Appeal No. UKEAT/994/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                   At the Tribunal
	      On 10 July 2000
Judgment delivered on 27 September 2000

Before
HIS HONOUR JUDGE A WILKIE QC
MR S M SPRINGER MBE
MISS D WHITTINGHAM

GUS HOME SHOPPING LTD	APPELLANT

(1) MRS E GREEN  (2) MRS C McLAUGHLIN	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR ALEX LOCK
(Employed Barrister)
Messrs Beachcroft Wansboroughs
Solicitors
10-22 Victoria Street
Bristol
BS99 7UD	
For the Respondents	MR THOMAS LINDEN
(of Counsel)
Messrs Pattinson & Brewer
Solicitors
30 Great James Street
London
WC1N 3HA	

JUDGE A WILKIE QC:

1	This is an appeal by the employer against the decision of the Employment Tribunal at Birmingham on 29 and 30 April 1999, whereby it decided that the Appellant unlawfully discriminated against the Respondents, contrary to section 1 (1) (a) of the Sex Discrimination Act 1975.  The Appellant was represented by Alex Lock of Counsel and the Respondents by Thomas Linden of Counsel.  We are greatly indebted to the quality and clarity of the arguments, both written and oral, presented by Counsel in this case.

2	The Appellant operated a marketing department at their Worcester office.  A decision was made to transfer this function from that office to Manchester with effect from 1 April 1998.  In order to effect a smooth transfer of this function the Appellant introduced a loyalty bonus scheme which was discretionary and individually targeted.  Payment of a bonus to an employee was contingent upon (1) an orderly and effective transfer of the marketing operation; (2) co-operation and goodwill of the individual employee; and (3) the individual employee remaining in the Appellant’s employ until 31 March 1998 or an earlier agreed date. 

3	Each Respondent was employed at the Worcester office in the relevant section.  There was an orderly and effective transfer of the marketing operation.  Each Respondent remained in employment with the Appellant until 31 March 1998 and was made redundant on that date.  The Tribunal made findings, either explicitly or implicitly, that save for their periods of absence each Respondent did nothing which could be described as a failure to co-operate or provide goodwill.

4	Mrs McLaughlin did not, however, receive any loyalty payment.  She was on maternity leave throughout the whole of the period covered by the loyalty bonus.  The Appellant’s evidence was that they concluded that Mrs McLaughlin had been unable to meet the criteria because she had not been present at work to demonstrate commitment.  It was the fact of her not being present rather than the fact that her absence was by reason of maternity leave which was the cause of her not receiving the loyalty payment.

5	Mrs Green was absent sick from 20 November 1997 until the end of January 1998 from which time she was absent on maternity leave.  She did not receive a full loyalty payment but received one reduced to reflect the fact that throughout the period covered by the loyalty payment bonus she was present at work only for some six weeks.  For the remainder of the period her absence was either by reason of pregnancy-related illness or maternity leave.

6	The Tribunal decided that the Applicants were, through their absence on maternity leave and pregnancy related sick leave, both denied any effective opportunity of being considered for the loyalty bonus.  This was based substantially on the mere fact of their absence.  That the absence was due to pregnancy was relevant consideration and the failure of the Respondents to recognise the special status given to female employees in such circumstances amounted to an act of direct sex discrimination.

7	In coming to this decision the Tribunal had regard to the decisions, respectively, of the ECJ and the House of Lords in Webb v EMO Cargo (UK) Ltd, respectively, [1994] IRLR 482 (ECJ) and [1995] IRLR 645 (No.2 HL).  In each case the courts decided that the Respondent employers discriminated against the Appellant contrary to the Equal Treatment Directive 76/207 and the Sex Discrimination Act 1975 by dismissing her because she was found to be pregnant in circumstances in which she had been recruited for an unlimited term with a view, initially, to replacing another employee during the latter’s maternity leave.  This was the case even though she would not have been available for work at the time when the task for which she was recruited fell to be performed.  In such a case the fact that the reason she will be temporarily available for work at a time when, to her knowledge, her services will be particularly required is pregnancy is a circumstance relevant to her case, being a circumstance which could not be present in the case of a hypothetical man.

