ADE/13/41 DETERMINATION NO. EDA1429
SECTION 83, EMPLOYMENT EQUALITY ACTS, 1998 TO 2011
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
(REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION)
- AND -
CATHERINE MC DONNELL, BRIDGET O'DONOUGHUE, SHARON MC DONNELL, NOELEEN NOONE & ANNETTE GLASS
(REPRESENTED BY JOHN KANE, ASSISTED BY CLAIRE BRUTON B.L., INSTRUCTED BY MC ENROE SOLICITORS)
Chairman : Mr Duffy
Employer Member : Ms Doyle
Worker Member : Ms Tanham
1. Appeal under Section 83 of the Employment Equality Acts, 1998 to 2011.
2. The Workers appealed the Decision of the Equality Officer dated 23rd July, 2013 to the Labour Court on the 2nd September, 2013. Labour Court hearings took place on the 16th January and concluded on 5th July, 2014. The following is the Court's Determination:-
This is an appeal by Catherine McDonnell, Bridget O’Dohoghue, Sharon McDonnell, Noeleen Noone and Annette Glass, (referred to herein as the Complainants) against a Decision of the Equality Tribunal given under the Employment Equality Acts 1998-2011 (the Act). Each of the Complainants was employed by SIPTU (referred to herein as the Respondent) in administrative or clerical positions. They worked part-time as job-sharers. They left their employment when they accepted voluntary redundancy under a scheme introduced by the Respondent with an association representing its staff.
The claim relates to the terms of that voluntary redundancy scheme. In particular, it relates to the imposition of a cap on the monetary amount that a departing employee could obtain under the scheme equal to three times their then current annual salary. The Complainants had their redundancy payments caped at three times their actual annual salary. They contend that a cap of three times the salary applicable to their grade should have applied (the salary payable to a person working full-time in the grade).
The claim is taken on the gender, marital status grounds and family status grounds.
The claim was referred to the Equality Tribunal as one of equal treatment and was dealt with by the Equality Tribunal as such, without objection by the Respondent.
The appeal came on for hearing before the Court on 16th January 2014. At the opening of the hearing the Court raised with the parties the question of whether the claims should properly be classified as involving equal pay rather than equal treatment. The parties requested time to consider this point and to make supplemental submissions on the correct classification of the case.
Submissions on this question were subsequently received from both parties and the hearing was resumed on 15th July 2014. At the resumed hearing the Complainants were represented by Mr John Kane assisted by Ms Claire Bruton B.L, instructed by McEnroe, Solicitors. The Respondent was represented by Mr Tony Walsh and Mr Eamon Lawless.
It was agreed that the Court should deal with the classification question as a preliminary issue.
The Court is grateful to both parties for their careful and comprehensive submissions on the legal principles arising in this case.
Equal Pay / Equal Treatment
It is noted that Counsel for the Complainants properly and fairly conceded at the outset that if the within claim does involve equal pay rather than equal treatment in conditions of employment the matter is not properly before the Court.
Section 8 of the Act prohibits discrimination in respect to conditions of employment. It provides at Subsection (6): -
(6) Without prejudice to the generality of subsection (1), an employer shall be taken to discriminate against an employee or prospective employee in relation to conditions of employment if, on any of the discriminatory grounds, the employer does not offer or afford to that employee or prospective employee or to a class of persons of whom he or she is one—
(a) the same terms of employment (other than remuneration and pension rights),
(b) the same working conditions, and
(c) the same treatment in relation to overtime, shift work, short time, transfers, lay-offs, redundancies, dismissals and disciplinary measures,
as the employer offers or affords to another person or class of persons, where the circumstances in which both such persons or classes are or would be employed are not materially different.
It is clear from paragraph (a) of this Subsection that the entitlement to remuneration does not come within the ambit of Section 8 of the Act. Rather, that right, in the case of a claim based on the gender ground, is derived from Section 19 of the Act and, in the case of claims based on other discriminatory grounds, from Section 29 of the Act. It is also clear that a claim for equal pay must be grounded by reference to the pay of a comparator who is engaged in like work. The within claims are not grounded by reference to an actual comparator having a different gender, marital status or family status, with whom the Complainants were engaged in like work.
In these circumstances the first question that falls for consideration in this case is whether monies paid by an employer under a voluntary redundancy scheme constitutes pay for the purposes of the Act. In considering that question considerable guidance can be obtained in the jurisprudence of the CJEU on the interpretation of the term ‘remuneration’ contained in Article 157 TFEU (ex Article 119 and 141 of the Treaty EC).
