Equality is not reliable in the world of employment

How equal is equal? In employment, it may not be as straightforward as you
think

Over the past decade or so, the Transfer of Undertakings, Protection of
Employment protocol (TUPE) has become generally accepted as shorthand for the
law that protects employees’ rights when the business they work in is
outsourced or sold.

TUPE and Article 141 of the Treaty of the European Community – which is the
legal foundation for equal pay law in the EU, and provides that men and women
are entitled to equal pay for equal work – have been paying many employment
lawyers’ mortgages for some time.

The growth of EU employment law has been so inexorable in these areas that
nowadays, many HR managers and employment lawyers would probably take it for
granted that if an organisation outsources a function the employees’ pay and
benefits will inevitably be protected.

The European Court’s decisions in the cases of Allonby and Lawrence are
interesting, because they illustrate that this will not always be the case.

Mrs Allonby was employed on a part-time basis from 1990 to 1996 by a further
education college on a series of one-year contracts. She was made redundant
and, like several of her colleagues, was engaged by a new company, ELS, to
deliver classes she formerly provided as an employee.

Allonby claimed that she was entitled to equal pay with a lecturer who was
still employed by the college and doing work that she claimed was of equal
value. She also claimed she had the right to join the teachers’ pension scheme.
The European Court of Justice (ECJ) had to consider:

– Could Allonby claim equal pay with her comparator despite the fact they
were employed by two independent organisations – ELS and the college?

– Could Allonby establish that she had a right to the teachers’ pension
scheme without a comparator, by showing that the scheme discriminated indirectly
against women?

To some extent, the answer to the first question had already been decided in
a previous case. In Lawrence v Regent Office Care Ltd [C-320/00], 446
outsourced catering and cleaning employees at North Yorkshire County Council
claimed equal pay with former colleagues who were still employed by the
council. After the outsourcing, the cleaners and catering workers had been
re-engaged at reduced rates of pay.

The ECJ held that, as their pay was decided by the contractor, there was no
one person responsible for both the pay of the North Yorkshire staff and the
outsourced staff, so Article 141 could not apply. For the same reasons, Article
141 could not apply in the Allonby case, either.

However, in Allonby, the ECJ set out its reasoning in much greater detail.
It also clarified and extended the scope of equal pay law. Subject to their
being a single person or entity responsible for the discrimination, Article 141
now applies to all persons "who perform paid services for and under the
direction of another person", whether they are employed or self-employed.

Allonby’s claim was more successful with the teachers’ pension scheme. She
claimed she was entitled to participate in the scheme despite the fact she was
no longer employed by the college.

The court accepted her argument that as the scheme is statutory, it must
comply with Article 141. It held that if Allonby could statistically show that
a rule of the pension scheme had an adverse impact on women, the rule would be
disapplied. In other words, as EU law has primacy over national law, any rule
in the scheme which conflicts with Article 141 will have no effect.

It is important to appreciate that the ECJ decided this point as a
preliminary issue. In this case, Allonby is seeking to show that the exclusion
of self-employed teachers from the scheme adversely affects more women than
men. As yet evidence has not been heard to show this, so it is not yet clear
whether this is true.

By Tim Johnson, Partner in people services, McGrigors

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