wavered considerably over deciding whether this court could interfere with the Tribunal's decision that the steps taken by the College were objectively justifiable. My hesitation sprang from my chastened reticence to assume that a specialist Tribunal like this, having been referred to the relevant authorities, did not know how to perform its function and which matters it should and should not take into account in reaching its conclusion. To subject a decision of the court or Tribunal below to too narrow a textual analysis is a besetting sin for the appellate court. Sedley L.J. has, however, subjected it to more penetrating analysis than that. He has raised a number of very pertinent questions which the Industrial Tribunal properly addressing the problem ought to have posed and ought to have answered in the extended reasons which it is their duty to give. That is an important duty as is explained by Henry L.J. in Flannery v Halifax Estate Agencies Ltd. (t/a Colleys Professional Services) [2000] 1 WLR 377. He made these general comments, as apposite to Tribunals as to the judges to whom they were there addressed:-

"We make the following general comments on the duty to give reasons.

(1) The duty is a function of due process, and therefore of justice. Its rationale has principally two aspects. The first is that fairness surely requires that the parties - especially the losing party - should be left in no doubt why they have won or lost. This is especially so since without reasons the losing party will not know ... whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case. The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not.

(2) The first of these aspects implies that want of reasons may be good self-standing ground of appeal ...

(3) The extent of the duty, or rather the reach of what is required to fulfil it, depends on the subject matter. ...

(4) ... the judge must explain why he has reached his decision ... Transparency should be the watchword."

85. When the disparate impact on men and women of the College's action is as serious as it is for Mrs Allonby, there must, in my judgment, be a cogent explanation of what the objective justification is for implementing that action. No sufficiently cogent explanation appears in the decision as enables me now to be sure that the Tribunal can be assumed to have directed themselves properly along the lines Sedley L.J. has set out and properly taken the appropriate factors into account in striking their balance. I am now left in doubt why Mrs Allonby lost and, for that reason alone, I would allow her appeal. Mrs Allonby and the many other women in her position are entitled to know exactly why the business reasons were so appropriate and so necessary as to amount to a proportionate justification for subjecting them to detriment. So I agree with my Lords that the matter must be remitted to the Tribunal for their more explicit reconsideration.
86. Finally, as to the extent of the disparate impact: Section 1(1)(b)(i) of the Act requires that the proportion of women who can comply with the requirement or condition must be considerably smaller than the proportion of men who can comply with it. The Tribunal did not expressly find the proportion to have been considerably smaller. If this were the only point, I would have been quite prepared to find in this case that the Tribunal knew what it ought to be doing and that the failure to add the required adverb did not impugn their decision. It is only because I agree the matter has to go back to them that I also agree that when it does, they give renewed consideration to the extent of the proportion of women affected by the College's action, and that they give fresh considerations to the matters remitted, unaffected by any comments made in these Judgments.

The section 9 claim: discrimination against contract workers.

87. Mrs Allonby's complaint is that the College indirectly discriminated against her in that it was a requirement or condition for notice of termination of her contract, payment for classes cancelled due to bad weather, notice of closure of unviable classes, the right to attend staff development classes and the benefit of professional indemnity insurance paid by the College that she was directly employed and not a contract worker.
88. The Tribunal accepted the College's submission that this claim was misconceived:-

"The Tribunal considered that this section was designed to prevent an employer discriminating against a contract worker by discriminating between male and female contract workers supplied to it by a third person. All contract workers employed by this College and supplied by E.L.S. were treated in the same way by the College and E.L.S. The section is not intended to provide contract workers with the same benefits as full time employees. It was designed to ensure that where a principal "employs" contract workers the principal treats the contract workers all in the same way."

89. In my judgment the Tribunal were wrong. The language of s.9 does not impose that limitation. The purpose of the Act does not require such limitation: on the contrary so restricted a meaning defeats the primary purpose of the Act which is to remove sex discrimination of any kind in the employment field. There is no need to limit the scope of the Act to disparate treatment as between contract workers of the supplier one compared with the other. Properly construed s.9 has its own inbuilt limitations.
90. As the Tribunal has misdirected itself, the matter must be remitted for consideration of the merits. As I understand the position under s.9, what is made unlawful by ss.(2) is:-

"for the principal, in relation to work to which this section applied, to discriminate against a woman who is a contract worker -

(a) in the terms on which he allows her to do that work, or

(b) by not allowing her to do it or continue to do it, or

(c) in the way he affords her access to any benefits, facilities or services or by refusing or deliberately omitting to afford her access to them, or

(d) by subjecting her to any other detriment."

