Cadman vs Health & Safety Executive

More that 30 years after the Equal Pay Act and in the year that the Sex Discrimination (NI) Order marks its thirtieth anniversary, the gender pay gap is still very much in the picture. Ursula O’Hare, head of policy at Law Centre (NI), reviews the judgement in Cadman v Health & Safety Executive (Case C-17/05, judgment of 3 October 2006), a recent case on unequal pay arising from the application of a length of service condition, and argues that this judgement may make it difficult for women to challenge unequal pay.

Last year was an important year for sex equality. 2006 marked the thirtieth anniversary of the Sex Discrimination (NI) Order 1976 and the thirtieth anniversary of the enactment of the Equal Treatment Directive by the European Economic Community (as it was then). The Equal Pay Act and the Equal Pay Directive are also now more than 30 years old. Many advances in sex equality law have been brought about in the intervening years by individual challenges to workplace practices relying on these provisions. The case law of the ECJ has been instrumental to much of this positive change.

2006 also was marked by the publication of two key policy developments on sex equality at both national and European level. The Women and Work Commission Report, published by the DTI, drew attention to the ‘pay and opportunity gap’ between men and women and made a number of important recommendations aimed at bringing about positive change. It did not, however, recommend mandatory pay audits to address the enduring pay gap between male and female earnings. Meanwhile, the European Union published its Roadmap for Equality between Men and Women for 2006 – 2010: an action plan to address remaining inequalities, including the gender pay gap. Further, the EU designated 2007 as European Year of Equal Opportunities. Despite this policy focus on sex equality at national and European level, inequality in pay between men and women remains stubbornly persistent. Figures for the EU as a whole show that, on average, women earn 15% less than men for every hour worked.
In case law, 2006 witnessed the ruling of the European Court of Justice in the long-running Cadman case. Cadman afforded the Court of Justice the opportunity to revisit aspects of its earlier jurisprudence on equal pay in relation to length of service requirements. As explained below, the judgment is, in some aspects, disappointing.

In Cadman v Health & Safety Executive [2006], the European Court of Justice was asked, in an equal pay dispute, to consider the lawfulness of a length of service condition in a pay scale where it was shown that more women than men had shorter service with their employer. The key question in this case was whether an employer has to justify the use of a length of service criterion in determining pay where it is shown that such a criterion may have an adverse impact on women. The decision in the Cadman case has clarified that a length of service condition in a pay scale, which may adversely impact on women, does not automatically require justification by an employer. However, an employer will be required to provide ‘objective justification’ for applying a length of service criterion where an employee provides evidence capable of raising serious doubts about the appropriateness of such a criterion.

Background

The case was referred to the European Court of Justice by the Court of Appeal after lengthy litigation before the English courts. Mrs Cadman was employed as a senior inspector with the Health and Safety Executive (the Executive). She was paid less than four of her male colleagues who performed the same job because the Executive’s pay scheme rewarded length of service (Cadman’s male comparators all had longer service than Cadman, although some of this service was acquired in more junior posts). She lodged a claim for equal pay claiming that the Executive’s reliance on length of service as a condition for determining pay was indirectly discriminatory because fewer women than men could comply with the condition due to interrupted career patterns (commonly associated with child care or other family commitments). Under European sex equality law, an employer is required to prove that a practice or condition that has an indirectly discriminatory impact on women is objectively justified for reasons unrelated to any discrimination based on sex and that the means chosen to achieve that objective are appropriate and necessary for that purpose. Relying on the Equal Pay Act (1970); Article 141 EC and Directive 75/117 (Equal Pay Directive) which enshrine the principle of equal pay without discrimination on the grounds of sex, Cadman argued that the Health and Safety Executive was required to provide objective justification for the use of the length of service criterion.

The Employment Tribunal found in favour of Cadman’s claim. The Executive appealed this decision to the Employment Appeal Tribunal (EAT) who upheld the appeal. Cadman then appealed the EAT’s decision to the Court of Appeal. At issue before the Court of Appeal was the question of the proper interpretation of the European Court of Justice’s case law on equal pay. The Court of Appeal therefore stayed proceedings and referred the question of the proper interpretation of Community law to the European Court of Justice.

European Court of Justice

The European Court found that the application of a length of service criterion does not automatically require justification. The key part of the court’s judgement is as follows: ‘since, as a general rule, recourse to the criterion of length of service is appropriate to attain the legitimate objective of rewarding experience acquired which enables the worker to perform his [sic] duties better, the employer does not have to establish specifically that recourse to that criterion is appropriate to attain that objective as regards a particular job, unless the worker provides evidence capable of raising serious doubts in that regard’ [para. 44].

In coming to this conclusion, the court drew on its earlier decision in Danfoss [1989]. In Danfoss, the court had ruled that although length of service as a criterion for determining pay may involve less advantageous treatment of women than of men, ‘an employer does not have to provide special justification for recourse to that criterion.’

Comment and implications

A number of points are worth noting about this judgment. First, although the court drew on its earlier decision in Danfoss, it did not give consideration to its decision in Nimz [1991] which Cadman argued had called into question the Danfoss decision. In Nimz, the court ruled that a length of service condition which disadvantages part-time workers was indirectly discriminatory and requires justification by the employer by reference to the nature of the work performed and the experience gained from the performance of the work. It is unfortunate that the court did not clarify its position in this case in relation to the NImz argument as regards part-time workers.

Second, it is important to note that the ruling does not provide blanket immunity to employers relying on a length of service criterion in their pay practices as it is open to employees to challenge the application of such a criterion in the context of a particular job. Prudent employers will ensure that length of service can be justified in the relevant circumstances. For some jobs, it may be difficult for employers to rely on a presumption that length of service is an appropriate basis upon which to determine pay. It is highly unsatisfactory, however, to require employees to adduce evidence that is capable of raising serious doubts about the appropriateness of a length of service condition for determining pay. Equal pay cases are notoriously difficult to pursue and the difficulties of this approach were recognised by the Advocate General in the case. The Advocate General argued that there is no reason ‘why the employee should bear the burden of demonstrating that a wholly disproportionate weight is given to the length of service criterion instead of the employer having the burden of proving that the system is in fact proportionate.’ Such an approach, he argues, is contrary to the principle of the Burden of Proof Directive which requires an employer to establish justification for the application of an indirectly discriminatory condition.

Third, it is as yet unclear what evidence courts will require from claimants to establish ‘serious doubts’ about the legitimacy of a length of service condition. Finally, it will be recalled that the new Age Discrimination Regulations only permit the use of length of service rewards up to a period of five years. How this decision sits with the provisions for length of service awards in the age regulations is unclear.

Prospect, the union which supported Cadman’s case, is undeterred by the decision of the Court of Justice. Prospect is continuing to support Cadman and is pursuing more equal pay cases on this point. The Equal Opportunities Commission, which had submitted evidence before the Court of Appeal that as a whole, the length of service of women workers is less than that of male workers and that the use of a length of service condition in pay scales plays a part in the pay gap between men and women workers, has highlighted the importance of the possibility of challenges by women who can provide evidence that pay awards based on length of service are not appropriate in all the circumstances of the job being performed.

The Advocate General in this case commented that, if a length of service criterion was accepted as a general justification for a pay system which was shown to disadvantage women, there would be ‘virtually no scope … for an employee to challenge a pay system.’ The Court has not gone this far, but it should not be anticipated that a claim of unequal pay arising from the application of a length of service condition will be other than burdensome for claimants to establish in certain circumstances. This is disappointing given the persistence of the gender pay gap across European labour markets.

The case has now been referred back from the Court of Justice to the Court of Appeal for determination.