United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J McMULLEN QC MISS T GILL (of Counsel) Instructed By: Ms J Wade (Solicitor) The Maternity Alliance 45 Beech Street London EC2P 2LX
For the First Respondents For the Second Respondents	MR J HAND QC (of Counsel) Messrs Dibb Lupton Alsop Solicitors Windsor House Temple Row Birmingham B2 5LQ MR C VAJDA QC The Solicitor Dept of Social Security New Court 48 Carey Street London WC2A 2LS


 


MR JUSTICE MORISON: This case concerns the entitlement of a woman whilst on maternity leave to statutory maternity pay.

1. The appellant started her part-time employment with Tesco Stores Limited in January 1994. Her gross earnings were £56 per week. She became pregnant, and started her maternity leave on 17 December 1994. Her expected week of confinement was 28 February 1995; in fact, her baby was born on 12 March 1995. She did not return to work, and resigned with effect from the end of the year. She claimed statutory maternity pay but was refused it because her earnings fell below the minimum level required.
2. Under UK legislation, a woman is entitled to statutory maternity pay if she fulfils three conditions:
3. She has been in "employed earner's employment" with an employer for a continuous period of at least 26 weeks ending with the week immediately preceding the 14th week before the expected week of confinement, and has ceased to work wholly or partly because of pregnancy or confinement [the 'service condition'].
4. Her normal weekly earnings, as defined by statute, for the period of eight weeks before the expected week of confinement are not less than the "lower earnings level" [LEL] immediately before the commencement of the 14th week before the expected week of confinement. The LEL was, at the relevant time, £57 per week. At and above that level, an employed earner is liable to pay Class I National Insurance Contributions; below it she does not [the 'earnings condition']. A person who is earning less than the LEL is not entitled to statutory sick pay.
5. She has reached, or been confined before reaching, the commencement of the 11th week before the expected week of confinement [the 'pregnancy condition'].
6. If due, Statutory Maternity Pay is payable by the employer to the pregnant employee in respect of each week during a prescribed period not exceeding 18 weeks. In respect of the first 6 weeks of her maternity pay period [which starts from 22 weeks before the expected week of confinement] the woman is entitled to 90% of her normal weekly earnings, or to the flat rate if that is higher, and for the remainder of the period she is entitled to a flat rate of, at the relevant time, £52.50 per week. The employer is entitled to recover from the National Insurance Fund at least 92% of the Statutory Maternity Pay by making deductions from their liabilities to the Fund tin respect of the employers' National Insurance Contributions.
7. If a woman does not qualify for Statutory Maternity Pay, she may be entitled to a Maternity Allowance. Such an allowance is dependent upon her having paid National Insurance Contributions for a continuous period of 26 weeks in the period of 66 weeks before the Expected Week of Confinement. Thus, a woman who has recently changed jobs, or who is self-employed may be excluded from Statutory Maternity Pay because she did not satisfy the service condition, but might be entitled to a Maternity Allowance. Equally, a woman who does not satisfy the pay condition, might, if she had previously been in higher paid employment, qualify for the Allowance.
8. A woman who is not entitled to Statutory Maternity Pay or a Maternity Allowance may qualify for Incapacity Benefit. For what might be described as a 'normal' pregnancy, without complications, a certificate of confinement would be sufficient proof that she was incapacitated in respect of the period of 6 weeks before her expected week of confinement and for up to two weeks after the birth. But this benefit is conditional upon the claimant having paid national insurance contributions of at least, at the relevant time, £28.50 in any one tax year before the year in which benefit is claimed; and she must have paid or been credited with National Insurance Contributions equal to £57 in each of the two previous years. A person may not pay a National Insurance Contribution otherwise than through the scheme. In other words, it is not possible for an employee to pay more than she is obliged to pay. A weekly contribution of £1.14 on weekly earnings of £57 gives an idea of the scale: the higher the earnings the greater the level of contribution, with a cut-off point at the higher end of the earnings scale.
9. If a woman is not entitled to Statutory Maternity Pay, a Maternity Allowance or Incapacity Benefit, she may, nonetheless, qualify for Income Support, which is described as a safety net benefit. If she is so entitled, then she would qualify for a flat-rate maternity payment of £100 from the Social Fund. In assessing a woman's entitlement to Income Support, the earnings of her partner would be taken into account.
10. In this case, Mrs Banks was not entitled to Statutory Maternity Pay because she failed to satisfy the earnings condition, although she satisfied both the other conditions. She was not entitled to a Maternity Allowance or to Incapacity Benefit because she did not satisfy the relevant conditions in either case. And, because of her partner's earnings, she was not entitled to Income Support, and, therefore, to the flat-rate payment.
11. The question at issue is whether domestic law has unlawfully restricted her rights to statutory maternity pay, having regard to Article 119 of the Treaty, and to the judgment of the European Court of Justice in Gillespie v Northern Health Board [1996] ICR page 498, commencing at page 510. There, the Court was invited, by the Court of Appeal in Northern Ireland, to answer four questions. I summarise them:

