Pay gap

It remains the case that, across the UK and Europe as a whole, women are far more likely than men to suffer disruptions to their careers as a result of caring and family responsibilities. 

Another factor that contributes to different employment patterns is that women are more recent joiners in some areas that have been traditionally regarded as men’s work. In short, on the whole men tend to work for one employer for longer than women.

It is thought that a third of UK employers use pay schemes that are based on length of service.

Not surprisingly, given the gender difference in working patterns, the Equality and Human Rights Commission suggests that service based pay schemes are a key factor in the continuing gender pay gap, which currently stands at 12 per cent.

Cadman v HSE – ‘serious doubts’

Since the European Court of Justice’s (ECJ) decision in Danfoss (1989), it had long been thought that length of service pay schemes qualified for special treatment: the case suggested that even where such schemes disadvantaged women, they were always justified, since as a “general rule”, length of service “goes hand in hand with experience, and experience leads to better performance”.

This general rule is not absolute though, as the ECJ clarified in 2006 in the case of Cadman v HSEin which the court held that an employer does need to provide objective justification for seniority based pay schemes which disadvantage women, if the employee can show that in their particular circumstances there are serious doubts about the application of the general rule that experience always leads to better performance.

Wilson v HSE

The Court of Appeal last month considered the question of what ‘serious doubts’ means, and how the test should be applied.

Christine Wilson worked as an inspector for the Health and Safety Executive (HSE).  She was paid in accordance with a 10-year pay scale. 

However, the employment tribunal which first considered her case agreed that once an inspector had about five years service, their performance was unlikely to improve.

The pay scheme had a disparate impact on women inspectors compared to men, because men were more likely than women to have longer service.

The case was subject to appeal to the Employment Appeals Tribunal (EAT) and was then stayed pending the reference to the ECJ in Cadman. 

On remittal to the employment tribunal after the Cadman judgment, in what is thought to be the first case in which the ‘serious doubts’ test was considered, the employment tribunal held that Wilson had not shown serious doubts. 

This was overturned on appeal by the EAT, who again remitted the case to the employment tribunal.

However, the Court of Appeal, considering HSE’s appeal against the EAT’s decision, held that the serious doubts test had been met in this case.  In doing so, the court gave welcome guidance about the way in which the serious doubts test works in practice.

The court held that the test does not impose a new burden of proof on the employee. It is not a high hurdle, rather, it is a ‘filter’ to preclude claims with no prospects of success. 

To satisfy the test, the employee needs to show that there is evidence from which, if established at trial, it could properly be found that the general rule about experience and performance does not apply.

The court was clear that the formal burden of proof remains on the employer.

Further, Lady Justice Arden held that a stricter test would not be consistent with the Equal Pay Act, which does not provide separate rules for length of service pay schemes. 

She confirmed that domestic legislation may confer more advantageous rights than the minimum standard guaranteed by community law, and, where it does so, domestic law will prevail.

Emma Hawksworth is a partner at Russell Jones & Walker