Lawrence and others v Regent Office Care Ltd [2002] IRLR 822 ECJ

The European Court of Justice has now given judgment in this case which tests the limits of equal pay law and contracting out of services.

The interface between equal pay legislation and contracting out is critical to protecting workers' terms and conditions of employment. There has been huge progress made by the creative use of the law over the past 15 years. Remember the days when the public sector was excluded from the protection given by TUPE - when only transfers in the nature of a 'commercial venture' were covered by the TUPE regulations? At that time, use of the equal pay legislation was the main source of protection for women workers trying to maintain pay parity with comparable male staff employed by the same Council.

The landmark victory in the House of Lords in Ratcliffe v North Yorkshire County Council [1995] IRLR 439 established that where market forces are tainted with sex discrimination, it is no defence to an equal pay claim. The school catering assistants' pay could not be reduced below that of their male comparators under a Job Evaluation Study in order to keep the service in-house under threat of competitive tender.

With the extension of TUPE to cover compulsory competitive tender, incoming contractors could not bid on the basis of lowering terms and conditions of the workforce on transfer. That provided a measure of protection to workers, at least on transfer to a private contractor. What the test case of Lawrence v Regent Office Care Ltd sought to do was establish that the comparison with male workers in local government service held good after the transfer, arguing that the workers were all employed in the same service, even if not, employed by the same employer. Some of the Applicants in the case had been dismissed by the Council and taken on on new, and reduced terms contracts by the contractors; some had transferred over straight from the Council; and some had never worked for the Council and only been employed by the contractor but on the local government service.

An Employment Tribunal had rejected the women's arguments holding that in order to make the comparison 'the person who discriminates has to be in control of both the women's wage and the comparator's wage'. The Court of Appeal then referred the case to the European Court of Justice.

In a particularly short and Delphic judgment which leaves more questions than it answers, the ECJ has rejected the women's claim. The court helpfully reiterates the position that equal pay rights - Article 141 Treaty of Rome - is not limited to the situation where men and women work for the same employer. It repeats that the principle of equal pay may be invoked in cases involving pay discrimination arising directly from legislative provisions or collective labour agreements, as well as in cases in which the work is carried out in the same establishment or service, whether private or public.

However, where the differences identified in the pay and conditions of workers cannot be attributed to a single source, there is no body which is responsible for the inequality and which could restore equal treatment, the claim falls outside the scope of Article 141. The Court does not explain what that means and we will have to await the ECJ's ruling in Allonby due next year, and hope for better illumination of this difficult point.