1. Did Article 119, the Equal Pay Directive or the Equal Treatment Directive or any of them require women on maternity leave to receive by way of maternity pay the same pay ('full pay') which she would have received had she been working?

2. If no, then did any of the provisions require that the amount of her maternity pay be calculated by reference to particular criteria?

3. If yes, what are the criteria?

4. If the answer to the first two questions is 'no', do any of the provisions have any application or effect "as respects the amount of pay to which a woman on such leave is entitled"?

12. The answer given by the Court was as follows, and, again, I summarise them:

1. The benefits paid during maternity leave constitutes pay within the meaning of Article 119 and the Equal Pay Directive and are not, therefore, covered by the Equal Treatment Directive as well, which does not apply to 'pay'.

2. Neither Article 119 nor the Equal Pay Directive requires that women on maternity leave should receive full pay during that period.

3. Nor do those provisions lay down specific criteria for determining the amount of benefit payable during that period "provided that the amount is not set so low as to jeopardise the purpose of maternity leave."

4. However, to the extent that the amount of their benefit is calculated by reference to the pay which the woman was receiving before she went on leave, her maternity pay must reflect any pay increases awarded after she went on leave, as from the date of the increase.

13. The Gillespie appellants brought proceedings in relation to maternity leave taken in 1988. On 19 October 1992 the Council of Ministers adopted Directive 92/85/EEC: known as the Pregnant Workers Directive [PWD]. Member States were required to give effect to its terms no later than two years after its adoption. Thus, the Directive was not 'in force' when the Northern Ireland Court of Appeal referred the case to the ECJ [June 1993], although the Directive was in force as at the date of the ECJ's judgment.
14. For present purposes, the relevant passages of the Court's judgment are to be found in paragraphs 14 to 20 inclusive, which are included in this Judgment for completeness:
15. Under the PWD, Article 8(1) requires Member States to take the necessary measures to ensure that pregnant workers are entitled to 14 weeks of maternity leave. Article 11(2)(b) requires to be ensured

"maintenance of a payment to, and/or entitlement to or an adequate allowance for"

pregnant women on maternity leave.

16. Points 3 and 4 of Article 11 provide

"3. The allowance referred to in point 2(b) shall be deemed adequate if it guarantees income at least equivalent to that which the worker concerned would receive in the event of a break in her activities on grounds connected with her state of health, subject to any ceiling laid down under national legislation.

4. Member States may make entitlement to pay or the allowance referred to in points 1 and 2(b) conditional upon the worker concerned fulfilling the conditions of eligibility for such benefits laid down under national legislation.

These conditions may under no circumstances provide for periods of previous employment in excess of 12 months immediately prior to the presumed date of confinement."

In a statement attached to the PWD made by the Council and the Commission on 19 October 1992, it was said, à propos Article 11(3):

"In determining the level of the allowances referred to in Article 11(2)(b) and (3) reference shall be made, for purely technical reasons to the allowance which a worker would receive in the event of a break in her activities on grounds connected with her state of health. Such a reference is not intended in any way to imply that pregnancy and childbirth be equated with sickness. The national social security legislation of all Member States provides for an allowance to be paid during an absence from work due to sickness. The link with such allowance in the chosen formulation is simply intended to serve as a concrete, fixed reference amount in all Member States for the determination of the minimum amount of maternity allowance payable. In so far as allowances are paid in individual Member States which exceed those provided for in the Directive, such allowances are, of course, retained. This is clear from Article 1(3) of the Directive". [I interpolate: which provides that implementation of the PWD is not to be used as an occasion for reducing the previous level of a pregnant woman's entitlement].

In Mrs Banks' case, she was not entitled to any statutory sick pay so that, unless some payment was required, it would appear that there was no breach of Article 11.3 of the Directive. Second, the service condition is more generous than the maximum permitted by Article 11.4 of the Directive.

