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Cite as: [1987] IEHC 32
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Bank of Ireland v. Kavanagh [1987] IEHC 32 (19 June 1987)\
THE HIGH COURT
BETWEEN:
THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND
PLAINTIFF AND
WILLIAM B. KAVANAGH
DEFENDANT
Judgment of Mr. Justice Costello delivered on the 19th day of June 1987.
Mr. William Kavanagh, the Defendant in this appeal, was employed by the Bank of Ireland, who are the Plaintiffs in this appeal, from the year 1969,until his retirement on the 30th November, 1984 to take up employment with another financial institution. He had married in 1980 and shortly before he left the Bank's employment he wrote, applying for the payment of a marriage gratuity. Such a gratuity was then only payable to certain female employees of the Bank on marriage. He had no contractual claim to the gratuity but he claimed entitlement to it by virtue of the Anti-Discrimination (Pay) Act, 1974. His application was turned down. After he left the Bank he referred the dispute, under section 7 of the 1974 Act, to an "equality officer" appointed under the Act who investigated it and recommended payment of the gratuity. The Bank appealed this recommendation to the Labour Court (under section 8 of the Act) who decided against the Bank. The Bank has now appealed this determination to this Court, (under section 8 (3) of the Act).
The marriage gratuity. I should firstly explain how it has come about that the Bank pays a marriage gratuity to some of its female staff. Prior to 1974 all female officials of the Bank were required to resign from the service of the Bank on their marriage. At the time of resignation and on production of the marriage certificate all female officials were paid a marriage gratuity based on the completed years of service, the payment being in lieu of the pension which could not be obtained because of early retirement. In the opinion of the Bank the requirement to retire on marriage and the payment of the marriage gratuity were part of the contract of employment of all female officials who had joined the Bank's service prior to the 1st January, 1974. The "marriage bar" (with its concomitant marriage gratuity) did not apply to men. An Agreement was entered into in March 1974 under the auspices of the Banks' Joint Industrial Council between "the Banks' Staff Relations Committee" on behalf of its member Banks and the "Irish Bank Officials Association", on behalf of its members employed by the Banks in the Republic of Ireland,which inter alia abolished the marriage bar but retained the gratuity for all pre-1974 staff. The Bank of Ireland was one of the "member Banks" on whose behalf the agreement by the Staff Relations Committee was made. Paragraph (5) of the Agreement is headed "Elimination of Marriage Bar" and reads as follows:
"With effect from the 1st June, 1973 no lady official will be required to resign on marriage. Any lady official in the service on the 1st June, 1973, or entering the service on or before the 31st December, 1973, may on marriage opt to take a marriage gratuity at the time, provided she has completed five years service. If, however, she defers drawing the marriage gratuity and leaves the service before attaining the m normal retirement age, she will be granted a gratuity based on total service. If she takes a gratuity at the time of marriage and subsequently remains in the service until, retirement age she will be awarded a [ pension actuarially reduced by the amount of the gratuity. New entrants from the 1st January, 1974 will not be eligible for the marriage gratuity".
These are two aspects of this agreement which are noteworthy. Firstly, the marriage gratuity is not payable to all the Bank's female staff on marriage: only those who took up employment prior to 1974. Secondly, the existing entitlement to the gratuity was enhanced, in that an option to defer its payment and so obtain a larger gratuity was conferred by it.
The Anti Discrimination (Pay) Act, 1974.
Mr. Kavanagh's claim is based on the statutory term which he says is imported into his contract of employment by virtue of the Anti-Discrimination (Pay) Act, 1974. This is an Act to ensure equal treatment in relation to certain conditions of employment between men and women doing "like work". Sections 2 and 4 deal specifically with equal pay. Section 2 begins by providing that it shall be a term of the contract under which a woman is employed that she shall be entitled to the same rate of remuneration as a man if they are both employed on like work. But this general entitlement is subject to an important qualification (which is, indeed, of central concern in this case) for subsection (3) of section 2 provides that nothing in the Act is to prevent an employer from paying to employees engaged in like work different rates of remuneration "on grounds other than sex". But if section 2 applies and if a woman is employed under a contract which does not include a term satisfying section 2 then her contract is to contain an implied term giving effect to the section (section 4).
