Equal Pay and Discrimination Claims – A New Reality for Guernsey

The reality remains people may know or claim to know what goes on within law firms and/or what different people get paid sometimes for doing the same job, but rarely does the outside world get the chance to see it first-hand. As such the recent judgment published by the Guernsey Employment & Discrimination Tribunal in the case of Katherine Hitchens v Babbé LLP, brought by its former head of corporate against the law firm, alleging constructive dismissal and sex discrimination in relation to pay has been illuminating on a number of levels.

Constructive dismissal claim

The background to the case involves allegations by another male partner of the firm against the claimant of sexual assault. Because of the nature of the allegations the firm took the decision to appoint an external UK based investigator to look into the matter, however the Tribunal was scathing in its judgment of the manner in which this was handled even though it ultimately cleared the claimant of wrongdoing. In particular, the Tribunal drew attention to the lack of any terms of reference of the investigation, the exclusion of the firm’s HR department from the process, a lack of confidentiality in the investigation, the delay in the process, the inconsistent way in which the parties were handled during this time, and the failure to recognise the need for the claimant to seek to restore her standing after its conclusion.

Ultimately, the Tribunal reached the conclusion that because of the manner that the firm had conducted the investigation this amounted to a fundamental breach of the implied term of trust and confidence, and as a result upheld her complaint of constructive dismissal. As with any judgment it is possible to perhaps take issue with particular points, but a few clear themes emerge. The first of these is that the starting point for employers, even in difficult cases you should use your internal procedures wherever possible, however, if you are going to depart from it (which arguably may have been justified in the circumstances), it should have been agreed between the parties at the outset. The other two points employers should note is the need for confidentiality and importance of avoiding delay, both of which from experience are two of the most common failings in investigations.

Equal pay claim

Whilst the headline grabbing aspects of this claim may have been the constructive dismissal complaint, of far more long term importance was the pay discrimination claim. Unlike the UK, neither Guernsey, nor for that matter Jersey, have specific equal pay legislation, rather claims have to be framed around the traditional principles of either direct or indirect discrimination on the grounds of sex. This is obviously a challenging area, not least because even in the UK equal pay claims are notoriously technically complex, and here the Tribunal did not have any real case law to fall back on, this being one of the first major equal pay claims brought in the Channel Islands with both parties being legally represented.

In bringing her claim, the claimant as head of the corporate team, sought to rely on the head of a different department as a male comparator whose pay was 57% higher than her own. Based on the fact that they both were at the same level of the hierarchy within the firm, had similar responsibilities in managing budgets, and responsible for monitoring the performance of their team, the Tribunal concluded that this individual was an appropriate comparator. The Tribunal then went on to consider whether the difference in remuneration could be justified by reference to various factors put forward by the firm, including his time in the role and past successes. However, the Tribunal rejected these arguments, noting that the firm had given no thought whatsoever to the issue of achieving equality of pay between genders in the same role. In reaching its conclusion that there was discrimination in this instance, the Tribunal drew inferences from substantial pay awards which had previously been given to male colleagues, in comparison to the claimant.

Whilst there are technical points within the decision which mean an appeal may well arise in this case (and as a consequence it would be inappropriate to comment on the specific findings), there are important points of principle for all employers to consider. Unfortunately, too many businesses in the Channel Islands only pay lip service to the #MeToo movement and the need to address the gender pay gap, and many do not even do that much. This case serves as a timely reminder that the world is moving on, not least as the States of Guernsey has recently approved the introduction of new equality legislation, which will eventually include specific equal pay legislation, not only giving employees the ability to claim equality with individuals who perform the same jobs, but also those who are classed as performing jobs of equal value. The new law should come into force in 2022, although the provisions relating to work of “equal value” are not due to be introduced until 2027.

This case amply highlights the need for employers to understand issues around pay and equality, and the position can perhaps be most neatly summed up in one passage in the judgment:

“It is for the employer to defend what they believe is equitable pay for their employees, however, in the case where pay policy is not defined this is difficult to defend.”

Enough said.