Employers could face the threat of pay-related tribunal claims on twin fronts, after a European ruling on rewards based on experience.
The European Court of Justice (ECJ) held that pay based on length of service does not amount to discrimination, but legal experts have warned that this could pave the way for joint tribunal cases based on age and sex discrimination.
Last week, the ECJ ruled in Cadman v Health and Safety Executive that rewarding experience that “enables a worker to perform his duties better” constitutes a legitimate objective of pay policy, and does not amount to sex discrimination.
Employers’ groups hailed the decision as a common-sense approach that would not lead to radical changes in workplace practices. But unions also claimed victory because the ECJ added the caveat that if an employee can show there are “serious doubts” about the reasons for the extra rewards, a challenge may still be brought.
Sam Mercer, director of the Employers Forum on Age, warned that the ruling has implications for businesses. Although the case was brought as an equal pay claim, it has ramifications for the age regulations, where length of service has been identified as an issue. They allow an explicit exemption from discrimination claims where up to five years’ service is taken into account in enhancing pay and benefits.
Rachel Dineley, head of the discrimination unit at law firm Beachcroft, said this left employers open to joint claims for age and sex discrimination.
“Far from encouraging complacency, the Cadman decision should prompt employers to review their pay policies,” she said.
“They should assess how and why employees are rewarded, by reference to length of service and other factors, and whether they are at risk of claims.”
The Cadman case
Bernadette Cadman, 44, an inspector for the Health and Safety Executive, said its policy of paying a higher salary based on experience discriminated against women, as they were more likely to take breaks for maternity leave and childcare, and therefore have less experience.
She brought the claim after discovering she was earning up to £9,000 less than men in the same role. Despite losing, Prospect, the union that represented Cadman, said it was preparing 52 further cases following the ECJ ruling.