Issue 3 (September 1996)

Equal pay compensation: how far back can you go?
Tough line on time limit
Staff get shirty with sweater shop over deductions from pay packets
Express track just the ticket
Scots EAT flings a spanner in the TUPE works
IT thaws pay freeze move
Left on the Shelf
Dialling J for job share
Is ET coming in to land?
Keeping up appearances

Equal pay compensation: how far back can you go?

B S Levez v T H Jennings (Harlow Pools) Ltd (Unreported EAT/812/94 - 24 June 1996)

The Employment Appeal Tribunal has referred the two year limit on back pay in equal pay cases to the European Court of Justice. That means the Levez case could be as significant as the case of Marshall (No. 2) [1993] WLR 1054 that removed the ceiling on compensation in sex discrimination cases.

Applicants' advisers should now consider delaying assessing compensation in equal pay cases until the ECJ has ruled. At present, Industrial Tribunals award compensation in equal pay cases for up to two years before the tribunal case started until the date the tribunal makes its Order.

Compensation is calculated on the difference between the man's pay and the woman's pay over the two year period, plus interest. The woman's pay is protected for the future by including an equality clause in her contract of employment making her pay equal to the man's.

Although there is no limit to the financial compensation the IT can award, the two year limit on back pay means women do not get full compensation for the pay difference.
Mrs Levez was a betting shop manager paid £600 a year less than her male predecessor. She did not learn of this difference until she had left her job because her employer had misled her about the previous manager's salary.

She won her case but was not compensated for the seven months of pay difference that happened more than two years before she started her case. Mrs Levez appealed to the Employment Appeal Tribunal, with backing from the Equal Opportunities Commission, claiming full compensation.

She argued the two year limit on back pay breaches Article 119 of the Treaty of Rome and that the limit is in breach of European legal obligations to fully compensate her in accordance with the relevant national rules. The limit also failed to provide protection and have a real deterrent effect on employers, as required by European discrimination law.

The limit for compensation in the Equal Pay Act is less favourable than comparable domestic law such as breaches of contract and racially discriminatory contract terms. There is no limit on back pay under the Race Relations Act 1976. The limit in contract claims is six years from the breach with courts having discretion to extend the period still further.

In Levez the other side argued the UK Government was entitled to place reasonable limits on how far claims can be backdated. A two year limit is not therefore unlawful. Unusually the EAT - which consists of a Judge and two lay members, one from each of the management and union sides - could not reach a unanimous decision.

Both lay members agreed with Mrs Levez that the two year limit was unlawful. But EAT President, Mr Justice Mummery, thought it was clear there was no breach of Article 119.
They resolved their disagreement by referring the question direct to the ECJ. Let's hope we will not wait too long for the answer.