91. To discriminate the principal must apply to her a requirement or condition which, by virtue of s.1(1)(b) is disproportionate in its impact on women, unjustifiable and detrimental to her personally. It seems to me, therefore, that the proper question for the Tribunal to be asking is whether or not, in relation to the work available for doing by the contract worker (in this case the teaching), the College has applied a discriminatory condition or requirement in the terms on which it allows her to do that work or in the way it affords her or denies her access to any benefits, facilities or services. That is very much a commonsense, fact-based enquiry and, therefore, very much one for the Tribunal to undertake.
92. The Tribunal must ask upon what terms the College allowed her to do her work. The College is the principal and it is the principal's conduct, not the supplier's (E.L.S.'s) conduct which may constitute the unlawful discrimination. If, therefore, she does not enjoy the rights and benefits set out in her claim, is that because she is not allowed by the College to do her work on those terms? If she is denied those rights and benefits because her contract with E.L.S. has excluded them, it may still be necessary to enquire whether the College would only allow her to do her work if E.L.S. so stipulated. In my judgment, whilst the contractual arrangements are very relevant, they may not be determinative. Thus the way in which the College affords her or refuses her access to any benefits (e.g. of professional indemnity insurance) or facilities (e.g. the right to attend staff development classes) may, - like the provision of canteen facilities - be a matter of administration and business organisation without a contractual reference point, but denying the contract workers access to the canteen may nevertheless offend s. 9.
93. Whether success on any part of her s.9 claim adds anything to success (if she achieves it) on her main claim under s.1, and whether it amounts to much if free standing are matters which the parties and the Tribunal will no doubt have to reconsider.

The equal pay claim.

94. In my judgment Mrs Allonby's claim under the Equal Pay Act 1970 must fail. She has to establish for the purposes of s.1(2) that she is employed "on like work with a man in the same employment". That leads on to s.1(6) which provides that:-

"men shall be treated as in the same employment with a woman if there are men employed by her employer or any associated employer at the same establishment ..." (Emphasis added).

95. Her chosen comparator was not employed by her employer, which is E.L.S., but by the College. E.L.S. and the College are not associated employers as defined in s.1(6)(c) because on the clear and correct findings of fact made by the Tribunal neither has control of the other. On the plain ordinary meaning of the Act, Mrs Allonby fails to establish this claim.
96. Consequently Ms Gill is forced to advance the argument that that the Equal Pay Act 1970 has failed to comply in all respects with Article 141 (formerly Article 119) of the Treaty of Rome. She submits that it should be permissible for the purpose of giving effect to the principle that men and women should receive equal pay for equal work that one should look to the work done and the pay received by men and women in the same establishment or service or undertaking irrespective of who the employer may be and, pertinently, without the need for the employer to be the same.
97. This argument is, it seems to me, very heavily dependent upon paragraph 22 of the judgment of the European Court of Justice in Defrenne v Sabena [1976] ICR 547, 566 to this effect:-

"This applies even more in cases where men and women received unequal pay for equal work carried out in the same establishment or service, whether public or private."

98. It is submitted that the absence of a requirement that the work be carried out for the same employer is significant. The emphasis, it is said, is upon the work being done in the same establishment. That phrase has been amplified and extended. Mr Advocate General Capotorti in Macarthys v Smith [1980] I.C.R. 673, 677 refers without distinction to discrimination taking place within "the same establishment" and "the same undertaking". In similar vein Mr Advocate General van Gerven refers to "an undertaking" in paragraph 65 of his opinion in Ten Oever v Stichting Bedrijfspensioenfonds [1995] ICR 74 132. The argument, putting it slightly differently, is that discrimination must be eliminated from the workplace.
99. As Defrenne emphasises, Article 119 had a social as well as an economic objective in that it seeks to ensure social progress and the constant improvement of the living and working conditions of the people. Thus a purposive construction of Article 141(119) would demand that where a man and a woman are teaching the same children in the same institution under the same conditions then they should be paid the same. The submission has an obvious social attraction.
100. On the other hand Mr Jeans may have the stronger armoury of law at his disposal. He is able firstly to rely on the definition of "pay" which under the Article means:-

"the ordinary basic or minimum wage or salary or any other consideration, whether in cash or kind, which the worker receives, directly or indirectly, in respect of his employment from his employer:" (Emphasis added).

101. Mr Jeans may also draw comfort from the judgment of the Employment Appeal Tribunal where Mr Justice Lindsay relies on the expression of principle in Macarthys Ltd. v Smith in paragraph 13 at p.690:-

"... the principle that men and women should receive equal pay for equal work, enshrined in Article 119 of the E.E.C. Treaty, is not confined to situations in which men and women are contemporaneously doing equal work for the same employer".