These sections were designated specifically to ensure equal treatment for women in matters of pay. But the Oireachtas accepted that men, too, might be the subject of unjustifiable discrimination in pay and section 11 applied sections 2 and 4 to men.
Mr. Kavanagh's case is that the marriage gratuity paid to female employees is "remuneration" within the meaning of the Act, that he was engaged on "like work" as female employees who became entitled to it, and that the operation of sections 2 and 4 confers on him a right to it.
The Labour Court's determination.
When a dispute arises under the Act it is firstly investigated by an "equality officer" who makes a recommendation which is conveyed to the Labour Court, and if there is an appeal against the recommendation the Labour Court determines the dispute (subject to an appeal on a point of law to this Court). The Labour Court's decision is dated the 3rd December, 1985. Having outlined the facts and issues of the dispute the Court made its determination by indicating its agreement with the conclusions of the equality officer in the following paragraphs:
"6. A married female bank employee who had the same length of service as Mr. Kavanagh and who had not drawn a gratuity at the time of her marriage would be granted a gratuity based on total service if she left the service of the Bank before attaining the normal retirement age.
7. The Court concurs with the conclusions of the Equality Officer in respect of the arguments put to her and repeated in this appeal.
8. The Court considers that the terms of the agreement between the Bank and the IBOA are irrelevant to the case. What matters is the practice of the Bank in relation to the payment of marriage gratuities. That practice is described in paragraph 6 above.
9. A further ground of the Bank's appeal is that the difference in treatment concerns an option and is not therefore part of remuneration. In the circumstances of this case Mr. Kavanagh cannot be said to have an option. The only alternative offered to him by the Bank is to accept nothing instead of a gratuity. H The judgment of the European Communities Court of Justice in the case of Arthur Burton .v. British Railways Board (Case 19/81) is not therefore relevant.
10. The Court determines that the appeal be dismissed". The conclusions of the equality officer (with which the Labour Court concurred) can be summarised as follows:
(1) Prior to his resignation Mr. Kavanagh had applied for a gratuity which had been refused before he had left the Bank's employment and accordingly a dispute between him as an "employee" and the Bank as "employer" existed in the context of section 7 (1) of the Act and his subsequent resignation did not preclude its investigation by an equality officer (as the Bank had urged). (Paragraph 9 of Recommendation of 9th April 1985);
(2) As the marriage gratuity was "remuneration" within the meaning of section 2 and as Mr. Kavanagh was engaged in like work with female employees who obtained the gratuity he was entitled to it by virtue of section 2 (1) unless the Bank could show that the gratuity was paid "on grounds other than sex" within the meaning of section 2 (3). (Paragraph 11);
(3) The Bank may or may not have had a legal obligation to continue to pay the gratuity even after the elimination o the marriage bar. But there was no obligation to improve the entitlement as was done from 1974. In doing so it had acted generously but it had treated female employees more favourably than male employees and so it could not rely on the section 2 (3) exemption (Paragraphs 13 to 15).
(A further conclusion on a submission based on section 5 of the Act (which referred to collective agreements entered into after the passing of the Act) need not here be referred to as the submission is not now being relied on by the Bank).
Conclusions
My conclusions on the issues which have been argued on this "*) appeal are as follows:
(1) The Labour Court was not, I think, correct in its view that the terms of the collective agreement of March, 1974 were irrelevant to the determination of the issues in this case. The terms of this agreement were incorporated in the conditions of contract under which the officials of the Bank, including Mr. Kavanagh, and its female employees were employed by it. The Bank's obligation to pay the gratuity is a contractual, not a discretionary one, and the terms under which its obligation arises I (which are to be found in the March 1974 Agreement) are highly relevant on the question of the application of sections 2 and 4 of the 1974 Act to the facts of this case. Furthermore, the Agreement is relevant to the Bank's alternative argument. namely, that if the Agreement contains a prohibited discrimination (which it denies) and if the 1974 Act is to be construed with the Employment Equality Act, 1977 (which it also denies) then the Agreement relating to the gratuity is rendered void by section 10 of the latter Act and neither male or female employees are entitled to it. But this view of the relevance of the 1974 Agreement does not, of course, determine the appeal one way or the other - because it is open to Mr. Kavanagh to submit, as was done most vigorously on his behalf, that the 1974 Act operates to confer on him the benefit to the marriage gratuity conferred by the 1974 Agreement on certain members of the female staff.
