The appellant employee (W) appealed against an employment tribunal's decision to dismiss her equal pay claim against the respondent employer (H). W had relied on comparators who were all in the same job as she was, but were paid more, in part because they had longer service. The tribunal had found that the length of service criterion had a disparate impact on female employees because they were more likely to have career breaks to have children. It went on to consider whether service-linked pay was objectively justified. Though W accepted that service-related increases could be justified, she argued that the 10-year progression allowed by H was more than could be justified by the value which experience added to her job. The tribunal dismissed W's claim, on the basis that the European Court of Justice's ruling in Handels- og Kontorfunktionaerernes Forbund i Danmark v Dansk Arbejdsgiverforening Ex p Danfoss A/S (109/88) (1989) ECR 3199 ECJ, that an employer did not have to justify any service-related pay differential, barred its further inquiry. However, the tribunal said that it would otherwise have found that the 10-year period was excessive. W appealed following the ECJ's decision in Cadman v Health and Safety Executive (C-17/05) (2007) All ER (EC) 1 ECJ that an employer would have to justify a length of service criterion where the worker provided evidence capable of giving rise to serious doubts as to whether the criterion was, in the circumstances, justified. W's appeal was successful in that the claim was remitted back to the tribunal but was again dismissed, as the tribunal found that Cadman represented only a marginal departure from Danfoss and that once it was accepted that the criterion had been appropriately applied, the manner of its application was beyond judicial scrutiny. W argued that Cadman had altered Danfoss and that once it had been accepted that the nature of a job was such that pay could properly depend on the length of service, it was open to a tribunal to consider whether the degree of dependence on length of service could be justified.

 

HELD: 1) A tribunal could question whether the application of a length of service criterion was justified where the employee had raised serious doubts as to whether it was. In Cadman there had been no acceptance, as there was in the instant case, that some service-based pay differential could be justified: the employee had submitted that the employer had to justify the differential arising out of the application of the criterion. That would involve the employer justifying not only the adoption of the criterion, but also the period in respect of which it continued to justify the differential. The ECJ had not in terms disentangled those two elements, and had said that its decision followed from all the considerations in the case, indicating that it did not intend to limit the scope of judicial inquiry into the operation of the criterion. The tribunal's interpretation of Cadman would entail a rebuttable presumption that the nature of the job justified a differential, but thereafter an irrebuttable presumption that any relationship between pay and service, however apparently arbitrary, was justified and beyond judicial scrutiny. It was unlikely that the ECJ intended to adopt such a position. In Cadman the ECJ had recognised that while the presumption that experience contributed to job performance should not be readily upset, it could be in an appropriate case. There was no rationale for limiting such a case to situations where there was a question whether an application of the criterion was justified, without also permitting a consideration of the particular way it was applied. That was a departure from Danfoss, but not a fundamental one, Danfoss and Cadman considered. A tribunal would have to find that the employee had raised serious doubts as to whether the criterion was justified, not merely raise the possibility of serious doubts, to require justification from the employer; the tribunal would have to be satisfied that there was real reason to suspect that the employer had stepped beyond the margins which could properly be afforded to employers when considering whether added experience typically improves job performance. 2) The logic of Cadman required a tribunal to depart from the usual approach of hearing all the evidence on all issues before deciding any of them; instead, it should not hear all the evidence on justification before deciding the preliminary issue of serious doubts. Requiring all the evidence in one go would undermine one of the objectives of Cadman, namely relieving an employer of having to justify the differential unless there were serious doubts. The instant case was remitted to a fresh tribunal on the issue of serious doubts only.

 

Appeal allowed

 

Counsel for the appellant: Tess Gill
Counsel for the respondent: Jennifer Eady QC, Robert Moretto