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In a judgement given on 8 September 2005 in the case North Western Health Board v Margaret McKenna, the European Court of Justice (ECJ) has ruled that it is not discriminatory on the grounds of sex for
- a woman to be paid contractual sick pay for a pregnancy-related illness at a rate less than her normal rate of pay prior to her taking maternity leave, or
- the period for which contractual sick pay for a pregnancy-related illness is paid to be offset against a maximum period of entitlement, where the result is that she is paid at a rate less than her normal rate of pay after her maternity leave.
The decision of the ECJ went contrary to the Opinion of Advocate-General Léger in December 2004 which stated that it is discriminatory to treat pregnancy-related illnesses for sick pay purposes as if they were the same as other illnesses.
Background
A preliminary ruling by the ECJ was requested by Ireland's Labour Court in 2003. Under the terms of her employment contract, Ms McKenna was entitled to full pay for up to 183 days sickness absence in a year, followed by up to 183 days at half pay, with a limit of 365 days in a four-year period. Ms McKenna suffered from a pregnancy-related illness for almost all of her pregnancy. She received full pay until two months before her baby was due, at which point her pay was reduced to half pay. She was then paid maternity pay for 14 weeks at full pay but, as she was still too ill to return to work, her sick pay continued at half pay.
She claimed that she had been discriminated against because her employer had treated her pregnancy-related illness as any other illness and offset it against her sick pay entitlement. She claimed that she was entitled to full pay for the two months prior to her maternity leave and that, after returning from leave, she should have received sick pay at the full rate because the pregnancy-related illness should not have counted against her entitlement.
The Labour Court subsequently referred the matter to the ECJ in order to determine whether the treatment of pregnancy-related illnesses and pathological illnesses in an identical manner amounts to discrimination on the grounds of sex and, if so, whether it is also discriminatory to offset a period of pregnancy-related absence against a woman's total occupational sick pay entitlement.
After considering submissions made by the parties to the case and the governments of Ireland, Italy, Austria and the United Kingdom, the Advocate-General's Opinion, issued in December 2004, was as follows:
"A sick-leave scheme that treats in exactly the same way those employees who suffer from a pregnancy-related illness and those who are victims of any other illness, in that the periods of absence due to incapacity for work caused by a pregnancy-related illness and occurring during that pregnancy are set against entitlement to paid sick leave, falls within the ambit of [the European Directive] on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions."
If the ECJ had agreed with this Opinion, there would have been serious implications for occupational sick pay schemes. A woman absent with a pregnancy-related illness would be entitled to full pay because that would have been her entitlement had she been at work. The period of absence due to the pregnancy-related illness would not have counted against her occupational sick pay entitlement.
An additional complexity would have arisen due to the difficulty that UK employers have in determining whether or not an illness is pregnancy-related when deciding whether to enforce the start of maternity leave within the four-week period before the baby is due. With full pay for several months at stake, the potential for argument between women and their employers as to whether a particular illness is pregnancy-related would have been considerable.
An advance Opinion of the Advocate-General is followed by the ECJ in most cases. However, in this case, the arguments presented by the ECJ resulted in a different decision, although with certain qualifications.
Is equal treatment or equal pay at issue?
The issue addressed first by the ECJ was whether a sick-leave scheme which treats in the same way female workers suffering from a pregnancy-related illness and other workers suffering from an illness unrelated to pregnancy comes within the scope of
- Directive 76/207, which requires "equal treatment" with regard to working conditions, with the result that men and women are guaranteed the same conditions without discrimination on grounds of sex, and/or
- Article 141 EC and Directive 75/117, which requires "equal pay" for male and female workers for equal work or work of equal value, with the result that there may be no discrimination on grounds of sex with regard to all aspects and conditions of remuneration.
If the provisions of the sick-leave scheme fall within the "equal treatment" requirement, it could be argued that
- it is discriminatory to offset a period of absence caused by a pregnancy-related illness against an employee's total entitlement under an occupational sick-leave scheme, and
- employers should have special arrangements in place to cover absences due to incapacity caused by pregnancy-related illness.
On the other hand, if the provisions of the sick-leave scheme fall within the "equal pay" requirement, the issue is limited to whether it is discriminatory to reduce a woman's pay where the absence is caused by incapacity due to a pregnancy-related illness in circumstances in which a non-pregnant woman or a man would suffer the same reduction if absent due to an illness not related to pregnancy.
The ECJ took the position that the principal issue in this case is the reduction in pay experienced by Ms McKenna's as a result of the application of the sick-leave scheme. Payment of wages in the event of illness falls within the definition of "pay" in the context of the "equal pay" requirement (Article 141 EC), whereas the "equal treatment" requirement (Directive 76/207) specifically does not apply to "pay". In taking that position, the ECJ disagreed with the arguments put forward by the Advocate-General and the legal advisers of the European Commission.
