Lewen v Denda ECJ Case C-33/97 [2000]IRLR 6/7
Not very topical in February, but are you entitled to a Christmas bonus paid to other staff if you are away from work on maternity leave or parental leave? The answer will be relevant to all UK employees taking advantage of their rights under the Maternity and Parental Leave Regulations.
Susanne Lewen was employed in Germany by Mr Denda's firm when she became pregnant. Her baby was born on 12th July 1996 and when her maternity leave ended in September 1996 she took parental leave, as permitted by German Law, until 12th July 1999. (Spot the difference between German and UK parental leave entitlement.). During parental leave her contract was suspended. During her leave period, Mrs Lewen did not receive pay from her employer, but an allowance from the State. (Spot another difference.)
Neither did she receive her Christmas bonus in 1996 because she was not in "active" employment in December 1996 although she had worked earlier in the year. She took legal action.
The European Court of Justice decided that the failure to pay the bonus to employees on parental leave can be indirect sex discrimination. They said that although the bonus is paid voluntarily by the employer as an exceptional allowance, it is "pay" within the meaning of article 119 (now 141) of the Treaty of Rome which states that men and women should receive equal pay.
However, whether withholding the payment is unlawful depends on what the bonus is for. If it is payment for work performed during the year then refusal to award it to workers on parental leave is likely to be indirect sex discrimination as female workers are more likely than male workers to be on parental leave and thus to be excluded when the bonus is given.
But the catch is that the court said if the bonus is not a reward for past work but instead is to encourage employees to work hard and reward future loyalty, and a condition of the bonus is that an employee must be in active employment when it is awarded, then it is lawful for the employer to refuse to pay the bonus. This is because a worker on parental leave is in a special situation and cannot be compared to a man or woman at work.
So whether employers can play Scrooge or Santa, will depend on the purpose of the bonus. It will be a question of fact for the Tribunal to determine the purpose of the bonus, so careful minuting of negotiations about any bonuses or one off payments could be crucial. The case has implications for all bonuses - not just those given at Christmas.