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Yvonne Frederiksen
Partner LLM

Equal pay in different establishments

In a recent judgment, the ECJ held that employers are obligated to provide equal pay for work of equal value across establishments.

Employers have a duty to ensure that equal pay is paid for equal work or work of equal value. But does this also apply when it comes to different work performed at different establishments? That was the question in this case.

The case concerned an equal pay dispute between a major UK grocery retailer and a number of (present and former) workers employed in its stores. In addition to the stores, the retailer also had several distribution centres. The store workers believed that they should receive the same pay as the workers in the distribution centres on the ground that they performed work of equal value from the same “source”, even though the work was carried out in different establishments.

The retailer disputed this, stating that the stores and distribution centres did not have common terms and conditions of employment and that it could not be classified as the “single source” for the terms and conditions. In addition, the retailer contended that the Treaty on the Functioning of the European Union (TFEU) is not directly effective in cases where the workers compared perform different work.

The referring tribunal in the UK stayed the proceedings with a view to referring questions to the ECJ for a preliminary ruling, asking whether the TFEU has direct effect in cases concerning equal pay for work of equal value.

The ECJ held that the TFEU has direct effect in such cases and may thus be relied upon before national courts.

The ECJ further held that the rules on equal pay also apply when workers perform different work in different establishments. However, this only applies in situations where a single source can be held responsible for the terms and conditions. This is because, in case of several different employers, there is no single entity which can be held responsible for the discrimination and put an end to it.

In the specific situation where the retailer was the employer of both types of employee, and was thus responsible for the terms and conditions of both employee groups, the ECJ stated that it seemed obvious that there was a ”single source”. However, the final assessment in this regard was for the referring tribunal to make.

Norrbom Vinding notes

  • that if an employer is responsible for the terms and conditions of employment in different parts of the organization (different establishments within the same company), it is regarded as the same “source” of the terms and conditions and is therefore obligated to ensure equal pay, even if the work carried out in other parts of the organization is different.

The content of the above is not, and should not be a substitute for legal advice.