Employers with incremental pay scales based on length of service need to be able to justify the relationship between pay and length of service so as not to fall foul of the Equal Pay Act 1970 (Wilson v HSE).
It is likely to be easier for employers to justify using length of service in positions involving responsibility or management positions where experience really does enable an employee to perform his role more effectively. It will be much harder to justify using it in the case of jobs involving repetitive tasks or where greater experience does not necessarily mean an employee is better at the job.
Mrs Wilson claimed that she was being paid less than three of her male colleagues. One of the reasons for the pay differential was that they had longer service than her. She accepted that the nature of the job was one where job performance would be likely to improve with experience for the first few years, but argued that the HSE was not justified in applying it over a ten-year period. She argued that after three years there was no difference in experience to justify any differences in pay and that as she had raised “serious doubts” about whether it was appropriate, the HSE was required to justify its decision to use length of service.
The key issue in this case was how far a Tribunal is entitled to question an employer’s use of length of service. Once it is accepted that the nature of the job is such that pay can properly be made to depend on length of service (as in this case) is that the end of the matter or can a Tribunal go on to consider whether the degree of recourse to length of service can be justified?
The EAT said that it can. It concluded that where an employee raises serious doubts about the use of length oservice as a criterion, employers then have to justify not only the adoption of the criterion with regard to the particular job, but also the period in respect of which it was argued to continue to justify a difference in pay.
Employers should be aware that the issue of length of service criterion in pay systems is not confined to the context of equal pay. Under age discrimination legislation employers can still offer pay and employment benefits based on length of service but for those based on accruing service of more than 5 years, they have to show that it “reasonably” appears to them that the use of length of service as a criterion for awarding those benefits “fulfils a business need of [their] undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of [their] workers”. If experience beyond a certain point adds nothing to the employee’s value to the employer, it is thrown back on the intangibles of loyalty and motivation, a harder call.