Equal Opportunities Commission chair Jenny Watson said:
'Employers should therefore err on the side of caution and ensure that length of service is only used in pay where it can legitimately be justified.
'The government is currently reviewing equalities law. We would like to see them use this opportunity to make the situation clearer for both employers and individuals by requiring all employers to undertake a simple, straightforward, preventative check of their pay - so that they can put any problems right before both parties end up in expensive and costly employment tribunal proceedings.'
The ECJ decision reiterates the general rule that where a pay practice results in a difference in pay between men and women doing equal work, the employer must be able to show that it is justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary. The court confirmed that experience generally enables a worker to perform their duties better. Therefore, employers may reward length of service without having to establish the importance it has in the performance of the job. However, the court went on to say that employees may now challenge this blanket justification where greater length of service does not actually enable job holders to perform their duties better, and the employer will be required to provide justification in detail.
This clarifies previous case law which indicated that using length of service to determine pay was sufficient justification in itself. Therefore, for example, having long pay scales in jobs which can effectively be mastered within a few months/years of starting, such as unskilled and semi skilled work, will be open to challenge and will have to be justified in detail. Also, employees will also now be able to challenge the use of very long pay scales in more complex jobs where the scale goes beyond the point where the tasks are effectively mastered.
In short, the case does open the door to challenges, and if employers hope to avoid such challenges it would be in their interest to examine their pay systems.
Bernadette Cadman, a principal inspector at the Health and Safety Executive, brought a case against her employer five years ago. She challenged the pay and benefits system, which automatically rewarded length of service with higher pay, regardless of whether or not that difference could be, in legal language 'objectively justified' by, for example, showing that longer service had resulted in skills necessary to do the job at a higher level. Her case was supported by her union, Prospect.
The EOC intervened in the case, providing evidence showing the extent to which length of service related pay systems disadvantage women in the UK and across the EU and - in the absence of any justification - could indirectly discriminate against them.
Many employers, particularly in the public sector, should take notice of this important ruling as it will have far-reaching implications. A 2005 survey by the Chartered Institute of Personnel and Development found that more than half of public service employers used service-related increments to manage pay systems, compared to only one in ten private sector employers.
Labour Force Survey data for spring 2006 shows that 55 percent of female employees have been continuously employed by their current employer for less than five years, compared to 51 percent of male employees. Alternatively, 31 percent of male employees have ten or more years of service at their current employer, compared to 27 percent of women.
The government is currently reviewing all anti-discrimination legislation, which has been introduced in a piece-meal fashion over the last 30 years, with an eye towards modernization and harmonization. A Green Paper is expected early next year. The EOC is calling for the introduction of a new requirement on employers to proactively review their pay, to see whether there is a gender pay gap using an initial simple diagnostic equality check. Where differences are found, it would require further investigative work to identify causes and to take preventative action. Causes of the pay gap include pay discrimination, other forms of discrimination, occupational segregation and lack of workplace support for parents and carers, including access to flexible working.
Contrary to some media reports, the decision does not mean that mothers lose the right to equal pay:
Taking maternity leave does not reduce a woman's length of service, and therefore pay based on length of service, as by law her contract of employment continues during this time.
However, a woman's length of service will be affected if she takes a career break to look after children, as her employment contract will be broken. Consequently, her pay will be calculated on a shorter length of service. Where employers have long pay scales this will mean she could be working alongside male colleagues doing equal work but receiving less pay.
Whether a woman takes maternity leave or a career break, if she is able to show that longer service does not in fact enable a worker to perform the job better - for example, if she works in a call centre were the job can be mastered in six months - then the employer will be required by the court to justify in detail the use of length of service to determine pay.
 The court said that the practice may be challenged 'where the worker provides evidence capable of giving rise to serious doubts as to whether recourse to the criterion of length of service is, in the circumstances, appropriate to attain the objective [of rewarding experience which enables the worker to perform his duties better]. It is in such circumstances for the employer to prove that that which is true as a general rule, namely that length of service goes hand in hand with experience and that experience enables the worker to perform his duties better, is also true in regards the job in question'.