102. Perhaps not too much can be read into that because it was quoting back the question which it had to answer.
103. There are, however, various references in the opinions of the Advocates General, for example Mr van Gerven in Barber v Guardian Royal Exchange, Case 262/88 at I-1920 and Mr Lenz in Enderby v Frenchay Health Authority Case 127/92 at I-5562 tending, as the Employment Appeal Tribunal say, towards a requirement of common employment.
104. I can see the attractions of these arguments. To eradicate discrimination one must first identify the discriminator. In matters of unequal pay, that is the paymaster. It is the employer who is the paymaster. It is the unequal treatment in respect of those in his employment which is the evil to be stamped upon. Eradicating unequal treatment between different employers may be a desirable social objective but that may "involve the elaboration of criteria whose implementation necessitates the taking of appropriate measures at community and national level" as the court recognised in paragraph 19 of its judgment in Defrenne. Unless and until any such change in the law is made I can see considerable force in these submissions that equal pay for equal work can only be required as between those employed in the same establishment, service or undertaking by the same employer.
105. Left to myself I probably would have been presumptuous enough to decide for myself without seeking help from Luxembourg. I would not however be confident that Sedley L.J. would necessarily agree with my conclusions even if Gage J. did. The very fact we may not be at one is of itself enough to persuade me it cannot all be acte clair. Since Sedley L.J., whose experience in these matters is so much greater than mine, takes the view that we must refer these questions to Europe, it seems to me impossible to say that the matter is beyond argument and I agree, therefore, with the course he proposes.

The pension claim.

106. Mrs Allonby claims to be entitled to the equal treatment rule prescribed by s.62(3) of the Act namely that:-

"The equal treatment rule has the effect that where -

(a) a woman is employed on like work with a man in the same employment ...

but, (apart from the rule) any of the terms referred to in sub- section (2) is or becomes less favourable to the woman than it is to the man, the term shall be treated as so modified as not to be less favourable."

107. The points of construction are as to the meaning of "employed" and "in the same employment". The words are not defined in the Act though there is a reference, subject to the provisions of the Act, to expressions used in the Pension Schemes Act 1993 and that requires gainful employment under a contract of service. Mrs Allonby is not so engaged. She has a contract for her services. I agree, however, with the Employment Appeal Tribunal and with Sedley L.J. that effect has to be given to s.63(4) requiring that:-

"Section 62 shall be construed as one with section 1 of the Equal Pay Act 1970 ..."

108. There "employed" is defined to mean employed under a contract of service or "a contract personally to execute work or labour". Mrs Allonby certainly has that kind of contract.
109. She is, therefore, employed for the purposes of the Pensions Act and the question is whether she can find a man "in the same employment". I note that s.62(3)(a) does not use the language of s.1(6) of the Equal Pay Act which requires the comparator to be employed by her employer at the same establishment. The requirement to read the Pensions Act at one with the Equal Pay Act may require the importation of those words, but I would prefer to leave the question open for the time being. If the additional words are not imported, then the meaning to be given to "in the same employment" is even more dependent upon whether or not the real focus of Article 141(119) is on the establishment or undertaking, rather than the employer. So the question which has to be referred to the European Court of Justice under the Equal Pay Act is even more sharply raised under the Pensions Act.
110. There seem to me to be even more important reasons for seeking clarification from the Court of Justice. The state has set up this pension scheme and it operates in accordance with the Act and the Regulations. The benefits payable under the scheme are treated as pay and by s.63(4) the trustees are treated as the employer. Being a nationwide scheme, the trustees, who for this purpose must be taken to be the Secretary of State for Education and Employment, are then to be treated as the employer of potentially eligible teachers even though those teachers are actually "employed" (using the word in its widest sense) by different "employers" within the borough or the county. By virtue of s.62(4) it is the trustees who must prove that there is no discrimination in operation of the terms regulating which persons may become members of the scheme. If Mrs Allonby is not entitled to choose her comparator from the College staff or to argue that the discrimination "may be detected on the basis of a purely legal analysis of the situation", per Defrenne, then the state may have set up a pension scheme where it may be there is not equal pay (pension benefits) for equal work (giving the lecture). The purpose of the new Act was to give equal pension rights to part-time employees as Mrs Allonby was. Because her employer had to make a contribution it could not afford, she lost that employment and with it her pension benefit. She has been forced to become self-employed and, on the Secretary of State's case, ineligible for membership of a scheme that was originally intended to benefit her. Yet she is doing the same work she always did. I can readily understand why Ms Gill finds that utterly unsatisfactory and I regret that Mr Paines Q.C. did not dispel my concerns.
111. Whilst, therefore, I might have been persuaded to deal with the Equal Pay Act on the existing jurisprudence from Luxembourg, I certainly feel I need help to decide whether Mrs Allonby has a valid claim under the Pensions Act.

Conclusion

112. In the result I agree that whilst we can allow the appeal in part, we must ask counsel to assist us in settling the necessary questions to be referred to the European Court of Justice.
ORDER:
113. Appeal allowed in part.
114. Appellant's costs against 1^st and 3^rd Respondent's.
115. Part remitted back to the Employment Appeal Tribunal;
116. Permission to appeal to the House of Lords refused (on behalf of 1^st 2^nd and 3^rd Respondents).
117. Reference to the European Court of Justice.
(Order does not form part of approved Judgment)