On 20 October the court held that employers will need to have good reasons for using this type of pay scheme if it means women doing the same work as their male colleagues are significantly underpaid.
The professionals’ union Prospect has been representing two members, Christine Wilson and Bernadette Cadman, in equal pay cases against the Health and Safety Executive (HSE), which have been running for over eight years. Prospect will now use today’s judgement in another 80 tribunal claims it is pursuing on similar grounds against a number of Civil Service departments and agencies. These cases had been stayed pending the outcome in the Court of Appeal.
Length of service or incremental pay schemes, widely used in both the public and private sectors, tend to disadvantage women who generally work for employers for shorter periods than men, due to breaks to bring up their families or where they are later joiners to traditionally male jobs.
HSE has long pay scales structured in a way that makes movement up the scale very slow with the difference in pay between women claimants and their male comparators amounting to several thousand pounds per year.
Today’s decision clarifies the ECJ’s judgment in the ‘sister case’ of Bernadette Cadman v HSE, and emphasises that challenges to these pay schemes are permissible where the scheme is inappropriate, for example, where length in service continues to be rewarded beyond the period it could be argued that it brings extra expertise to the role.
Reacting to the decision, Christine Wilson said: “I am delighted by the result. We have successfully challenged the injustice of women being undervalued at work. I am very grateful to the union, I simply could not have taken the case without their support.”
Paul Noon, General Secretary of Prospect, said: “Prospect is wholly committed to the battle for equal pay. This hard-fought but ground-breaking case should make it easier for justified claims based on length of service to succeed with any employer.”
Emma Hawksworth, a partner in Russell Jones & Walker’s employment law team, who represented Christine Wilson at the Court of Appeal said: “Length of service pay scales are widely felt to be part of the equal pay problem in this country.
“The Court of Appeal’s judgment in Christine Wilson’s case has confirmed that employers cannot continue to structure pay scales in this way where that is inappropriate and leads to women being paid less to do the same jobs as men. Employers need to give careful thought as to whether extra years in the job really do lead to better performance and if so for how long.”
The Equality and Human Rights Commission, which made representations in the case, also argues that length of service pay schemes are a key factor in the continuing gender pay gap.
The history behind today's decision
Bernadette Cadman began a challenge to the scheme in 2001 when she made her claim for equal pay to the Employment Tribunal. Christine Wilson started her claim in 2002. In both cases the employment tribunals who first heard the claims agreed that HSE’s pay scheme disadvantaged women, and that the schemes were not being used appropriately. These decisions have been subject to several appeals, and the important issues they raise have been considered by many different courts and tribunals.
The key legal issue is whether or not the employer is required to provide good reasons to justify the length of their pay scales in cases where they disadvantage women. European case law at the time the claims began suggested that challenging the use of length of service in pay schemes was not permissible at all.
However the issue was considered again by the European Court of Justice in Bernadette Cadman’s case in 2006. In a widely publicised decision, the ECJ ruled that the employer was required to justify its use of length of service linked pay schemes where the claimant provides ‘evidence capable of giving rise to serious doubts’ as to the appropriateness of the pay system.
Christine Wilson’s case was the first time since the Cadman decision that an Employment Tribunal had to consider a length of service challenge and apply the new ‘serious doubts’ test.
The tribunal, which heard her case again in 2007, ruled that it would only be possible to establish serious doubts about a pay scheme in very few cases and only when the claimant could show it was completely inappropriate to use length of service at all.
In many roles there is an initial period where experience in the job improves performance. However, the key question in most of these cases is the length of time for which it is appropriate to continue to reward time in the role, irrespective of whether that adds value for the employer.
Christine Wilson, with the support of Prospect, appealed to the Employment Appeal Tribunal (EAT). The EAT found that the Employment Tribunal had been too restrictive and held that in challenges to the appropriateness of the pay system, the length of the pay scale is a factor which can be considered as well. However, the EAT went on to say that the hurdle for the claimant at this initial stage is still fairly high and there must be clear evidence that serious doubts are raised.
HSE appealed against this judgement to the Court of Appeal, and Christine Wilson cross-appealed on whether the ECJ judgment had been correctly interpreted by the EAT
Court of Appeal
The case was heard in the Court of Appeal on June 18 –19. Christine Wilson was represented by Dinah Rose QC and Ben Cooper of Counsel, who were instructed by Emma Hawksworth of Russell Jones & Walker.
The Court of Appeal agreed with the EAT that challenges to pay scales can include claims where the pay scale is argued to be too long. It also found that the serious doubts hurdle was set too high by the EAT, and that the test is a low one, a ‘filter on claims’. In her judgment Lady Justice Arden emphasised that the right to equal pay is a fundamental principle and that:
“The need to protect rights arising from the use of service-related criteria is not an academic question, as it is common ground that women are often disadvantaged by the use of such criteria in pay schemes.” (paragraph 35)
As a result of this clarification of the way in which the serious doubts test is to be applied, it will be easier for employees to challenge the way in which their employers’ pay schemes reward length of service. Schemes which disadvantage women and which can be shown to be inappropriate will now have to be fully justified by employers.
The union recognises that there may be justifiable differences in pay to reflect experience and a real learning curve in employment. But it has always argued that the employer should be required to objectively justify any significant difference in pay that has a disproportionate impact by gender and that very long scales could not be justified. Today’s judgement means that employers cannot evade addressing this question.