This question arose in Case C-262/88 Barber v Guardian Royal Exchange Assurance Group  IRLR 240. Here the Court held, at paragraphs 12 – 19 of the judgment: -
As the Court has held, the concept of pay, within the meaning of the second paragraph of Article 119, comprises any other consideration, whether in cash or in kind, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment from his employer (see, in particular, the judgment of 9 February 1982 in Case 12/81, Garland v British Rail Engineering  IRLR 111 at para.5). Accordingly, the fact that certain benefits are paid after the termination of the employment relationship does not prevent them from being in the nature of pay, within the meaning of Article 119 of the Treaty.
As regards, in particular, the compensation granted to a worker in connection with his redundancy, it must be stated that such compensation constitutes a form of pay to which the worker is entitled in respect of his employment, which is paid to him upon termination of the employment relationship, which makes it possible to facilitate his adjustment to the new circumstances resulting from the loss of his employment and which provides him with a source of income during the period in which he is seeking new employment.
It follows that compensation granted to a worker in connection with his redundancy falls in principle within the concept of pay for the purposes of Article 119 of the Treaty.
At the hearing, the United Kingdom argued that the statutory redundancy payment fell outside the scope of Article 119 of the Treaty because it constitutes a social security benefit and not a form of pay.
In that regard it must be pointed out that a redundancy payment made by the employer, such as that which is at issue, cannot cease to constitute a form of pay on the sole ground that, rather than deriving from the contract of employment, it is a statutory or ex gratia payment.
In the case of statutory redundancy payments it must be borne in mind that, as the Court held in its judgment of 8 April 1976 in Case 43/75 (Defrenne v Sabena  ECR 455 at para.40), Article 119 of the Treaty also applies to discrimination arising directly from legislative provisions. This means that benefits provided for by law may come within the concept of pay for the purposes of that provision.
Although it is true that many advantages granted by an employer also reflect considerations of social policy, the fact that a benefit is in the nature of pay cannot be called in question where the worker is entitled to receive the benefit in question from his employer by reason of the existence of the employment relationship.
In the case of ex gratia payments by the employer, it is clear from the judgment of 9 February 1982 in Case 12/81 (Garland  IRLR 111, cited above, at para.10) that Article 119 also applies to advantages which an employer grants to workers although he is not required to do so by contract.
In Garland v British Rail Engineering  IRLR 111 (which was followed in Barber), a question arose as to whether a claim concerning travel concessions afforded to retired employees of the Respondent constituted pay for the purposes of Article 119 EC (now Article 157 TFEU). Mrs Garland was a retired employee of British Rail Engineering. All employees of British Rail Engineering enjoyed concessionary rail travel during their employment, a concession which also extended to their spouses and dependent children. On retirement, both men and women continue to enjoy certain reduced travel facilities. In respect of men, these continue to extend to their wives and dependent children. The families of retired women, however, lose all their travel concessions. An issue arose in the main proceedings as to whether the dispute involved equal pay or equal treatment.
Having reviewed the submissions and the relevant authorities the Court of Justice held, at paragraphs 53 and 54: -
The argument that the facilities are not related to a contractual obligation is immaterial. The legal nature of the facilities is not important for the purposes of the application of Article 119 provided that they are granted in respect of the employment.
It follows that where an employer (although not bound to do so by contract) provides special travel facilities for former male employees to enjoy after their retirement this constitutes discrimination within the meaning of Article 119 against former female employees who do not receive the same facilities.
In the course of her submissions Counsel for the Complainants referred the Court to the Decision of the CJEU in Case 19/81, Burton v British Railway Board  IRLR 116 which, it was submitted, indicates that the terms of a voluntary redundancy scheme comes within the scope of working conditions. That case concerned the rules under which workers could access a voluntary redundancy scheme operated by the Respondent. A male worker could only avail of the scheme if he had reached the age of 60 whereas a woman could access the scheme if she had reached the age of 55. A question arose as to whether the issue raised by this difference related to discrimination in terms of pay or unequal working conditions. The Court held, at paragraph 100, that the question of interpretation before it related not to the benefit itself but to whether the conditions of access to the scheme were discriminatory. The Court held that to be a matter of equal treatment.
That case can be readily distinguished from the instant case. This is not a case involving access to the Respondent’s voluntary redundancy scheme. The issue giving rise to the dispute between the parties relates not to the rules governing admission to the scheme but to the conditions under which the benefits received by those availing of the scheme were computed.
