Length of Service and Equal Pay / Maternity Leave and Continuing Obligations (Updates)

Men tend to have longer service than women. Pay scales which reward length of service will therefore tend to benefit men more than women. One of the surprising features of the recent case of HSE v Cadman is that this is apparently the first case in which that proposition has been challenged under the Equal Pay legislation, at least at appeal level. Ms Cadman was paid between £4,000 and £9,000 less than her longer serving male comparators in the same grade, doing the same job. It was accepted that the pay structure, with increments based on length of service, was indirectly discriminatory. Was it justified?

Surprisingly, the Employment Appeal Tribunal ruled that where a pay differential was based on service, no further justification was required. They followed an ECJ decision, Danfoss . They therefore avoided exploring the difficult though familiar arguments, legally untested, of whether service based differentials can actually be objectively justified in a particular case. Does service equate to experience, and if so, does experience justify the differential? Do turnover rates justify an increment in order to retain staff? Finding the evidence to support these arguments can be difficult (and the HSE struggled in this case),especially as all of the difference has to be justified: it is not enough to show that some differential is appropriate. Ms Cadman may have been worth less than her male colleagues because of her shorter service, but £9,000 less?

Other European cases have suggested a more rigorous approach than Danfoss. Bilka-Kaufhaus requires measures which have a disproportionate impact on women to be based ?on objectively justified factors unrelated to any discrimination on grounds of sex ?. Arguably, length of service is a factor tainted by its discriminatory impact: women take more career breaks than men, for childbirth and caring responsibilities. In addition, in Rainey, the House of Lords held that the employer must show the measures chosen ?correspond to a real need on the part of the employer, are appropriate with a view to achieving the objectives pursued and are necessary to achieve that end ?.

Practical Implications

At the moment, and subject to any appeal, pay scales with service increments need not be justified further under the sex discrimination legislation. However, the arguments will have to be faced once age discrimination regulations come into force in 2006. The government proposes an exception to allow service...