Cadman v Health and Safety Executive

A length-of-service criterion which disadvantages women may require objective justification under equal pay law. European authority exempting that criterion from specific justification had been cast into doubt by later decisions, so clarification from the Court of Justice was necessary.

Where justification is required, the employer may rely on reasons identified after adopting the measure. The measure must pursue a legitimate objective or real need, be appropriate, and be reasonably necessary. The tribunal must critically balance its discriminatory effect against the justification advanced. It need not find that the measure was the only possible course.

An inspector employed by the Health and Safety Executive received less pay than four male inspectors in the same grade. The differentials derived substantially from their longer service, while proportionately more men than women in the relevant workforce had longer service.

The Employment Tribunal upheld her equal pay claim and modified her contractual pay term under section 1 of the Equal Pay Act 1970. The Employment Appeal Tribunal allowed the employer's appeal. It held that Danfoss relieved the employer from specifically justifying length of service and that, in any event, the Tribunal's justification analysis contained legal errors.

The Court of Appeal considered whether later European decisions had undermined Danfoss and whether the Employment Tribunal had applied the objective justification test correctly.

1. The appeal succeeded to the extent that a preliminary reference was required. Later European decisions had cast doubt on the continuing authority of Danfoss, which stated that an employer could reward length of service without special justification. Nimz, Hill and Gerster appeared to reflect a different approach which was probably not confined logically to part-time workers. The Court therefore directed a reference under Article 234 of the EC Treaty because clarification was necessary before final judgment could be given.

2. If objective justification was ultimately required, an employer's justification did not have to feature consciously and contemporaneously in the decision to adopt the measure. A justification advanced after the event remained legally available. Its late emergence might affect its evidential weight, but the Employment Tribunal had treated contemporaneous consideration as a legal requirement and that misdirection infected its reasoning.

3. The Bilka-Kaufhaus test required consideration of whether the measure met a real need or legitimate objective, was appropriate, and was reasonably necessary. Reasonable necessity did not mean that no alternative measure was possible. The Tribunal therefore erred by asking whether the pay arrangements were simply “necessary”.

4. A tribunal must critically evaluate the evidence and balance the discriminatory effect of the pay practice against the employer's justification. The Employment Tribunal had not undertaken that exercise adequately. It also misstated the evidence about alternative methods of rewarding experience and failed to address the continuing role of service-related increments or the difficulties of eliminating historic differentials.

5. The employer's contention that justification could be assessed only at the collective level was rejected. Section 1 of the Equal Pay Act 1970 required attention to the impact of the pay policy upon the claimant and her identified male comparators.

6. If the European issue were resolved in the employee's favour, her appeal on justification would be dismissed and that issue remitted to a differently constituted Employment Tribunal. The Court did not decide that the employer's justification necessarily succeeded.

1. Court of Appeal (Civil Division): The employee's appeal succeeded insofar as the Court directed a preliminary reference concerning Danfoss. It conditionally upheld the Employment Appeal Tribunal's conclusion that objective justification would require rehearing by a differently constituted Employment Tribunal.
2. Employment Appeal Tribunal: On 22 October 2003 it allowed the employer's appeal. It held that length of service required no specific justification under Danfoss and that the Employment Tribunal had made legal errors when considering justification.
3. Employment Tribunal: On 14 October 2002 it upheld the employee's complaint and declared under section 1 of the Equal Pay Act 1970 that her contractual pay term should be no less favourable than those of her four male comparators.