An award for injury to feelings or an award of aggravated/exemplary damages (i.e. non-economic losses) cannot be made for equal pay claims brought under the Equal Pay Act 1970: Council of the City Of Newcastle Upon Tyne v. Allan; Degnan v. Redcar and Cleveland Borough Council (UKEAT/0845/04/RN & UKEAT/0846/04).

The Equal Pay Act 1970, s. 2(5) limits the backdating of claims to two years before the application is made to the tribunal, and considerable debate has centred on whether this is compatible with EU law. However, the European Court of Justice (ECJ) has now ruled in a number of cases that the two-year time limit does not apply in particular circumstances.

In Magorrian and Cunningham v. Eastern Health and Social Services Board and DHSS (C-246/96), the ECJ decided that the general application of the two-year limit on the backdating of claims under the Equal Pay Act 1970, whilst not in itself incompatible with EU law, had to be disapplied on the facts of the case in question.

In Magorrian, two part-time female workers who were denied the more favourable benefits available to their full-time counterparts under an occupational pension scheme succeeded in their claims of indirect sex discrimination. In its judgment, the ECJ held that the applicants, rather than merely being deprived of certain benefits under the pension scheme, had in fact been denied access to full membership of the scheme. As such, they were entitled to have their service from 8 April 1976 taken into account in calculating the additional benefits to which they were entitled, this being the date of the ECJ’s second decision in Defrenne v. SABENA (C-43/75), which confirmed that individuals could rely directly on the provisions of the Treaty of Rome 1957, art. 141 (formerly art. 119) in claiming equal pay for work of equal value.

In Levez v. TH Jennings (Harlow Pools) Ltd (C-326/96), the ECJ was asked to consider the matter in relation to a female manager of a betting shop who, between February 1991 and April 1992, was paid at a lower rate than her male predecessor in the post. Ms Levez did not discover that she had been underpaid until March 1993, as her employers deliberately misled her about her predecessor’s salary. In September 1993, she lodged an equal pay claim; this proved to be successful, but her damages were limited to two years’ back pay on the basis of section 2(5). The Employment Appeal Tribunal (EAT) referred the question of the lawfulness of the two-year limit to the ECJ.

The ECJ again held that, although the two-year limit was not in itself open to criticism, its application in this particular case was unlawful, since Ms Levez’s employer had deliberately misled her about her predecessor’s salary, and there was no provision in the Equal Pay Act 1970 allowing an employment tribunal to extend the two-year limit in order to avoid the obvious injustice which would otherwise result in these circumstances.

The Court also decided that the unlawfulness of the two-year limit would not be affected by the fact that Ms Levez could have made a claim before a county court – where the limit would not apply – if such a claim would be more costly and involve more delay in comparison with a similar claim before an employment tribunal. This would be a matter for the national court to decide.

The Levez case was remitted to the EAT following the ECJ’s decision and EAT held that the two-year limit contravened Treaty of Rome 1957, art. 141 and should be extended to six years (being, broadly, the time limit for bringing breach of contract claims). The EAT did not believe that ECJ’s decision in the Levez case should be limited to cases where the employer had deliberately misled the employee about their predecessor’s salary (Levez v. T.H.Jennings (Harlow Pools) Ltd (C-326/96)). Although Equal Pay Act 1970, s. 2(5) is theoretically still in force, it appears that the six-year limit (five in Scotland) will now be applied by tribunals.

In 2000 the ECJ delivered its judgment in the case of Preston v. Wolverhampton Health Care NHS Trust (C-78/98), which, amongst other issues, again centres on the lawfulness of the two-year limit on retrospective compensation under the Equal Pay Act 1970 in relation to part-time employees excluded from occupational pension schemes. In referring this issue to the European Court, the House of Lords in Preston stated that the decision in Magorrian had not fully clarified this issue.

The Advocate General suggested that the ECJ should rule that the two-year limit on backdated pension claims was unlawful and the ECJ followed that suggestion. Following this ruling by the ECJ, the House of Lords held that the two-year limit did not prevent the concerned employees from having their pension scheme membership backdated to 8 April 1976 (the date of the ECJ’s decision in Barber (see Treaty of Rome (EEC Treaty) Article 141 (Formerly Art. 119))), or to the date they started employment, whichever is the later. Also, that limit did not prevent such employees from receiving pension benefits that would otherwise have been due to be paid in the period after they had applied to the employment tribunal. Such pension benefits should be calculated by taking into account the employee’s length of service since 8 April 1976, as long as they paid the relevant pension contributions.

The Advocate General noted that it was difficult to forecast the financial implications of his opinion for businesses (in particular, public sector employers) in the United Kingdom because most of the claimants would only be able to obtain the benefits of retrospective membership of the occupational pension scheme if they first paid contributions for all of the periods of part-time employment for which they sought recognition. The Advocate General added that the price of these contributions could prove to be expensive and may deter some claimants from seeking the benefits of retrospective membership of the occupational pension scheme.

