Jamstalldhetsombudsmannen v Orebro lans landsting Case C-236/98
Deutsche Telekom AG v Lilli Schroder Case C-50/96
We reort below on two encouraging decisions of the European Court of Justice on equal pay. Some of the names may be unpronouncable to non-linguists, but the principles in both cases are loud and clear.
The Deutsche Telekom case deals with issues related to retroactive entitlement to membership of pension schemes for part-timers and sets the scene for the eagerly awaited judgment in the UK cases referred on the same issues (Preston and Fletcher).
The Jamstalldhetsombudsmannen case deals with whether or not different elements of the pay package should be treated separately for the purpose of deciding whether or not an Applicant is paid less than her comparator, or whether the overall pay packet should be used for comparative purposes.
In the Deutshe Telekom case, Ms Schroder worked from 20 May 1975 to 31 march 1994 for Deutsche Telekom on a part-time basis. She then retired and became entitled to a pension. Up until 1 April 1991, she had been excluded from membership of the pension scheme because of her part-time status. She therefore claimed a pension relying on her service from 20 May 1975 onwards, on the basis that the relevant collective agreement in Germany contained no restriction on retrospection.
Before the ECJ, Deutsche Telekom tried to reopen the already settled debate as to whether the effects of the Barber decision and the Protocol to the Maastricht Treaty meant that only periods of service after May 17 1990 (the date of the ECJ judgment in Barber) could be taken into account for the purpose of retrospective entitlement to membership of pension schemes. Predictably, the ECJ spelled out again the difference between discriminatory benefit provision (covered by the Barber limitation) and discriminatory access provisions (which are not). Accordingly the Barber limitation did not apply.
However, the ECJ, then went on to consider a further, related question. It is generally assumed that the cut-off point for relying retrospectively on the direct effect of Article 141 of the Amsterdam Treaty (previously Article 119 of the Treaty of Rome) is 8 April 1976 Ð the date of the decision of the ECJ in Defrenne v Sabena (No.2). In the Deutsche Telekom case, the ECJ went on to examine whether that cut-off date applied where relevant domestic anti-discrimination law applied prior to that date, even if at that stage it was interpreted in a manner inconsistent with EU law.
Interestingly, the ECJ did not allow Deutsche Telekom to rely on the date of the judgment in the Defrenne case as the right cut-off point. It confirmed that 8 April 1976 was the right cut-off point for claims relying solely on the direct effect of Article 141.
However, that limitation on claims relying solely on Article 141 did not affect Ms Schroder's ability to rely on separate domestic law applicable to periods before 8 April 1976.
Deutsche Telekom also tried to define limits to the operation of Article 141 by reference to the possibility that its operation may lead to distortion of competition between employers resident in different members states, some of whom may respect the provisions of Article 141 more rigidly than others. Quite rightly, the ECJ gave this argument short shrift. The ECJ acknowledged that the purpose of Article 141 is twofold - both economic and social. However, the very purpose of Article 141 is to secure a degree of conformity of standards across member states. In addition, the European Union is not just an economic union, it is also a social union, one of the aims of which is to improve workers' living conditions. The economic aim of Article 141 is secondary to the social aim, that is the removal of discrimination, which is itself a fundamental human right.
This is all good stuff. The ECJ has neatly confirmed many of the principles relevant to the part-timer pensions access claims. Indeed, there may be some scope for the applicants in the part-time pension claims now to argue that their retrospective access should not be limited to April 1976. There are also no limits to the scope of Article 141, certainly by reference to purely economic factors.
The issue in the Jamstalldhetsombudsmannen case is very different. Two female midwives in Sweden claimed equal pay for work of equal value with a clinical technician.
The mid-wives worked on a rota-based system, with unsocial hours attracting an additional allowance. The rota-system took account of public holidays by applying a reduction in the hours to be worked for any week in which a public holiday fell. The clinical technician worked fixed weekly hours. His basic wage was higher than the midwives', but he did not work unsocial hours and was not therefore entitled to an unsocial hours allowance.
The issue for the ECJ was how to calculate the midwives' and the clinician's pay for comparative purposes. Should the unsocial hours allowance be included in the mid-wives' pay and should the reduction in hours for public holidays be taken into account?
The ECJ is absolutely right to require an individual analysis of each element of the pay package - "ÉIt follows that genuine transparency, permitting effective review, is assured only if the principle of equal pay for work of equal value applies to each of the elements of remuneration granted to the men or women". This meant that the unsocial hours allowance should not be included, even if it was pensionable, in the midwives' pay and no account should be taken, when comparing pay, of the hours reduction for public holidays.
In relation to the hours reduction, the ECJ correctly points out that a variance in hours may serve as an objective justification of a difference in pay. But that justification is for the employer to prove, after the applicant has established a difference in pay.
This decision is entirely consistent with established UK law. The House of Lords considered very similar issues in the Leverton v Clwyd case, with the same result.
Again, this is all good news. Where applicant groups receive pay comprising a number of different elements, the correct approach is to compare each element separately with the corresponding element in the comparator's pay packet. It is only possible for employers to set one element of an applicant's pay packet off against a different element of the comparator's pay where there is a unifying link which justifies that element of the comparator's pay by reference to the different element of the applicant's pay. A difference in hours may therefore justify a difference in monthly pay, but only if the hourly rate remains the same.