Farmah v Birmingham City Council: A warning for all multiple claims
Daphne Romney QC
Daphne Romney QC considers the recent far-ranging EAT decision of Farmah & ors v Birmingham City Council, a copy of which is available here.
Farmah does not just affect multiple equal pay claims brought in an Employment Tribunal (ET). It affects all multiple claims brought in an ET, for example TUPE and failure to consult or unilateral variation of terms leading to a deduction of wages. It affects any case where more than one claimant is named on the same claim form. It is therefore a case of immense importance and it demonstrates how the fees regime introduced in 2013 has radically affected issuing claims, as well as the catastrophic consequences of including more than one claimant on a claim form where “the same set of facts” do not apply to all of them.
These were five separate appeals combined primarily to decide three questions. First, what does “the same set of facts” mean for the purposes of rule 9 of the ET Rules 2013?; second, can the ET use its discretion to allow claims to proceed where rule 9 has not been complied with such that the wrong fees have been paid; third, if so, what principles should be applied in exercising that discretion?
The cost of issuing a claim form in the ET is expensive. The issue fee for a single claimant is £250; for 2-10 claimants it is £500; for 11-200 claimants it is £1000; and above 200 claimants it is £1,500. Multiple claims are considerably cheaper to issue where multiple claimants can be put onto the same claim form, particularly where the solicitors are acting on a no-win, no-fee basis in protracted litigation where, even if they succeed, payment of compensation is some time off. From experience, we know that equal pay cases are very protracted. For example, the local authority claims took over a decade in some cases.
Rule 9 of the Rules provides that:
Two or more claimants may make their claims on the same claim form if their claims are based on the same set of facts. Where two or more claimants wrongly include claims on the same claim form, this shall be treated as an irregularity falling under rule 6”.
After 2013 and the introduction of costs, rule 11(1) provides that the ET could reject claims where the correct fee was not paid and where there was an underpayment, rule 11(2) provides that the ET must give notice to the claimant and, if the additional amounts were not paid, could reject the claim. Rule 40 allows ETs to dismiss the claims where the proper fees are unpaid.
In equal pay claims, it has always been customary to issue multiple claims using one claim form. Usually these claim forms have been presented on behalf of many claimants carrying out different jobs and, in the case of claimants rated as equivalent with their comparators, in different grades and naming their comparators at different grades. As more and more claimants join in ongoing equal pay claims, fresh claim forms are then issued with more claimants on them. These claim forms can sometimes include the “piggyback” claims brought by men which are contingent upon the success of the female claimants. This is what was done in the five claims:
In ASDA v Brierley, 5,497 claimants were included in 22 claim forms with one claim form containing 1,568 claimants. The claimants did different jobs within the stores, including serving customers, in-house pharmacies, groceries and bakeries and checkout operators and whilst predominantly female, also contained male claims. The women claimed equal value with men working in the warehouse and distribution divisions. The ET heard that the estimated cost of issuing claims in accordance with the strict interpretation of rule 9 was some £650,000.
In Fenton v ASDA, there were 3 claimants on a single claim form, 1 male, again bringing equal value claims. They all did different work.
In Farmah v Birmingham City Council, the claimants did various jobs and claimed equal value with male manual workers. 23 of them were Flying Start Practitioners.
In Callaghan v Birmingham, there were 8 claimants on the same form. 2 were clerical assistants, the rest did different work.
In Sainsbury’s Stores v Ahmed, there were 192 claimants in all. 1 claim form, 4 women all did different jobs and 1 claimant included her previous job. In total there were 32 claim forms, including male claims.