In response to the ECJ’s decision in the Preston and Levez cases, the Government has introduced the Equal Pay Act 1970 (Amendment) Regulations 2003 (S.I. 2003, No. 1656). The Regulations came into force on 19 July 2003 and amend the two-year time limit on the backdating of equal pay claims.

The amendments are as follows:

1. Standard case - as a general rule, the time limit on the backdating of equal pay claims will be six years (five years in Scotland). However, this general rule will be subject to the exceptions mentioned in points (2) and (3), below.A ‘standard case’ is a case which is not a concealment case (see point (2), below), a disability case (see point (3), below) or both a concealment and a disability case.
2. Concealment case - this is a case where the conditions listed below have been satisfied:
   • The employer deliberately concealed from the employee any fact that is relevant to the contravention to which the equal pay claim relates.
   • The employee, without the knowledge of that fact, could not reasonably have been expected to institute the equal pay claim.
   • The employee instituted the equal pay claim within six years of the day on which they discovered the fact (or could with reasonable diligence have discovered it).

   In a concealment case, compensation will be awarded to an employee for the entire period for which they received unequal pay. Therefore, the time limit on the backdating of an equal pay claim in such a case could be longer than six years.

3. Disability case - this is a case where an employee was under a disability at the time of the contravention to which an equal pay claim relates and the employee instituted that claim within six years of the day on which they ceased to be under a disability.

In a disability case, compensation will be awarded to an employee for the entire period for which they received unequal pay. Therefore, the time limit on the backdating of an equal pay claim in such a case could be longer than six years.

In England and Wales, an employee is under a disability if they are a minor or of unsound mind (which has the same meaning as in the Limitation Act 1980, s. 38(2)). In Scotland, an employee is under a disability if they have not attained the age of 16 years or are incapable within the meaning of the Adults with Incapacity (Scotland) Act 2000.

The above amendments to the time limit on the backdating of equal pay claims reflect the Equal Pay Act 1970, s. 2ZB as inserted by the Equal Pay Act 1970 (Amendment) Regulations 2003 (S.I. 2003, No. 1656), reg. 5 and apply to equal pay claims in England and Wales that are instituted on or after 19 July 2003.

The DTI’s workplace guidance on the Equal Pay Act 1970 (Amendment) Regulations 2003 (S.I. 2003, No. 1656) can be obtained at www.womenandequalityunit.gov.uk

Where the difference in terms does not result from indirect discrimination, the employer is able to show a genuine material factor to explain the differential in pay between the applicant and their comparator, and that factor is not itself tainted by sex discrimination, the defence is complete. In these circumstances it is not necessary for the employer to show that, in addition, the difference in pay is objectively justified. This was the conclusion of the House of Lords in Strathclyde Regional Council v. Wallace [1998] UKHL 4.

This case involved a local education authority forced by financial difficulties to suspend the promotion of teachers to principal teacher level. A group of female teachers performing the work of principal teachers, but without the commensurate regrading or pay increase, claimed equal pay with male principal teachers who had been promoted before the new policy came into effect. The House of Lords accepted that the authority’s financial troubles were the reason for the pay differential. The policy of suspending promotions was not in itself discriminatory against the women since the majority of teachers affected were men. It was therefore already justified, and it was unnecessary for the employer to go on to show some further ‘objective justification’.

Where the factor relied on is itself discriminatory indirectly on grounds of sex, however, it is necessary for the employer to show objective justification for the difference in pay in accordance with the judgment of the European Court of Justice (ECJ) in Bilka-Kaufhaus GmbH v. Karin Weber von Hartz (C-170/84).

To be objectively justified the difference in pay must have been:

• Designed to meet a real need
• Appropriate and necessary to meeting that need

In the case of Brunnhofer v. Bank der osterreichischen Postsparkasse AG (C-381/99), the ECJ held that where a male employee’s job was classified in the same job category as a female employee’s job under a collective agreement, a difference in pay between those employees could be justified by factors not taken into consideration by that collective agreement. This was provided they were objective reasons unrelated to any discrimination based on sex and in conformity with the principle of proportionality.

Where work is paid at time rates, a difference in pay awarded to a male and female employee for the same job or work of equal value at the start of their employment, cannot be justified by factors that would only be known after those employees performed their contractual duties, for example, a difference in the individual work capacity of those employees or in the effectiveness of the work of the employees.

In the case of the Bailey v. Home Office [2005] EWCA Civ 327, the Court of Appeal held that an employment tribunal may use a statistical approach to determine whether there was a prima facie case of sex discrimination.

This is so as to place a duty on the employer to provide objective justification in an equal pay case where either:

1. The disparate impact was due to a requirement or condition that presented a barrier to women becoming a member of a particular work group, or
2. The disparity was due to membership of a particular work group and a history of different collective bargaining arrangements that operated disparately between the sexes

Once the employment tribunal was satisfied about the validity of the statistics and the appropriateness of their use, it could use a statistical approach in order to determine whether there had been a prima facie case of sex discrimination.