Discrimination under the equal pay requirements?
Having decided that Ms McKenna's reduction in pay falls within the "equal pay" requirements, the ECJ's next issue was whether the following provisions of the sick-leave scheme constitute discrimination on the grounds of sex:
- a rule which provides, in the case of female workers who are absent prior to maternity leave because of a pregnancy-related illness, as well as in the case of male workers who are absent as a result of any other illness, for a reduction in pay in the case where the absence exceeds a certain duration, and
- a rule which provides for absences on grounds of illness to be offset against a maximum total number of days of paid sick leave to which a worker is entitled during a given period, irrespective of whether the illness is or is not pregnancy-related.
In reaching its decision, the ECJ looked at the development of Community rules governing equality as between men and women with regard to the protection of female workers before and after they have given birth. In summary, current Community law states that a female worker
- cannot be dismissed during her maternity leave by reason of her condition or, prior to such leave, by reason of an illness related to the pregnancy and arising before such leave
- may, in appropriate cases, be dismissed by reason of an illness related to pregnancy or childbirth and arising after the maternity leave
- may, in appropriate cases, suffer a reduction in pay either during maternity leave or, after such leave, in the event of an illness related to pregnancy or childbirth and arising after such leave, as long as the payment is not so low as to undermine the purpose of maternity leave, namely the protection of women before and after giving birth.
Consequently, if a rule that allows, within certain limits, for a reduction in pay to a female worker during her maternity leave does not constitute discrimination based on sex, a rule that allows, within the same limits, for a reduction in pay to that female worker who is absent due to a pregnancy-related illness also cannot be regarded as constituting discrimination based on sex. She may, therefore, suffer a reduction in her pay, provided that she is treated in the same way as a male worker who is absent on grounds of illness, and provided that the amount of payment made is not so low as to undermine the objective of protecting pregnant workers.
Offsetting absence against the maximum sick-leave entitlement
Although the employer's sick-leave scheme in this case treats all sickness absences as counting towards the maximum entitlement, including those that are pregnancy-related, the ECJ decided that this is also not discriminatory as, otherwise, it would act to prevent the possibility of a woman's pay being reduced during pregnancy.
However, offsetting a period of pregnancy-related absence against the maximum period of sick-leave entitlement may not have the effect that, during the period affected by the offsetting after maternity leave, her pay is below the minimum amount to which she was entitled over the course of the illness which arose during her pregnancy. If an employer's sick-leave scheme could have that effect, the ECJ directed that special provisions must be implemented to prevent the possibility.
Implications for employers and Government
The ECJ's ruling clearly allows absences due to pregnancy-related illnesses to be treated as absences for other reasons and be offset against an occupational sick-leave scheme's maximum period of entitlement. However, the implications of the condition to that arrangement are not so clear.
To quote the ECJ's ruling exactly, the following situation does not constitute discrimination on the grounds of sex:
"a rule of a sick-leave scheme which provides for absences on grounds of illness to be offset against a maximum total number of days of paid sick-leave to which a worker is entitled over a specified period, whether or not the illness is pregnancy-related, provided that the offsetting of the absences on grounds of a pregnancy-related illness does not have the effect that, during the absence affected by that offsetting after the maternity leave, the female worker receives pay that is lower than the minimum amount to which she was entitled during the illness which arose while she was pregnant."
In Ms McKenna's case, she was already receiving half pay before the start of maternity leave, so there is no difficulty, according to the ECJ ruling, for her to continue to be paid half pay when her sick pay resumes at half pay after maternity leave. But, what if she had been paid full pay prior to maternity leave and, under the scheme, she was only entitled to half pay when she resumed her sickness absence after maternity leave? The ECJ ruling appears to suggest that she would, nevertheless, have to continue to be paid full pay after maternity leave.
There would also appear to be a problem with the UK's statutory sick pay (SSP) scheme. That has a maximum 28-week period of payment for continuing or linked absences, against which sick pay absences are offset. Pregnancy-related sickness absences that occur within four weeks of the expected week of childbirth are not offset against that entitlement because the woman is required to start her maternity leave at that time. However, SSP is paid for pregnancy-related absences that occur prior to the four-week point, and such absences are offset against the 28-week maximum. That is not in itself a problem according to the ECJ ruling but, what if she is absent both before and after maternity leave with a pregnancy-related illness and, after maternity leave, she has used up her 28-week entitlement and is no longer entitled to statutory sick pay? The ECJ ruling appears to indicate that she would have to continue to be paid SSP at not less than the rate she was receiving prior to maternity leave.
We have asked the Department for Work and Pensions to comment on the effect of the ECJ's ruling on the statutory sick pay scheme.
...back to 15 September 2005
Source:
Court of Justice of the European Communities (including Court of First Instance Decisions)
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For Payroll and Human Resource Professionals