The first issue for Lewis J was the meaning of the phrase “the same set of facts”. The ASDA claimants argued that there was sufficient similarity of the facts between all the claimants on the claim forms; they had the same employer, they were predominantly female, they were underpaid in comparison to their comparators, there was a “Single Source” controlling the retail division and the predominantly male warehouse and distribution divisions and there was no good reason for the pay disparity. They further submitted that they were all victims of historic inequality in pay by reason of gender occupational segregation and separate pay bargaining. Lewis J rejected that submission. There had to be the same set of facts; the claims of a checkout operator and someone working on the sales floor did not encompass the same set of facts (para. 88). This was because the essence of an equal pay case was that there had to be a comparison between the work done by the woman and the work done by the man; it followed that a claim by a checkout operator comparing herself to a male comparator was different from a claim by a sales floor assistant even against the same comparator. This follows the line of authority beginning with Redcar & Cleveland B.C. v Bainbridge [2009] ICR 133 where the Court of Appeal held that a claim against a new comparator was a new claim, as endorsed by Underhill J in Prest v Mouchel [2011] ICR 1345 (with the proviso that the substitution of one comparator for another where they did the same job did not constitute a new cause of action). Lewis J also reminded himself of the definition in Bainbridge of a cause of action (para. 217 of that judgment), namely “a factual situation the existence of which entitles one person to obtain a remedy”.
Lewis J declined to rely upon the jurisprudence relevant to earlier sets of ET rules given that the fees regime was new and there was a “changed landscape” (para. 79). Nor was he impressed by arguments based on the Overriding Objective.
It followed that the claimants must have the same set of facts applicable to all of them before they could be part of the same claim form under rule 9. The consequences of this are far-reaching. Piggyback claims cannot be included in claim forms brought by the male claimants for contingent claims. Claimants in different jobs and different grades cannot be included in the same claim form. Claimants with a different employment history, even if they now do the same job, cannot be included in the same claim form as those who have only ever done one job. Even more draconian is the fact that where one group of claimants have the same set of facts in common but are on the same claim form as other claimants who do not have those facts in common, the entire claim form cannot stand.
All might not be lost, however, because rule 6 provides that a breach of the rules does not mean that the proceedings are automatically void. It gives the ET discretion to take such steps as it thinks fit, such as waiving or varying the requirement.
Different Employment Judges in Brierley and Farmah and Callaghan had reached different conclusions on the ambit of that discretion. The former had held that the breach was not deliberate and so waived it under its rule 9 discretion; in Farmah and Callaghan, the Employment Judges held that it was the duty of solicitors to show rule 9 had been complied with and that, although not the breach was not deliberate, there had been no proper explanation given. Lewis J held that it was inappropriate for ETs to apply different tests and that legal representatives were under a duty to ensure that rule 9 was properly complied with (para. 104).
Lewis J then laid down guidance for the discretion to be exercised in such cases:
The ET must have regard to the seriousness of the breach, i.e. failure to pay the appropriate fees is a serious matter (para. 99).
The circumstances of the breach are important, for example if it was done knowingly to evade paying the full fees (para. 100).
The approach in Blockbuster v James [2006] IRLR 630 is not applicable where there is a breach of rule 9 because the test of persistent failure is not appropriate (para. 101).
“The real issue in my judgment is whether the failure to take sufficient care to ensure the claimants were including claims in a claim form which were based on same set of facts is a factor which points towards striking out the claim” (para. 102).
Other relevant factors include prejudice to the claimants and respondents.
The claims in Brierley were remitted for the ET to consider whether there was a justifiable reason for the claims being issued in breach of rule 9. In Farmah and Callaghan, the claims of those who did share the same set of facts on the same form were remitted for further consideration. The other cases were dismissed.
It now seems impossible for those issuing future claims under rule 9 to excuse themselves on the grounds that there was a good reason to put the claimants on the same form when the same set of facts rule did not apply to them. It follows that solicitors should take great care in issuing their claims because a desire simply to save money is not an excuse. The consequence of this is that issuing multiple claims will become very expensive where there is any difference at all in the employment history or work done by different claimants. Another consequence is that a great deal of frontloading will be necessary in issuing the claims in terms of obtaining the full facts and employment history from each claimant before deciding which claim to pair with whose. The smallest individual difference will mean that a single claim form will be required and in ET claims with thousands of claimants, this is a very sobering prospect. A still further consequence is that those claimants who are out of time on dismissal of their claims will not be able to re-issue them because, unlike other discrimination claims, there is no discretion to extend time in equal pay claims. Meanwhile those re-issuing claims must pay new fees all over again.
It should be noted that this debacle could have been avoided had the Government heeded calls to allow class actions from the beginning, rather than selecting representative claims under the Rules.
This case is bound to be appealed, given the enormous financial ramifications. Watch this space.