Where a group of workers contained a significant number, but not a clear majority, of female workers whose work was evaluated as equal to that of another group of workers who were predominantly male and who received greater pay, it would be surprising if an employment tribunal did not find a disparity that required objective justification because of the presence in the disadvantaged group of a significant number of men.

In such a case, an employer could still put forward a genuine material factor defence for the disparity that was not based on sex.

Amicus believes that UK employee protection is the weakest in Europe and, among the richest industrialised nations, only the US has weaker protection.

It also argues that established information and consultation rights, legal provisions covering industrial action and stronger redundancy protection in Europe, make UK workers more vulnerable when multinational companies decide to make job cuts. It also maintains that it is no coincidence that the UK had the highest number of restructuring cases, 69, in Europe during the last quarter of 2004. Fifty seven of these cases involved job cuts in excess of 100, the highest rate in the 18 EU countries monitored.

Amicus also argues that UK workers are disadvantaged by the willingness of other countries to partake in protectionist policies.

Amicus argues that UK workers would not be the automatic choice for redundancy if they share the equivalent rights with other workers in Europe.

General secretary, Derek Simpson, said: “In an increasingly global economy, multinational companies will always choose to make job cuts where it is cheaper, quicker and more politically expedient to sack. The ‘flexible workforce’ makes no sense - it just enables quality jobs to be easily disposed of, resulting in a de-skilling of the economy. Unless we have employment protection parity with other European countries, UK workers will continue to be the soft touch when it comes to slashing jobs.”

Amicus is calling on the Government to strengthen employment rights, including the right to union representation for workers in companies employing less than 21 staff.

More than 5 million people complain of extreme stress in their jobs, at a cost of £100 billion a year in lost output, according to the mental health charity, Mind.

The report says that the pressures of the workplace are exacting a social and economic toll which can no longer be ignored, with more than half of British workers complaining of stress and taking almost 13 million days off sick. The report calculates that stress costs £1 in lost productivity for every £10 generated, yet less than 10 per cent of employers have a stress management policy.

The report found that the most stressed employees were: teachers, social workers, call centre workers, prison officers and the police.

The report will add to the mounting pressure on the Government to tackle the country’s epidemic of mental illness, which is now the country’s biggest social problem with estimates suggesting that it costs GBP 25 billion. Only one in two people with depression receives any kind of treatment, despite evidence that shows its effectiveness. Richard Brook, chief executive of Mind, said: “Employers cannot afford to ignore the ever increasing levels of occupational stress and the long hours culture of working Britain. We urge more understanding of stress and mental health problems in the workplace.”

The report highlights factors which induce stress including: poor working conditions, such as shift work, long hours, travel, noise, and work overload and underload; an unclear role in the company; and personalities factors. It sets out early warning signs of stress such as insomnia, fatigue, muscle tension, heart palpitations, stomach upsets and headaches and recommends ways to combat stress such as: flexible working hours, keeping jobs open to those off sick, and allowing a gradual return to work.

Occupational pensions are now regarded as ‘pay’ for the purposes of Treaty of Rome 1957, art. 141. In the UK these are governed by separate equal pay and equal treatment provisions in the Pensions Act 1995, closely related in form to the Equal Pay Act (EPA) 1970. The EPA 1970 makes it clear that it confers no rights in relation to membership of, or rights under, an occupational pension scheme going beyond those in the Pensions Act.

In the European Court of Justice (ECJ) case of K.B. v. The National Health Service Pensions Agency and the Secretary of State for Health (C-117/01), under the National Health Service pension scheme, the payment of a survivor’s pension was dependent upon the marital status of that survivor.

K.B. was a member of that pension scheme and this meant that her partner, who was a female-to-male transsexual, was not entitled to a widower’s pension as UK law does not allow a transsexual to marry on the basis of their acquired gender. K.B. claimed that this breached the Treaty of Rome 1957, art. 141 (formerly art. 119) and the EC Equal Pay Directive (75/117/EEC). The Court of Appeal referred her case to the ECJ.

The ECJ noted that the UK’s marriage law breached the European Convention of Human Rights and prevented a couple such as K.B. and her partner from satisfying the qualifying condition of being married in order for K.B.’s partner to be entitled to the widower’s pension. The ECJ held that in principle the UK’s marriage law was incompatible with the requirements of the Treaty of Rome 1957, art. 141. However, it is for a national court to determine whether K.B. could rely on that article in order to gain recognition of her right to nominate her partner as the beneficiary of a widower’s pension.

In response to the ECJ’s judgment, in July 2003, the Government passed the Gender Recognition Act 2004, in force from 4 April 2005. Under that Act, a transsexual will be able to gain legal recognition of their acquired gender by obtaining a full gender recognition certificate from a Gender Recognition Panel. This certificate would entitle them to a new birth certificate reflecting their acquired gender and, therefore, enable them to legally marry a person of the opposite sex to their acquired gender and claim a widow’s or widower’s pension and other benefits that are dependent on marital status.

The Gender Recognition Act 2004 is available online at www.legislation.hmso.gov.uk/acts/acts2004/20040007.htm