Wilson v Health & Safety Executive
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Rimer,Lord Justice Sedley |
| Judgment Date | 20 October 2009 |
| Neutral Citation | [2009] EWCA Civ 1074 |
| Docket Number | Case No: A2/2009/0167 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 October 2009 |
[2009] EWCA Civ 1074
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE EMPLOYMENT APPEAL TRIBUNAL
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Sedley
Lady Justice Arden and
Lord Justice Rimer
Case No: A2/2009/0167
Ms Jennifer Eady QC & Mr Robert Moretto (instructed by Treasury Solicitor) for the Appellant;
Ms Dinah Rose QC & Mr Ben Cooper (instructed by Russell, Jones & Walker for the Respondent);
Mr Robin Allen QC & Ms Dee Masters (instructed by the Equality and Human Rights Commission (Intervener))
Hearing dates : 18/19 June 2009
Lady Justice Arden:
This appeal requires us to determine two fundamental questions affecting equal pay claims arising out of the use of a service-related criterion as a determinant of pay: does the employer have to provide objective justification for the way he uses such a criterion, and, if so, in what circumstances? Service-related pay scales, that is, pay scales where increases in pay are dependent on years of service (or a “length of service criterion”) are common. It is well established that as a general rule an employer does not have to provide special justification for the decision to adopt such a criterion because the law recognizes that experience enables an employee to work better, and thus that rewarding experience is a legitimate aim of pay policy. The issues on this appeal are of great practical importance to employers and to women in employment. This is particularly so where service-related pay scales were set some years ago, and for reasons which are not now very clear.
Service-related pay scales often have different effects on men and women. According to the Equality and Human Rights Commission (“the Commission”), which has been permitted to intervene in this appeal, service-related pay scales:
“will frequently, and perhaps ordinarily have an adverse impact on women who are less likely than men to have unbroken employment records, because of the disproportionate responsibility for family caring.”
The equal pay legislation does not specifically refer to service-related pay schemes. The jurisprudence surrounding equal pay issues arising out of service-related schemes is at an early stage of development.
Equal pay legislation is ultimately derived from article 141 of the European Union Treaty (“the Treaty”). It is a fundamental principle of the Treaty that there should be equal pay for equal work, or work of equal value, for men and women. There have been a number of European directives, which, so far as relevant, have principally been implemented by the Equal Pay Act 1970 (“the 1970 Act”), as amended from time to time. In Cadman v Health & Safety Executive [2006] ICR 1623, the Court of Justice of the European Communities (“the Court of Justice”) described the general scheme of Community law on equal pay in the following terms:
“The general scheme arising from Article 141(1) EC
27 Article 141(1) EC lays down the principle that equal work or work of equal value must be remunerated in the same way, whether it is performed by a man or a woman: Lawrence v Regent Office Care Ltd ( case C-320/00) [2003] ICR 1092, para. 11).
28 As the Court held in Defrenne v Sabena ( Case 43/75) [1976] ICR 547, para. 12, that principle, which is a particular expression of the general principle of equality which prohibits comparable situations from being treated differently unless the difference is objectively justified, forms part of the foundations of the Community (see also case Brunnhofer v Bank der österreichischen Postsparkasse AG ( Case C-381/99) [2001] ECR I-4961, para. 28, and Lawrence, para 12).
29 Furthermore, it must be recalled that the general rule laid down in the first paragraph of Article 1 of Directive 75/117, which is principally designed to facilitate the practical application of the principle of equal pay outlined in Article 141(1) EC, in no way alters the content or scope of that principle (see Jenkins v Kingsgate (Clothing Productions) Ltd (Case 96/80592, para. 22). That rule provides for the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration for the same work or for work to which equal value is attributed: Rummler v Dato-Druck GmbH ( Case 237/85) 2101, para. 11).
30 The scope of Article 141(1) EC covers not only direct but also indirect discrimination (see, to that effect, Jenkins, paras 14 and 15, and Elsner-Lakeberg v Land Nordrhein-Westfalen ( Case C-285/02) [2004] ECR I-5861, para. 12).
