B. F. Cadman v Health & Safety Executive.

• Jurisdiction: European Union
• Celex Number: 62005CC0017
• ECLI: ECLI:EU:C:2006:333
• Date: 18 May 2006
• Docket Number: C-17/05
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling

OPINION OF ADVOCATE GENERAL

Poiares Maduro

delivered on 18 May 2006 (1)

Case C‑17/05

B.F. Cadman

v

Health & Safety Executive

Intervener: Equal Opportunities Commission

(Reference for a preliminary ruling from the Court of Appeal (England and Wales) (Civil Division))

(Equal pay for male and female workers – Use of length of service as a criterion in a pay system – Indirect discrimination)

1. This reference for a preliminary ruling from the Court of Appeal (England and Wales) (Civil Division) concerns the development of the Community case-law concerning equal pay. At the heart of the debate is the continuing applicability of the Danfoss judgment, (2) which held that use of length of service as a criterion in a pay system need not be justified by the employer, even if it works to the disadvantage of women, since ‘length of service goes hand in hand with experience and since experience generally enables the employee to perform his duties better’. The present case does not directly call into question pay systems that use length of service as a pay criterion, but it may indirectly affect such pay systems. What is at stake, is, first, the allocation of the burden of proof between the employer and the employee in a determination as to whether indirect discrimination arising from a pay system using length of service as a criterion can be justified and, second, the nature of the justification required and the extent of the burden of proof. If it is admitted as a general rule that length of service is a valid proxy for rewarding experience and efficiency, then it will be impossible for an employee to challenge a pay system that relies on length of service even if such a system in fact works to the disadvantage of women. Conversely, if it is found that an employer must justify any difference in treatment which arises out of the use of length of service as a criterion in the pay system, it may prove difficult for the employer to give precise and detailed evidence of the extent to which efficiency and productivity increase with seniority.

I – Legal Framework

2. The present case concerns equality between women and men which is a fundamental principle of EC law under Articles 2 EC and 3(2) EC and forms part of the foundations of the Community. (3) The principle of equal pay for equal work or work of equal value is enshrined in Article 141 EC, which provides:

‘1. Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied.

2. For the purpose of this article, “pay” means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer.

Equal pay without discrimination based on sex means:

(a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement;

(b) that pay for work at time rates shall be the same for the same job.’

3. Article 141 EC is supplemented by various pieces of secondary legislation. Council 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 (4) ensures that the aspects and conditions of remuneration do not discriminate between men and women. Article 1 of Directive 75/117 specifically states:

‘The principle of equal pay for men and women outlined in Article 119 of the Treaty, hereinafter called “principle of equal pay”, means, for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration.

In particular, where a job classification system is used for determining pay, it must be based on the same criteria for both men and women and so drawn up as to exclude any discrimination on grounds of sex.’

4. Although not expressly provided for in Article 141 EC, the notion of indirect sex discrimination was developed by the case‑law (5) and then incorporated into legislation. Council Directive 97/80/EC of 15 December 1997 on the burden of proof in cases of discrimination based on sex (6) gives a definition of indirect sex discrimination at Article 2(2): ‘For purposes of the principle of equal treatment referred to in paragraph 1, indirect discrimination shall exist where an apparently neutral provision, criterion or practice disadvantages a substantially higher proportion of the members of one sex, unless that provision, criterion or practice is appropriate and necessary and can be justified by objective factors unrelated to sex.’

5. Although the following directives are not applicable in the present case, it is worth noting that the notion of indirect discrimination is now uniformly defined by Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin, (7) Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation (8) and Council 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 (9) as amended by Directive 2002/73/EC of the European Parliament and of the Council of 23 September 2002. (10) Article 2 of Directive 76/207, as amended, provides that there is ‘indirect discrimination: where an apparently neutral provision, criterion or practice would put persons of one sex at a particular disadvantage compared with persons of the other sex, unless that provision, criterion or practice is objectively justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary.’

6. In relation to the allocation of the burden of proof in equality cases, Directive 97/80 also provides, at Article 4, that when plaintiffs establish ‘facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment’. (11)

7. The relationship between Article 2(2) of Directive 97/80, defining the notion of indirect discrimination, and Article 4 thereof, concerning the allocation of the burden of proof, will be decisive in resolving the issues raised by the referring court and in assessing when a pay system in which length of service is a determinant of pay might result in indirect discrimination.

II – Facts, procedures and questions referred

8. Mrs Cadman is employed by the United Kingdom Health and Safety Executive (hereinafter ‘the HSE’), the national statutory agency responsible for regulating health and safety risks arising from work activity in Great Britain.

9. Mrs Cadman joined the HSE in June 1990 as an Inspector of Factories. She was promoted at the end of her training in June 1993. In 1996, she became head of a Field Services Unit and was again promoted, this time to HM Principal Inspector of Health and Safety in Pay Band 2. In February 2001, she transferred to an operational post as head of a Field Management Unit.

10. During the period in which Mrs Cadman has been employed by the HSE, the pay system model has changed several times. Prior to 1992, the pay system was incremental, that is, each employee received an annual pay increment until he reached the top of the scale. In 1992, the HSE introduced a performance‑related element which adjusted the amount of the annual increment to reflect the employee’s performance. Under this system high performers could therefore reach the top of the scale more quickly. In 1995, following the introduction of a Long Term Pay Agreement, annual pay increases resulted from equity shares correlated to the employee’s performance, thus effectively decreasing the rate at which pay differentials narrowed between the longer‑serving and shorter‑serving employees on the same grade. Finally, in 2000, employees lower down the pay bands were afforded larger annual increases so as to facilitate faster progression through the pay band.

11. In the financial year 2000/01, Mrs Cadman’s annual salary was GBP 35 129, while that of four male colleagues employed in the same grade was GBP 39 125, GBP 43 345, GBP 43 119 and GBP 44 183. The annual pay differential between Mrs Cadman and her comparators, which ranged from GBP 4 000 to GBP 9 000, stemmed from the fact that her four male comparators all had longer service with the HSE.

12. In June 2001, Mrs Cadman lodged an application before the Manchester Employment Tribunal, alleging that HSE’s pay system had a disproportionately detrimental impact upon women and that she was accordingly entitled to receive pay equal to that of her four male comparators. Mrs Cadman based her claim on the Equal Pay Act 1970, which transposes Article 141 EC.

13. Section 1 of the Equal Pay Act, which is relevant for these purposes, provides:

‘(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one.

(2) An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed (the “woman’s contract”), and has the effect that –

…

(b) where the woman is employed on work rated as equivalent with that of a man in the same employment–

(i) if (apart from the equality clause) any term of the woman’s contract determined by the rating of the work is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman’s contract shall be treated as so modified as not to be less...