Bonus schemes and automatic promotions that are tied to days of effective presence at work may create indirect gender discrimination. This article discusses two recent Italian court cases that clarify when this happens and how employers can avoid this risk.

By: Stefano de Luca Tamajo

Firm: Toffoletto De Luca Tamajo e Soci

In the first case several female workers sued their employer, claiming for payment of a bonus. The conditions for bonus payment were set out in company-level agreements, which provided that the bonus was to be calculated based on days of effective presence at work. The claimants argued that this criterion created indirect gender discrimination. According to EU Directive 2006/54 (and to Italian law), indirect discrimination occurs when apparently neutral criteria are, in practice, detrimental for employees of one or the other sex. In this case, the claimants argued that female employees had accrued fewer days at work due to the fact that they had used parental leave provided by the law in connection with their role as mothers.

In the employer company, parental leave was taken almost exclusively (at a ratio of 8:1) by female employees. This meant they had higher levels of absence (and hence fewer days of effective presence at work), which had a negative impact on their bonus entitlement.

The Court of Appeal of Turin stated that the agreements were unlawful because they did not provide for absences resulting from maternity, parental leave and assisting ill children to be counted as days of presence at work. The unlawfulness of such exclusion was even more evident considering that other absences (such as for blood donation or for assisting disabled relatives, equally used by male and female employees) were counted as days of presence and did not impact on the bonus calculation. In the Court’s opinion, it was totally irrelevant that the criterion had been discussed and agreed with the Works Councils. Therefore, the Court awarded the claimants the right to receive a bonus calculated considering the days of absence for the above-mentioned reasons as effective days of presence at work.

This judgment is aligned with a recent decision of the Court of Appeal of Venice. In that case, a female employee who had been absent from work several months because of maternity leave claimed she should be promoted to a higher contractual level due to her seniority. The Court of Appeal stated that - based on the principles set forth in the above-mentioned European Directive as interpreted by the European Court of Justice –seniority must be calculated including periods of absence for maternity leave. The Court therefore awarded the employee the right to be included in the higher seniority grade.

In the light of the above-mentioned cases, it is very important for employers setting up bonus schemes or making provisions connected to career progression to exercise caution and to make sure they do not use criteria that, although formally neutral, may in practice be detrimental to female employees.