These authorities indicate beyond argument that while rules regulating who can be afforded access to a voluntary redundancy scheme constitute working conditions, redundancy benefits constitute pay. The authorities also indicate that it is immaterial whether a benefit is paid on foot of a contractual obligation or voluntarily provided the benefit is derived from the employment. It follows that a dispute concerning the quantum of redundancy, or the extent of a benefit provided on leaving employment, is properly classified as involving remuneration.
Nevertheless the point of distinction between cases properly classifiable as involving pay and those involving working conditions is not always easily discernable.
In Case C-77/02, Steinicke v. Bundesanstalt für Arbeit  IRLR 892 the CJEU had to consider whether a dispute concerning access to a scheme of part-time work for older workers concerned equal pay or equal treatment. The Court concluded that it came within the latter classification. At paragraph 51 of the judgment it held as follows: -
The fact that joining that scheme may have pecuniary consequences for the worker concerned is not sufficient to bring such conditions within the scope of Article 141 EC or of Directive 75/117, those provisions being based on the close connection which exists between the nature of the work done and the amount of the worker's pay (see, to that effect, the judgments in case C-236/98 JämO  IRLR 421, paragraph 59, and case C-476/99 Lommers  IRLR 430, paragraph 28).
In Case (C-184/89Nimz v Freie und Hansestadt Hamburg  ECR 1-297, the Complainant was not challenging pay rates in themselves, but rather the rules governing the system of salary classification. The Court of Justice confirmed that such rules fell within the concept of pay in Article 119 (now 157 TFEU) since they directly governed changes in employees’ salaries. At paragraphs 9 and 10 of the report the Court stated:-
“It appears from the documents before the Court that the present case concerns a system of practically automatic salary classification based on rules relating to length of service contained in a collective agreement. Those rules govern changes in the salary due as such to an employee who continues in the same type of work.
It follows that in such circumstances the rules governing what is practically an automatic reclassification in a higher salary grade come in principle within the concept of pay as defined in Article 119 of the Treaty”
In contrast, in Case (C-1/95)Gerster v Freistaat Bayern  ECR 1-05253, the Court of Justice held that rules governing the calculation of service for the purpose of promotion, thus indirectly affecting access to higher levels of pay, were a matter of equal treatment to be considered under Directive 76/207. The Court distinguished the case from Nimz at paragraphs 21,22 and 23 of the report as follows:-
“First of all, the Court emphasized in Defrenne III (Case 149/77 Defrenne v Sabena 1978 ECR 1365), paragraph 20, that the scope of Article 119 cannot be extended to aspects of the employment relationship other than those expressly referred to.
Mrs Gerster argues that, since the case before the Bayerisches Verwaltungsgericht - like the situation which gave rise to the judgment in Case C-148/89 Nimz 1991 ECR I-297 - concerns a system for the classification of salaries which is practically automatic, it falls within the scope of the term pay' as used in Article 119 of the Treaty and infringes Directive 75/117.
It should be emphasized that where, as in the present case, a civil servant is placed on the list of candidates eligible for promotion, his progression to a higher grade, and accordingly to a higher level of remuneration, is not a right but a mere possibility. Actual promotion depends on various factors such as, first, the availability of a post in the higher grade and, secondly, the maintenance of his position on the list of persons eligible for promotion. A provision such as [the national rule in contention] is thus primarily designed to lay down the conditions, in terms of length of service, for a civil servant's inclusion on the list of persons eligible for promotion and thus for access to a higher grade. Accordingly, it only affects indirectly the level of pay to which the person concerned is entitled upon completion of the promotions procedure.”
Case C-243/ 95,Hill and Stapleton v Revenue Commissioners  IRLR 466, like Gerster, concerned rules on the calculation of service in the case of job-sharers. Whereas in Gerster what was in issue related to calculation of service for the purpose of eligibility for promotion, in Hill and Stapleton the dispute concerned the mode of calculating service for the purpose of increments. The Court held that a system for classifying workers converting from job-sharing to full-time employment comes within the concept of “pay” for the purposes of Article 119 of the EC Treaty ( Article 157 TFEU), since it automatically determines the progression of pay due to those workers.
