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07/10/2006

All shall have prizes

On 3rd October, the European Court released its judgement in Cadman v HSE. Few people can have missed this as, for instance, there were large articles in the Guardian and the Times. Moreover, few people can miss that these articles draw deeply divergent conclusions from the judgement, because the headlines are a bit of a give-away.

Did Cadman win or lose? Does this change everything or nothing? Well, let’s look at the judgement. These were the questions referred:

(1) Where the use by an employer of the criterion of length of service as a determinant of pay has a disparate impact as between relevant male and female employees, does Article 141 EC require the employer to provide special justification for recourse to that criterion? If the answer depends on the circumstances, what are those circumstances?

(2) Would the answer to the preceding question be different if the employer applies the criterion of length of service on an individual basis to employees so that an assessment is made as to the extent to which greater length of service justifies a greater level of pay?

(3) Is there any relevant distinction to be drawn between the use of the criterion of length of service in the case of part-time workers and the use of that criterion in the case of full-time workers?

And the answer…

It follows from all of the foregoing considerations, that the answer to the first and second questions referred must be that Article 141 EC is to be interpreted as meaning that, where recourse to the criterion of length of service as a determinant of pay leads to disparities in pay, in respect of equal work or work of equal value, between the men and women to be included in the comparison:

– 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 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;

– where a job classification system based on an evaluation of the work to be carried out is used in determining pay, there is no need to show that an individual worker has acquired experience during the relevant period which has enabled him to perform his duties better.

The third question referred for a preliminary ruling

In the light of the answer given to the first and second questions, there is no need to answer the third question.

As far as I can see, this means that length of service can be taken to be equivalent to development of skills, and therefore rewarded, except where, you know, it isn’t, but it is up to the employee to show that it shouldn’t be.

Oh, and experience is experience, so part-time/full-time, feh, presumably meaning experience is gained pro rata.

What a glorious judgement. Pay increments are justifiable on the basis of skills developed over time, except if they are not – where a worker can provide evidence raising serious doubts. Then the employer must prove length of service pay increases are on the basis of increased skill.

This amounts to ‘there isn’t a problem, except where there is, and it should be obvious where there is a problem, but we’re not going to tell you’. A classic European judgement. All shall have prizes and the Court of Appeal and perhaps the Tribunal will have to pick its way through this particular case.

And then, in chicken little mode, British lawyers apparently suggest that service related pay increments will fall foul of the age discrimination law anyway. Why?

Surely experience is not necessarily related to age. One could be newly started in a specific role at 50 or have significant experience in one’s mid 20s. If the European Court sees a valid equation between period of service and experience/skill gained, then it is hard to see why additional pay for additional experience would be an age discrimination issue, per se. Of course it certainly could be, but possibly that would require, as with this judgement, that some evidence that service related pay was not related to increased skill could be adduced by the claimant.

The figure of 5 years has been bandied around in the Times and the Guardian as the limit for ‘valid’ experience related pay increases, but without any basis that I can see, either in this judgement or the English age discrimination statute. Granted, it is arguable that any increase in skill hits a terminal peak after a certain number of years, but I would be surprised to see a single, arbitrary, cut off point enforced.

[Edit. Silly lazy me, of course the 5 year exemption is in the EE(A)R themselves at 32. After 5 years it must reasonably fulfill a business need – loyalty, motivation, reward experience.]
I wish I was an employment lawyer at this point. There appears to be much fun to be had.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

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