(2) The Bank submitted that a dispute can only be investigated by an equality officer if it is one between an employer and employee and as the dispute in this case was referred to the equality officer after Mr. Kavanagh had left the Bank's employment she had no jurisdiction to investigate it.
This preliminary jurisdictional point was decided by the Labour Court in Mr. Kavanagh's favour, and, I think, correctly decided. A dispute between an "employer" and an "employee" can be investigated by an equality officer, under section 7 of the 1974 Act. These words are not defined in the 1974 Act but the 1977 Employment Equality Act defines "an employee" as including a person who has worked in the past under a contract of employment, and "employer" as including a person by whom an employee had been employed (section 1) so that if section 7 of the 1974 Act is to be construed with section 1 of the 1977 Act then the equality officer had jurisdiction to consider this dispute even though Mr. Kavanagh had ceased to be in the Bank's service when the dispute had been referred to her. I can see no reason why I should not give effect to section 56 (2) of the 1977 Act which provides that the 1977 Act and the 1974 Act are to be construed together. The effect of such a provision is that every part of each of the two Acts are to be construed as if they were contained in one Act, unless there is some manifest discrepancy making it necessary to hold that the later Act has modified something in the earlier Act. (See: Canada Southern Railway Co. .v. International Bridge Co. (1883) 3 A.C. 723 at 726). But there is no discrepancy between these sections and their effect is to permit the investigation of a dispute by an equality officer, and on appeal the Labour Court, after the termination of an employment contract.
(3) I come now to the central issue in this case, namely, whether the effect of sections 2 and 4 of the 1974 Act was to incorporate into Mr. Kavanagh's contract of employment a term entitling him to a gratuity on marriage. The Bank, for the purposes of this appeal, accepts that the marriage gratuity is "remuneration" within the meaning of section 2 and that he was engaged in "like work" as that of female employees of the Bank who obtained the gratuity. But it urges that section 2 confers no entitlement to the gratuity on Mr. Kavanagh because the section only applies where an inequality of treatment in pay is based on sex and that it has no application to cases where higher remuneration is paid on grounds other than sex, and it says that this is such a case.
It was suggested on behalf of the Bank that in construing sections 2 and 4 of the 1974 Act it should be borne in mind that it was enacted to give effect to this country's commitments ! under Article 119 of the EEC Treaty and that they should be construed by reference to Community Law on the subject of this Article. In support of this approach to the section I was referred to Garland .v. British Rail Engineering Ltd (1983) A.C. 751, a case relating to a scheme where discretionary travel facilities were granted after retirement and to a claim that it operated in such a way as to contravene the Sex Discrimination Act, 1975. The dispute eventually reached the House of Lords who referred to the European Court of Justice the question whether the discrimination involved was contrary to Article 119. The Court held that it was. The House of Lords then considered the matter in the light of the European's Court's judgment and Lord Diplock said:
"My Lords, even if the obligation to observe the provisions of article 119 were an obligation assumed by the United Kingdom under an ordinary treaty or convention and there was no question of the treaty obligation being directly applicable as part of the law to be applied by the courts of this country without need for any further enactment, it is a principle of construction of United Kingdom statutes, now too well established to call for citation of authority, that the words of a statute passed after the Treaty has been signed dealing with the subject matter of the international obligation of the United Kingdom, are to be construed, if they are reasonably capable of bearing such a meaning, as intending to carry out the obligation and not to be inconsistent with it. A fortiori is that the case where the Treaty obligation arises under one of the Community Treaties to which section 2 of the European Communities Act, 1972 applies" (p. 771).