31 It is apparent from settled case law that Article 141 EC, like its predecessor Article 119 of the EEC Treaty (which became Article 119 of the EC Treaty – Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 EC to 143 EC), must be interpreted as meaning that whenever there is evidence of discrimination, it is for the employer to prove that the practice at issue is justified by objective factors unrelated to any discrimination based on sex: see, to that effect, inter alia, Handels – og Kontorfunktionoerernes Forbund I Danmark v Dansk Arbejdsgiverforening, acting on behalf of Danfoss ( Case 109/88) [1991] ICR 74, paras 22 and 23; Kowalska v Freie und Hansesradt Hamburg ( Case C-33/89) [1992] ICR 29, para. 16, Hill v Revenue Comrs ( Case C-243/95) [1999] ICR 48, para. 43, and Schönheit v Stadt Frankfurt am Main (Cases C-4 and 5/02) [2003] ECR I-12575, para. 71.
32 The justification given must be based on a legitimate objective. The means chosen to achieve that objective must be appropriate and necessary for that purpose: see, to that effect Bilka-Kaufhaus Gmb H v Weber von Hartz, ( Case 170/84) 110, para. 37.”
The original reason why the Community adopted the principle of equal treatment in relation to pay was so that those countries which observed a principle of equal pay would not be at a competitive disadvantage as compared with those countries which did not adopt the same principle. Community law now also reflects the fact that equal pay is seen as a social objective in order to ensure equality for all citizens.
The course I propose to adopt in this judgment is to set out the background and then the legal framework. I will then set out the core issues to be decided in this appeal. After that I will take each issue separately, analysing the decision of the Employment Appeal Tribunal (“EAT”) under appeal and the submissions of the parties and the Commission.
In this judgment, the word “adoption” refers to the initial act of an employer in establishing pay scales which incorporate a service-related criterion, as opposed to the word “use” or “application” of a service-related criterion, which refers to the post-establishment implementation of such a criterion in the operation of those pay scales.
BACKGROUND – THE HISTORY OF THIS CASE
The background can be shortly stated. Mrs Wilson, the claimant, was employed as a band 3 inspector by the appellant, the Health & Safety Executive (“HSE”). She made her claim for equal pay as long ago as 2002. Her pay was governed by a pay scheme which in part fixed increases in pay according to length of service over ten years, after which time no further increases were awarded. She was paid less than three employees selected as comparators, whose work was rated as equivalent with hers for the purposes of s 1(2)(b) of the 1970 Act. At a hearing in 2003, the tribunal (Mr G.H. Prichard, Ms A Sinclair and Mr L Holbrook) found that the length of service criterion had a disparate impact on female employees because they would tend to have shorter service than males because of career breaks to have children and, in some cases, because of commencing employment at a later date than would otherwise have been the case because of childcare responsibilities. The tribunal also considered whether the service-related pay was objectively justified. The dispute between the parties was not the fact of the adoption of a length of service criterion but the way the length of service criterion was applied. Mr Strawson, a trade union official who gave evidence on Mrs Wilson's behalf and was himself an HSE officer, considered five years was the right level. The actual band adopted by the HSE was ten years, which was the period contended for by them. The HSE also argued that as a result of Danfoss Handels-og Kontorfunktionaerernes Forbund i Danmark v Dansk Arbejdsgiveforening acting on behalf of Danfoss (referred to below as “ Danfoss”) [1989] IRLR 532, it was to be assumed that service-related benefits were justified and that they did not have to justify any difference in pay between men and women in any event.
However, before the tribunal in this case gave judgment, the EAT (HHJ Burke QC, Mr B Benyon and Miss S M Wilson) in Cadman v Health & Safety Executive [2004] ICR 378 (which concerned employees at the HSE in a different band) held that Danfoss meant that an employer did not have to provide special justification for a pay difference resulting from the application of a length of service criterion. In those circumstances the tribunal in Mrs Wilson's case held that her case had to fail. However, they went on to hold that if they had not been required so to hold they would have found that the ten-year period was not justified. They agreed with Mr Strawson that five years was the appropriate period. They recognised that the evidence was limited and anecdotal. The tribunal made it clear that there was no absolutely correct answer and that there was a margin within which...
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