HR leader wins landmark unequal pay case

Former Co-op board member was unfairly dismissed following ‘partially achieved’ performance rating, tribunal rules

An HR leader has won a landmark case for equal pay and unfair dismissal, after an annual review that ranked her performance as only ‘partially achieved’ led to her employment being terminated.

Samantha Walker (pictured centre), former chief HR officer of the Co-operative Group, was discriminated against by the appraisal process, Manchester Employment Tribunal ruled, though it rejected claims she had been dismissed for raising concerns about being paid less than male board members.

Judge Sherratt found Walker’s treatment in relation to the restructuring constituted direct discrimination on the grounds of sex. “Where they seem to have had performance issues, the comparators [male employees] were arguably not treated as harshly in their assessments as was the claimant,” he wrote in his judgment.  

Walker raised concerns about her pay to then CEO Richard Pennycook after she was appointed group HR director of strategic projects and joined a newly established executive team in 2014, when the business was facing significant financial turmoil. 

That year, she was given the title of chief HR officer, which was originally proposed with a base salary of £500,000. The group remuneration and appointments committee decided in 2014 to reduce Walker’s base salary to £425,000 because she was “newly promoted to the executive and unproven at that level, unlike everyone else on the team at that time.”  

When the company underwent a redesign of its grading system, Walker told Pennycook it was “not looking good from an equal pay perspective.” An independent assessment by Hay Group in January 2015 found the HR leader’s role to be equal to or above that of some male executives. 

Walker said she wanted her role recognised as having at least equal value to the rest of the board. Walker's counsel claimed that this statement carried the cleat implication that Mrs Walker was the victim of unequal pay. 

When she had not received her end-of-year review in December 2015, Walker reminded Pennycook she was the only woman on the executive with five men and pointed out she was earning 34 per cent less “than the nearest man.” 

On 17 December 2015, Pennycock called Walker and, the tribunal noted: “[He] told Mrs Walker that he did not think that [they] would authorise any more pay for her and suggested that she consider other roles such as the MD of [Co-operative] Funeralcare or ‘something’ with the Legal Services business.” 

Walker responded: “I told Richard I was flattered, however given the journey I had been on with my team and how much we had achieved, my heart was firmly in HR.

“This seemed to stump Richard for a moment and he said he wasn’t sure what else he could do. Thinking out loud, I said that what if I was to go part-time like other executive members but with no change in pay. I said that this wasn’t just about me wanting a pay rise per se, it was about me wanting to be recognised and valued alongside my male peers. Richard clearly understood that I was referring to the differences in our pay.” 

According to Walker, Pennycook had agreed to discuss this further in January 2016 but in that month, two dates for her year-end review were cancelled with no explanation. 

The judge noted: “Thereafter, their conversations were essentially about possible other roles rather than dealing with concerns over her existing role.” 

Walker said that despite there having been no formal meeting or discussion, Pennycook informed her that he had decided to rate her performance as “partially achieved”.  On 1 April 2016, she was given 12 months’ written notice of termination. 

Pennycook, who was named as a co-defendant, told the tribunal he had growing concerns about the claimant's ability to fulfil the role of chief HR officer, with alleged significant failings in various aspects of this work. She raised a grievance in June 2016. 

The tribunal ruled Walker’s work was equal to that of her named comparators, having been rated as equivalent in a job evaluation study, and that she was directly discriminated against on the grounds of sex in relation to her performance rating.

In a statement, the Co-op told The Guardian: “Whilst the tribunal upheld the unfair dismissal claim on procedural grounds, we are pleased it found the Co-op had substantial reasons for justifying the termination of Ms Walker’s employment.” 

Speaking to the same paper, Walker said the company had been found wanting and that she hoped it had changed as a result: “Going through this process has also revealed to me that the law is fundamentally flawed and must change.”

Croner associate director Paul Holcroft said: “This is a useful reminder of the importance of carrying out periodic pay reviews, or formal pay audits, and continual assessment of the reasons behind pay differences. Even if there is one, or many, material reasons explaining the pay difference at the time rates of pay are determined, employers need to determine whether these reasons remain relevant during the course of employment.”

Anthony Fincham, partner at CMS, said: “The case serves as a reminder of the consequence of any study which amounts to a job evaluation, and the difficulty of resisting its conclusions by relying on the material factor defence. Equal pay law accords a proper job evaluation study an almost infallible status and employers commissioning one should be fully alert to the fact that they are likely to be bound to implement the results.

“The case also serves as a reminder that certain claims run not only against the employer but also against the individual employee who may have been responsible for the matters in question. I do not imagine that the CEO had any inkling he was exposing himself to possible legal liability as he handled what must have been a challenging situation”.

Photo credit: Christopher Thomond/Guardian/eyevine