8	The Tribunal also relied on the case of Caisse Nationale d’Assurance v Thibault [1998] IRLR 399.  In that case the ECJ decided that a woman who is accorded unfavourable treatment regarding her working conditions, in that she is deprived of the right to an annual assessment of her performance and, therefore, of the opportunity of qualifying for promotion to a higher pay grade as a result of absence on account of maternity leave, is discriminated against on grounds of her pregnancy and maternity leave.  Such conduct constitutes discrimination based directly on grounds of sex within the meaning of the Equal Treatment Directive.

9	The first argument advanced by Mr Lock was that the Tribunal erred in law in failing to look exclusively at the terms of the scheme on its own but, rather, by looking at it in the context of the indefinite contract of employment.  In essence, his argument is that, if looked at separately, the scheme was one which provided for a definite payment for a definite purpose for a definite period.  He argued, therefore, that it was analogous to the situation described by Lord Keith in the case of Webb v EMO (No.2) in his speech delivering the judgment of the whole house.  In paragraph 7 he had said as follows:

“It is apparent from the ruling of the Court, and also from the Opinion of the Advocate-General, that it was considered to be a relevant circumstance that the appellant had been engaged for an indefinite or unlimited period.  … . The emphasis placed by the Court upon the indefinite duration of the appellant’s contract of employment suggests the possibility of a distinction between such a case and the case where a woman’s absence due to pregnancy would have the consequence of her being unavailable for the whole of the work for which she had been engaged.  Such a situation may be envisaged as capable of occurring where the work is of purely seasonal duration, if not in the more exotic situations suggested in my speech in the earlier proceedings ([1993] IRLR 27 at p.29), namely where staff is required for some specific event such as the Wimbledon fortnight or the Olympic games … . 
If such a situation does not fall to be distinguished, so that an employer who fails to engage a woman who, due to pregnancy, will not be available for any part of the period of the proposed engagement is to be made liable for wrongful discrimination, the result would be likely to be perceived as unfair to employers and as tending to bring the law on sex discrimination into disrepute.”

10	The Tribunal addressed this issue in their decision and concluded that:

“It does not address the case of a contract for an indefinite period being brought to a possible end by extended notice during a complex and protracted redundancy exercise. … .  It would be a radical extension of the possibilities expressed so cautiously by Lord Keith to say that the facts in the present cases could be treated as analogous to the applicants having been considered for a fixed-term contract.”

Mr Linden argues that the Tribunal were right in this conclusion.  He points out that the bonus scheme was intimately linked with the contract of employment.  It required the contract of employment to continue and it required the employee to do no more than comply with the terms of the contract of employment, namely to co-operate and show goodwill.  This was not the case of a contract, whether separate and specific or a block within a continuing contract, for the performance of a specific task which explicitly required the employee to be at work performing the task in order to qualify for the payment.  Rather this was a special scheme within a contract of indefinite duration offering a special loyalty payment for those who continued with the contract until a specific date.  As such it was subject to all the regular incidences of an indefinite contract of employment such as absence by reason of illness or leave for whatever purpose.  In that sense it was analogous to the contract the subject of litigation in Webb.  

11	In our judgment Mr Linden is correct in his analysis and so too was the Employment Tribunal.  It may be that, in a similar situation, a scheme could be devised by an employer which would operate separately from the contract of employment and require the employee to attend work to perform a specific task in order to qualify either for payment, or for employment under the special scheme.  That, however, is not this case.  In our judgment the Employment Tribunal were correct in concluding that this case fell within the mainstream principle established by Webb and Thibault and not within the exceptional category canvassed as a possibility by their Lordships in Webb.

12	It therefore follows that, contrary to Mr Lock’s second argument and relying on the decisions, respectively in Webb and Thibault, the fact that the reason for the Respondents’ absence from work, which disqualified them from receiving payment under the bonus scheme, was that they were either suffering from pregnancy-related illness or taking maternity leave was a relevant consideration to which the Tribunal was entitled to have regard.  In that case, therefore, the finding of the Employment Tribunal that in declining to pay the Respondents their loyalty bonus, the Appellant discriminated against them on the grounds of sex, was a decision which was correct in law and, accordingly, these appeals must be dismissed.