An examination of Community Law clearly shows how faithfully the Irish statute has fulfilled Ireland's Community obligations. Article 119 of the E.E.C. Treaty imposed a general obligation on member states to "maintain the application of the principle that men and women should receive equal pay for equal work", but the European Court of Justice has shown that that Article does not prohibit all differences in pay between men and women doing the same work. In McCarthy Ltd .v. Smith (1980) ECR 1275, a case concerning the filling of a position of a retired male employee by a female employee at a lower rate of pay, the Court pointed out that "a difference in pay between two workers occupying the same post at different periods of time may be explained by factors unconnected with any discrimination on the grounds of sex" (p. 1289), a point more fully developed by the Advocate General who observed that the personal circumstances of the workers might justify a distinction in wages, as might a situation where management considered it proper to classify differently certain tasks previously carried out by a male worker which had in fact been over-rated. "What is important", he said, "is that the lower wage should be due to circumstances other than the sex of the workers" (p. 1295). The same point was made in Jenkins .v. Kinsgate (Clothing Productions Ltd) (1981) ECR 911 when the Court reiterated that the differences in pay prohibited by Article 119 are "exclusively those based on the difference of the sex of the workers" (p. 925). As pointed out by Lord Denning. M.R. H (Shields .v. E. Commes (Holdings) Ltd 1978 I W.L.R. 1408, at 1419) what Community Law requires is that all discrimination on grounds of sex should be eliminated so that if it can be shown that higher remuneration is paid to a male employee "because he is a man" then Community Law is infringed. Community Law does not, therefore, give an entitlement to equal pay for like work in all circumstances, but permits different "") pay levels for men and women doing like work provided it can be shown that the difference can be explained by circumstances other than the sex of the workers. Irish domestic Law likewise permits a payment of different rates of remuneration on grounds other than sex. In both codes the right to equal pay for like work is a qualified one, and the test to be applied in ascertaining whether an employer has wrongfully discriminated is virtually the same -no breach occurs under Irish Law if the difference in treatment is "on grounds other than sex", or under Community Law if the difference "is due to circumstances other than the sex of the worker". It is clear, therefore, that section 2 of the 1974 Act is perfectly consistent with the obligations imposed on the State by Article 119 of the Treaty and if this Court construes the section in accordance with the natural and ordinary meaning of the words employed in it it will produce a result consistent with those obligations.
I come, then, to consider whether the higher remuneration paid to certain female employees is paid on grounds other than sex within the meaning of section 2 (3) of the 1974 Act.
It is obvious that a simple contractual stipulation to the effect that all women who married should be granted a gratuity would attract the operation of sections 2 and 4 of the 1974 Act in favour of men doing like work because the Bank could not claim that it was paying higher remuneration to women on grounds other than their sex. But that is not what the Bank is doing in this case. A female employee who qualifies for the gratuity and thus gets paid a higher remuneration than her male colleague doing like work gets higher pay not because she is a woman, but because she is a woman who has fulfilled certain conditions, namely, that she has (a) married and (b) had entered the Bank's employment before the year 1974. Her higher pay is not based on her sex but on grounds other than her sex, a point convincingly demonstrated by the fact that all of her female colleagues who marry and who are doing like work will be treated differently from her and on the same footing as men if they had entered the Bank's service after 1st January 1974.
The point can be illustrated by an example. Let us suppose that there are three employees doing like work in a branch of the Bank of Ireland, A, a female employee who entered the Bank's service fourteen years ago in 1973, B, a female employee who recently joined the Bank and C, a male employee who joined the Bank at the same time as A. Let us suppose that all three marry on 19th June, 1987. Only A will qualify for the marriage gratuity. It cannot be said that on her marriage she qualified for the marriage gratuity because she was a woman - if that was the case B should also have qualified. Clearly, there are grounds other than her sex which explain the higher pay which she will enjoy over her two colleagues. And so I think that the Bank has been able to establish that the differences in remuneration between their male employees and some of their female employees doing like work fall within the exemption contemplated in subsection (3) of section 2 and that the determination of the Labour Court that there should be imported into Mr. Kavanagh's contract by virtue of sections 2 and 4 of the 1974 Act a term entitling him to the marriage gratuity was incorrect. The appeal, therefore, succeeds.
(4) In the light of this conclusion I need express no view on the Bank's alternative submission as to the effect of the prohibition against discriminatory contracts contained in section 10 of the 1977 Act as I do not consider that the 1974 agreement was a discriminatory contract.
I appreciate that the Bank's submissions on the hearing of this appeal were not made explicit in the grounds of appeal in the Special Summons, but it would be wrong to dispose of this case on a pleading point and no adjournment of the case was necessary (nor was one asked for) to allow Mr. Kavanagh's advisors time to consider the argument advanced on the Bank's behalf.