Issue 40 (November 1999)

Contents

Employers to pay up in equal pay claims
Stigma damages in breach of contract
Don't bank on statutory maternity pay, mum!
Top brass defeated
Pay in lieu of notice liable to tax
Recovering personal injury compensation as well?  

Employers to pay up in equal pay claims

Levez v T H Jennings (Harlow Pools) Ltd
Mrs M I Hicking v Basford Group Ltd (EAT)

In these two cases the EAT has now confirmed the downfall of the two-year limit on arrears of back pay in equal pay claims. The European Court of Justice had previously ruled - in the Levez case - that the domestic courts should decide whether the two year limit offended the 'equivalence' principle. The procedural rules governing the enforcement of rights based on Community law must be no less favourable than those for similar UK law claims. The EAT has now decided that the two-year limit does contravene the 'equivalence' principle and there is to be no bar on the recovery of back pay for a period of six years preceding the date of commencement of proceedings.

The two-year limit has been under attack in the pensions field in recent years, both for back-dated service for enhanced pension rights (Magorrian v Eastern Health and Social Services Board [1998] IRLR 86 ECJ) and for access to pension schemes for part-timers. In the Levez case the issue was arrears of salary.

The upshot of these various challenges is likely to be that different rules will apply depending upon the type of equal pay claim. In the Magorrian and part-time worker pension claims, the ECJ and Advocate General respectively have found that, as far as back-dated pensions access claims are concerned, no limit on the amount of service retrospectively claimed should apply. But we are still awaiting the ECJ judgment in the part timers' cases. Applicants may be able to claim as far back as April 1976. But the EAT in the Levez case has decided that a six year limit on arrears of salary and wages should apply.

Mrs Levez began employment with Jennings as a manager in February 1991, but it was not until April 1992 that her pay was raised to the same level of her male predecessor, who did work of equal value to her. She only discovered later that she had been paid less than him before April 1992. She then brought a case for equal pay.

The arrears of compensation which Mrs Levez claimed extended beyond the two year limit on arrears of back pay contained in Section 2(5) of the Equal Pay Act 1970. She therefore contended that the two year limit should be disapplied because it offended the 'equivalence' principle and therefore breached European equal pay law.

The EAT agreed with Mrs Levez that the 'similar domestic action' should be a claim based on contract for arrears of pay. This would include claims for breach of contract where losses can be recouped by the worker for periods of up to six years preceding the date of commencement of proceedings.

Levez therefore marks the final nail in the coffin of the two year limit on arrears of back pay. In equal pay claims for arrears of salary and/or wages, the limit will be extended to six years. For equal pay claims related to past service and retrospective access in the context of membership of pension schemes, there is likely to be no limit on the amount of past service which may be taken into account, other than the backstop date of April 1976.