In case C- 167/97 R v Secretary of State for Employment ex parte Seymour –Smith and Perez  IRLR 253 an issue arose as to whether a dispute concerning the statutory entitlement to claim compensation for unfair dismissal under UK law involved issues of equal treatment or equal pay. The CJEU held that the case involved a question of equal pay. The Court said the following, at paragraphs 25 -30: -
As regards, in particular, the compensation granted by an employer to an employee on termination of his employment, the Court has already stated that such compensation is a form of deferred pay to which the worker is entitled by reason of his employment but which is paid to him on termination of the employment relationship with a view to enabling him to adjust to the new circumstances arising from such termination (see Barber  IRLR 240, cited above, paragraph 13, and case C-33/89 Kowalska  IRLR 447, paragraph 10).
In this case, the compensation awarded to an employee for unfair dismissal, which comprises a basic award and a compensatory award, is designed in particular to give the employee what he would have earned if the employer had not unlawfully terminated the employment relationship.
The basic award refers directly to the remuneration which the employee would have received had he not been dismissed. The compensatory award covers the loss sustained by him as a result of the dismissal, including any expenses reasonably incurred by him in consequence thereof and, subject to certain conditions, the loss of any benefit which he might reasonably be expected to have gained but for the dismissal.
It follows that compensation for unfair dismissal is paid to the employee by reason of his employment, which would have continued but for the unfair dismissal. That compensation therefore falls within the definition of pay for the purposes of Article 119 of the Treaty.
The fact that the compensation at issue in the main proceedings is a judicial award made on the basis of the applicable legislation cannot, of itself, invalidate that conclusion. As the Court has already stated in this connection, it is irrelevant that the right to compensation, rather than deriving from the contract of employment is, for instance, a statutory right (see, to that effect, Barber  IRLR 240, cited above, paragraph 16).
In the light of the foregoing, the answer to the first question must be that a judicial award of compensation for breach of the right not to be unfairly dismissed constitutes pay within the meaning of Article 119 of the Treaty.
Case C-191/03 North Western Health Board v McKenna  IRLR 895 involved a claim by Ms McKenna that a provision of the Respondent’s sick pay scheme which treated absence caused by pregnancy in the same way as absence caused by pathological illness was discriminatory against women. A central question in the case was whether the dispute in the main proceedings related to equal treatment in terms of pay or equal treatment in relation to conditions of employment. Advocate General Léger was of the opinion that case was one involving equal treatment. The Advocate General proposed that the question posed by this Court be answered as follows: -
A sick-leave scheme that treats in exactly the same way those employees who suffer from a pregnancy-related illness and those who are victims of any other illness, in that the periods of absence due to incapacity for work caused by a pregnancy-related illness and occurring during that pregnancy are set against entitlement to paid sick leave, falls within the ambit of Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions and not within that of Article 141(1) and (2) EC and Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women.
The Court disagreed. It held, at paragraphs 30 -35 as follows: -
Pay within the terms of Article 141 EC and Directive 75/117 cannot also come within the scope of Directive 76/207. As is clear from the second recital in its preamble, Directive 76/207 does not apply to 'pay' within the meaning of the above mentioned provisions (see case C-342/93 Gillespie and others  IRLR 214, paragraph 24)31
A scheme such as that in issue in the main proceedings defines the conditions governing maintenance of the worker's pay in the event of absence on grounds of illness. It makes the maintenance of full pay subject to the condition that a maximum annual period of sick leave is not exceeded and, if that period is exceeded, it provides for the maintenance of pay at 50% of its level for a maximum total period determined over the course of four years
Such a scheme, which results in a reduction in pay and subsequently in an exhaustion of entitlement to pay, operates automatically on the basis of an arithmetical calculation of the days of absence on grounds of illness.
The rules established thus come within the scope of Article 141 EC and Directive 75/117 (see by way of analogy, in respect of a system for acquiring entitlement to a higher salary on the basis of rules on seniority, case C-184/89 Nimz  IRLR 222, paragraphs 9 and 10).
The fact that a reduction or extinction of entitlement to maintenance of pay is not immediate but occurs on the expiry of maximum periods does not deprive those rules of their automatic nature once the conditions laid down have been satisfied.
The answer to the first and fourth questions referred must therefore be that a sick-leave scheme which treats identically female workers suffering from a pregnancy-related illness and other workers suffering from an illness that is unrelated to pregnancy comes within the scope of Article 141 EC and Directive 75/117.
It seems to the Court that the principle that can be derived from these authorities is that a dispute concerning a rule or provision that directly and automatically determines the quantum of pay, including redundancy payments, falls to be determined as one involving the right to equal pay and not the right to equal treatment. However, if the impugned measure has indirect pecuniary consequence, such as access to promotion, the right to apply for voluntary redundancy or a facility to work part-time the issue is properly classified as involving the principle of equal employment conditions.
