Councils were obliged to set up their in-house service providers as ‘direct service organisations’ (DSOs) and could only use them where they successfully tendered against private contractors. In order to make this feasible, the DSO manager said costs had to be cut by 25% in the context of school food, so dinner ladies were given a pay cut. Ps (all women) claimed equal pay under s.1(2) EqPA, using male comparators from the Highways Dept (who the council had rated as providing work of equal value). HL said that the defence of ‘market forces’ due to the competitive tendering was not sufficient to show ‘material difference’ between the comparators. This seems to go against the Enderby decision which opened up the possibility of a market forces defence.
Lord Slynn: There is much debate on the relationship between s.1 EqPA and s.1 SDA. He says that the distinction between direct and indirect discrimination is not present in EqPA. Clearly women were being paid less than men for work that was rated the same. He said that the fact that the market (i.e. the DSO’s competitors) discriminated was not justification for DSO to do so, even where competitive pressures necessitated it. This is a ridiculous decisions: it is asking an employer to put itself at a disadvantage with a competitor, with the eventual result that it will lose the tendering process and its employees will lose their jobs. It makes no commercial sense.