Articles by McGrigors
27 May 2005
European law bumps equal pay into shape
by Alan Nicholson
(Published The Scotsman)
After nine years of legal wrangling, including trips to the English Court of Appeal and the European Court of Justice in Luxembourg, Michelle Alabaster has won a landmark equal pay claim against Barclays Bank, and is celebrating receiving the entire amount in dispute - the princely sum of £204.53.
Alabaster was a typist with the Woolwich Building Society (now Barclays Bank Plc) when she became pregnant in 1995. She was entitled to statutory maternity pay (SMP) during her leave, which is split into two parts, with the first six weeks being paid at 90 per cent of normal weekly earnings, and the remaining 20 weeks dropping to a flat rate of £106 per week.
To calculate SMP, normal weekly earnings are averaged over the period between 14 and 22 weeks before the expected week of childbirth. As a result of this, Alabaster's SMP was calculated on the basis of her salary between 1 September and 31 October, 1995. However, she received a salary increase of around £1,000 that was effective from 1 December, 1995. As it fell outside the pay reference period, the Woolwich did not factor this rise into Alabaster's SMP.
This meant Alabaster got a lower rate of SMP (£204.53 less) than if the calculation had been based on her increased wage. She felt this amounted to sex discrimination, but the Sex Discrimination Act 1975 does not extend to the field of pay.
As a result, she tried three alternative legal routes.
First, she claimed that the Woolwich's actions were contrary to European law, which requires each member state to ensure equal pay for men and women carrying out the same kind of work.
Second, she claimed that there had been a breach of the Equal Pay Act.
Third, she argued that the shortfall in her SMP was an unlawful deduction from wages under employment protection legislation.
The Department for Work and Pensions stepped in to defend against this claim, given its potentially far-reaching implications for UK employers. It did so by identifying legal technicalities that deprived Alabaster of her right to equal pay.
The first was that, in an equal pay claim, a woman must be able to show a male employee has received better pay in the same situation. For obvious reasons, Alabaster was not able to point out a pregnant man that had been paid more SMP during his maternity leave.
The second point was that a complaint of unlawful deduction from wages should be made within three months of the last deduction. Alabaster had missed this time limit and no extension had been granted by the initial tribunal. Without a proper basis in UK law, neither that tribunal nor the Employment Appeal Tribunal could entertain her European law claim.
The English Court of Appeal took a different approach, going back to the basic principles of equality that each of these laws tries to uphold, but felt it necessary to seek guidance from the European Court in Luxembourg.
The European Court confirmed that European law requires pay rises given between the beginning of the pay reference period and the end of maternity leave to be factored into the SMP calculation. Satisfied that Alabaster's rights under EU law had been breached, the Court of Appeal found in her favour. In order for her equal pay rights under EU law to be properly effected, the court said it was necessary to ignore the parts of the Equal Pay Act requiring a male comparator.
This decision closed a legal loophole that had prevented pregnant workers making claims over wages or SMP under UK sex discrimination laws. By being able to make discrimination claims of this type under the Equal Pay Act, employees now have six months instead of three to lodge claims and now do not need to point to a male comparator.
It also means that the Equal Opportunities Commission will be able to advise people like Alabaster when making such claims. Employees will also gain protection against victimisation where they have brought (or have threatened to bring) such a claim (both during and after employment), and, if an award is made, there will be an increased entitlement to interest.
Back pay in relation to such claims is limited to five years in Scotland, so there is at least a limit to employers' exposure.
That said, it is now clear that if a female employee's salary rises between the beginning of her pay reference period and the end of her maternity leave, her SMP should increase too.
Alabaster is confident that her case will force many businesses to make financial amends in this regard, saying: "Thousands of women will benefit from what I have done."
The Equal Opportunities Commission, which supported Alabaster with her Luxembourg case, feels this decision should spark an overhaul of UK equal pay legislation.
Until that overhaul happens, when calculating SMP and considering pay rises affecting pregnant staff, employers should have at the forefront of their minds the gender equality principles and their far reaching implications as evidenced by the case of Alabaster.
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