According to the Equal Opportunities Commission, over thirty years after the Equal Pay Act 1970 made it illegal to pay a woman less than a man for doing the same job, a pay gap of 18 per cent still exists between women and men working full-time. Incremental pay scales based on length of service can disadvantage women, who tend to have built up a shorter length of service either because of career breaks to look after children or because they are relatively new entrants into traditionally male-dominated professions.
In the recent case of Cadman v Health and Safety Executive (HSE) the courts had to consider whether the use of length of service as a criterion in a pay system requires justification if it disproportionately affects one sex.
The issue was whether the longer service of the male workers amounted to a genuine material difference for the purpose of setting pay rates and was therefore not a difference of sex for the purposes of the Equal Pay Act.
The case ended up in the Court of Appeal which remitted the matter to the European Court of Justice (ECJ) for clarification with regard to recent case law as to whether differences in pay based on length of service need to be objectively justified to be lawful and whether it makes any difference if the workers are full- or part-time.
The ECJ judged that as a general rule the criterion of length of service is appropriate to attain the legitimate objective of rewarding experience acquired which enables the worker to perform his or her duties better. An employer does not generally have to produce specific proof in order to justify the practice unless a worker provides evidence capable of raising serious doubts as to whether the link between pay and length of service is in fact rewarding experience which enables the worker to perform better. In that case, the employer must demonstrate the absence of unlawful discrimination.
The case will now go back to the Court of Appeal to decide whether the points raised by Mrs Cadman do amount to ‘serious doubts’ as to the appropriateness of the scheme which must be justified by the HSE.
To avoid problems of this nature, employers who operate a pay scheme linked to length of service should make sure they can justify paying those who do the same job different amounts. Pay increases based on length of service of five years or less are specifically permitted under the Employment Equality (Age) Regulations 2006. It remains to be seen exactly how this legislation will be interpreted with regard to service of more than five years in the light of the Cadman case.