The CJEU has held in Steinicke v. Bundesanstalt für Arbeit (and in the earlier cases referred to therein) that a close connection must be present between the worker’s pay and the work performed. However, in almost all of the other authorities considered earlier in this Determination in which it was held that the impugned rule or condition related to pay there was no such connection. For example in Hill and Stapleton and in McKenna the rule in question applied to all employees of the Respondent regardless of the work that they performed or the grade that they held within the employment. Also, in R v Secretary of State for Employment ex parte Seymour –Smith and Perez the impugned provision applied to the entire workforce in the UK.
Against that background a decisive consideration appears to be the extent to which the impugned measure directly and automatically determines the quantum of pay.
However, a question was raised as to whether that remains the law.
The Recast Directive
Counsel for the Complainants advanced the argument that the jurisprudence which established a clear distinction between questions involving equal pay and those involving equal treatment is based on the different legal instruments from which those rights were derived. The right to equal pay was derived from Article 141 of the Treaty EC (now Article 157 TFEU) and Directive 75/117/EEC, whereas the right to equal treatment was derived from Directive 76/207/EEC. Counsel pointed out that both of the aforementioned Directives have now been repealed and that the legislative basis for the right to equality in respect to both pay and treatment is now contained in Directive 2006/54/EC (the Recast Directive).
Article 1 of that Directive provides: -
The purpose of this Directive is to ensure the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation.
To that end, it contains provisions to implement the principle of equal treatment in relation to:
(a) access to employment, including promotion, and to vocational training;
(b) working conditions, including pay;
(c) occupational social security schemes.
It also contains provisions to ensure that such implementation is made more effective by the establishment of appropriate procedures.
Counsel submitted that it is clear from indent (b) of that Article that working conditions now includes matters relating to pay. On that basis it was submitted that the law of the European Union has changed and that this Court has a duty to give effect to that change.
There is cogency in the argument advanced by Counsel. However, there is nothing in either the body of Directive 2006/54/EC or in the recitals thereto to indicate that the Union legislature intended to alter the jurisprudential distinction between issues of equal treatment and those involving equal pay. Moreover, the point now contended for has not been considered by the CJEU or by the Superior Courts in this jurisdiction. Furthermore, the doctrine of direct effect can have no application in a case involving private parties. While the doctrine of indirect effect, or conforming interpretation, clearly does apply that doctrine does not require an interpretation of national law that is contra legem.
Even if the true effect of any changes brought about by Directive 2006/54 was clear (and in the Court’s opinion it is not) the provisions of the Acts draw a clear distinction between issues involving equal pay and those involving equal treatment in line with the established case law of the CJEU. Against that background it is difficult to see how those concepts could be conflated without departing from a cardinal feature of the national legislation.
In these circumstances and in the absence of any authority to the contrary, this Court believes that it is bound to follow the established jurisprudence on the question arising in this case.
What is at issue in this case is a provision which directly and automatically determined the quantum of redundancy payments that the Complainants received. It was part of the mathematical formula that was used in computing the level of their redundancy entitlements. What they are now seeking is a liquidated sum being the difference between the amount that they received and the amount that they would have received if the cap had applied to the unadjusted salary applicable to the grade that they occupied. In these circumstances, and having regard to the authorities considered herein, the conclusion that their claim is properly classifiable as one of equal pay, rather than one of equal treatment, is inescapable.
It is also of considerable relevance that their claim is not grounded by reference to an actual comparator. They accept that there is no such comparator with whom they were engaged in like work. The Decision of the High Court in Brides v Minister for Agriculture  E.L.R 125 is a clear and binding authority that the absence of such an actual comparator is fatal to a claim for equal pay. On that point Counsel for the Complainants submitted that the language of Article 2 of the Directive appears to provide that a hypothetical comparator can be used to establish discrimination in both treatment and pay. However, the Court does not accept that the submissions of Counsel go far enough to convince the Court that it should not consider itself bound to follow the dicta in Brides on that point.
For all of the reasons set out herein the Court had concluded that the Complainants’ claims involve an issue of equal pay and do not involve issues of equal treatment in respect to conditions of employment. The case was brought before the Equality Tribunal and is now before this Court in reliance on Section 8 of the Act as involving a breach of the principal of equal treatment. In these circumstances the Court must hold that the matter is not properly before the Court and it has no jurisdiction to determine their appeal.