17. For Mrs Banks, it is contended that under Article 119, as interpreted by the ECJ in Gillespie, she is entitled to an amount of statutory maternity pay which is not so low as to undermine the purpose of maternity leave, namely the protection of women before and after giving birth. A nil entitlement to statutory maternity pay simply because the woman was not earning enough would defeat the purpose of the protection afforded to women by Article 119. She says that if, on a proper interpretation of Article 11(4) of the PWD, it was permissible for a Member State to introduce a 'pay condition' which excludes a pregnant woman from any statutory maternity pay, then to that extent, her rights under Article 119 are greater and must prevail over the Directive. The PWD is irrelevant to her claim, which is based purely on the Treaty.
18. The Government, through the Secretary of State for Social Security, submits that it is most unlikely that the ECJ, which referred to the PWD, was intending to say anything which controverted the PWD's terms. If it had intended to say that the protection afforded to women was more extensive under Article 119 than under the Directive it would surely have said so. Member States are expressly entitled, under the provisions of Article 11 of the PWD, to make conditions for the payment of statutory maternity pay, the effect of which might be to deny a woman entitlement to any such pay; for example, if she failed to fulfil the service condition to which express reference is made in Article 11(4). Further, there is nothing in the Directive or in the statement attached to the Directive which requires a payment to be made if, for example, a person who was off sick would not qualify for statutory sick pay because she had made no contributions to the National Insurance Fund.
19. It seems to us that the outcome of this appeal is dependent upon the true meaning of the judgment of the European Court of Justice in the Gillespie decision. If the Court were saying that Article 119 requires every pregnant woman on maternity leave to be paid some maternity pay (whether or not she fulfilled eligibility criteria) otherwise the purpose of maternity leave would be subverted, then it would appear that there is a conflict between the Treaty and the Directive which contemplates a nil payment, where, for example the service condition is not fulfilled.
20. Since the Directive was not in force at the time when Mrs Gillespie made her claim, and her claim was brought under Article 119, it is to be inferred that the Court's fourth answer (that they were entitled to the pay increase) was based upon its interpretation of Article 119.
21. If there is an apparent conflict between a Treaty provision and a Directive, it would be our duty to refer the conflict to the ECJ for their ruling. Similarly, if there is real doubt about the proper interpretation of a Judgment of the ECJ. All parties invite us to refer questions to the Court if we were left in doubt.
22. We approach the answer to the question at issue with some diffidence, but it seems to us that a true interpretation of the Court's judgment in Gillespie is as follows:

1. Although paid in respect of a period during an employment relationship when a woman is entitled to leave and is not required to work (and is not working), the statutory maternity pay she receives, if any, is pay within the meaning of Article 119. If her maternity pay is based upon her earnings, it would be unlawful not to give her the benefit of any increases in the pay which she would have received had she remained at work. Absence on maternity leave is to be regarded as a temporary and natural break in the working relationship which must not deprive her of all the rights and benefits she would have received had she not required the break, but that does not mean that she is entitled to be paid what she would have received had she been at work.

2. The United Kingdom's statutory maternity scheme is part of its social security system, based upon the concept of national insurance: an employee who earns below a certain level pays no insurance contributions and is entitled to no statutory sick pay nor statutory maternity pay. Member States have a wide area of discretion in relation to the choice of their social security/national insurance arrangements. Broadly, subject to the exception mentioned in Article 11 of the PWD, the Directive is designed to ensure that women receive both maternity leave and maternity pay which must not be set at a level which defeats the objective of the Directive. We think it inherently unlikely that the Court was intending to say that Article 119 required member states to set such a level in cases where a woman did not qualify for any maternity pay by reason of an exception contemplated by Article 11. What it was saying was that where a woman otherwise qualified for maternity pay, the level at which it was set must be sufficient to satisfy the overriding requirement that maternity leave should not be undermined. Had statutory maternity pay been payable the appellant would have received no less than she would have received had she been off work sick. Article 11.3 of the Directive provides a minimum level for maternity pay and it was that provision, we think, which prompted the Court's observation that the payment must not be pitched so low as to defeat the purpose of maternity leave.

23. On this basis, therefore, we do not consider that we should refer any question to the European Court of Justice for their determination. We are satisfied that the appellant cannot rely upon the provisions of Article 119 to found a claim which she could not bring under domestic law and which would not be available to her under the Directive, even if she had been employed by an emanation of the State.
24. We agree with the Tribunal's decision and the appeal must be dismissed.