Pay by reference to length of service - Wilson v Health & Safety Executive [2008]

29 December 2008

Facts
Mrs Wilson was employed as an inspector for the Health & Safety Executive.  The employer operated a system which rewarded pay, in part, by reference to length of service. Mrs Wilson contended that this was a breach of the Equal Pay Act 1970.  She accepted that the nature of the job was one in which job performance would be likely to improve with experience in the first few years but disagreed with the employer as to how long that period should be. Mrs Wilson submitted that three years was appropriate and that the employer was not justified in applying service-linked pay over a ten-year period.

Employment Tribunal
The Claimant initially presented a claim for equal pay on 1 July 2002.   The Employment Tribunal (ET), in early 2003, found that the criterion of length of service had an unequal impact on female employees, as they would tend to have shorter service than males because of taking time off to have children and child care responsibilities. However, following the decision in the case of Cadman v Health & Safety Executive [2004] Mrs Wilson’s claim inevitably failed.  Cadman concluded that, following Handels-og Kontorfunktionaerenes Forbund Danmark v Dansk Arbejdsgiverforening (acting for Danfoss) [1989] ,it was not necessary for an employer to to justify service-linked pay.

Employment Appeal Tribunal
The Claimant appealed to the Employment Appeal Tribunal (EAT) and judgment was delivered on 19 December 2008.

The EAT held that, if the Health & Safety Executive was correct in its submissions in this case, the ECJ, in Cadman, “created a rebuttable presumption that the nature of the job is one which justifies pay being related to length of service in some way but, thereafter, an irrebuttable presumption that any relationship between pay and length of service, however apparently arbitrary and disproportionate it may be, is justified and beyond the scrutiny of the courts.  We think it unlikely that the court intended to adopt such a position”.  The EAT also stated that it did not see any rationale for limiting a case to the question of whether any application of the criterion is justified without also considering the particular way in which the criterion is applied.  The ET did not ask itself if it had serious doubts about whether the ten-year period that the Health & Safety Executive (HSE) had adopted was justified in light of the evidence produced by Mrs Wilson.

Significantly, the EAT Judgement poses the question "when will specific justification be required?".

The EAT commented, in response, that "the tribunal would have to be satisfied that, in light of the evidence adduced by the claimant, there is real reason to suspect that the employer has stepped beyond the margins which can properly be afforded to employers when considering whether added experience typically improves job performance".

Mrs Wilson's appeal succeeded and the EAT concluded that the matter should be referred back to the ET for a fresh Hearing.

Comment
Employers who have, relying upon the decision in Cadman, continued to operate a pay differential based on length of service must now consider whether the disparity in pay can be justified and, if so, on what grounds and for how long. Each case will depend on its own facts and the peculiarities of the particular industry and the specific requirements of the jobs that the employee and her comparators are employed to do will be relevant factors.