Employment Update January 2009: Equal pay

26 January 2009

Employment Group

Length of service does not necessarily justify pay differentiation

In Wilson v Health & Safety Executive the EAT considered an equal pay claim trying to interpret the ECJ decision in Cadman v HSE which said that an employer would have a defence to an equal pay claim and a differential in pay could be justified, if the employer showed that pay levels depended on length of service, provided that the job was one where experience would enhance performance. To succeed with a claim where an employer took this position, an employee would have to ‘provide evidence capable of raising serious doubts' about the employer's justification.

Now the EAT is saying that the ECJ has left it open to employees to query whether the job is one where length of service should be taken into account when fixing pay. They can also ask whether the period of length of service selected by the employer when operating its pay scales is appropriate. In this case the incremental pay scale covered a period of ten years. The case has now been remitted to the tribunal for the employees to see if they can raise ‘serious doubts’ as to whether that period is too long.

Points to note –

  • Employers should also be aware of para 32 of the Employment Equality (Age) Regulations 2006, which limits the extent to which employers can award benefits based on length of service without being liable for age discrimination.

  • Where an employee has been employed for over 5 years, the use of any length of service criterion against him/her which has the effect of denying him/her any benefit must be justified on statutory grounds or it will be unlawful. We shall be happy to advise further.