C-320/00

LAWRENCE AND OTHERS

O P I N I O N O F ADVOCATE GENERAL GEELHOED delivered on 14 March 2002 1

I — Introduction equal value is set out in Article 141 EC. The first subparagraph of Article 141(2) EC provides:

1. The question central to the present case is whether female employees who, follow- ing a competitive tendering procedure by the tendering body for which they worked, were transferred to the employers to whom 'For the purpose of this Article, "pay" the tender was awarded, argue in support means the ordinary basic or minimum wage of a claim for equal pay for men and or salary and any other consideration, women brought against their present whether in cash or in kind, which the employers may be compared with male worker receives directly or indirectly, in comparators working for their previous respect of his employment, from his employer. employer.'

3. The first paragraph of Article 1 of II — The legal framework Council Directive 7 5 / 1 1 7 / E E C of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women 2 provides:

A — Community law

4. Council Directive 77/187/EEC of Member States may limit the period for 14 February 1977 on the approximation observing such terms and conditions, with of the laws of the Member States relating to the provision that it shall not be less than the safeguarding of employees' rights in the one year.' event of transfers of undertakings, busi- nesses or parts of businesses, 4amended by Directive 98/50/EC, 5applies to the transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger. Article 3(1) provides that the transferor's rights and B — National law obligations arising from a contract of employment or from an employment rela- tionship existing on the date of a transfer are, by reason of such transfer, to be 5. In the United Kingdom, the principle of transferred to the transferee. equal pay is enshrined in the Equal Pay Act 1970 ('the 1970 Act'). Section 1(2) of the 1970 Act provides that a woman employed on like work with a man 'in the same employment' or on work rated as equival- ent with that of such a man is entitled to the Article 3(2) provides: modification of any term in her contract of employment which is or becomes less favourable than a comparable term in the contract under which her male comparator is employed.

'Following the transfer within the meaning of Article 1(1), the transferee shall continue 6. Section 1(3) provides that the employer 4 — OJ 1977 L 61 of 5 March 1977, p. 26. has a defence to a claim if he proves that 5 — Council Directive 98/50/EC of 29 June 1998 amending the variation between the woman's Directive 77/187/EEC on the approximation of the laws of contract and the man's contract is genu- the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses (OJ 1998 L 201 of 17 July inely attributable to a material factor other 1998, p. 88). than the difference in sex.

9. Up to the end of the 1980s school meals 6 — The competitors employed exclusively women, and at lower for pupils and the cleaning of school rates of pay.

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eluded that the work performed by the second round of tendering which took appellants was of equal value to the various place in 1993, lost the greater part of the jobs performed by men, such as gardening, catering and cleaning contracts to the collection of household waste and drainage respondents named in point 8 above. Two maintenance. of the three respondents were unaware that these transactions might come under the Transfer of Undertakings (Protection of Employment) Regulations, by which the United Kingdom had implemented Direc- tive 77/187. The employees concerned were 13. The employees concerned were ulti- for that reason dismissed by the Council mately successful at final instance. 7The and subsequently re-employed by those Council's defence that lower pay for those private undertakings. The employees were employees was necessary to make it poss- thereby obliged to accept less favourable ible to compete in a competitive tendering terms and conditions of employment than procedure on an open market with com- those which the DSO had offered them mercial undertakings was rejected by the hitherto (terms and conditions which were House of Lords. The House of Lords ruled already more unfavourable than those of that it was impossible to say that the Ordinary' Council employees; the final difference in pay was genuinely due to judgment in the case of North Yorkshire any material factor other than the differ- County Council v Ratcliffe had not yet ence in sex. The female employees were been delivered). entitled to compare, for equal-pay pur- poses, their own working conditions with those of men employed by the Council in other areas of the local government service and who, as the job evaluation study found, performed work of equal value.

19. The first-named category of employees invoke Article 141 EC in the main proceed- ings only by way of alternative submission. They principally invoke Directive 77/187, as implemented in English law by the — those who were former employees of Transfer of Undertakings Regulations. the Council and who were then immediately employed by one of the respondents;

20. The interpretation and application of that directive, and in casu those of the Transfer of Undertakings Regulations, are, however, in no respect in issue in the present reference for a preliminary ruling.

— those employed by the Council who did not accept employment with one of the respondents, or who did accept employment with one of the respon- 21. The parties to the main proceedings dents but left that employment more also agreed to proceed on the basis that than six months before the main appli- there is a difference, operating to the cations were brought; appellants' disadvantage, between their

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terms and conditions of employment and ever, in a decision on 16 April 1997 against those of their comparators. The parties the appellants. The Employment Appeal further base themselves on the following Tribunal confirmed the findings of the assumptions: Employment Tribunal and dismissed the appellants' appeal on 5 November 1998. The appellants were ultimately given leave to appeal to the Court of Appeal. They submit that, in the special circumstances of the present case, Article 141 EC gives them a. There was a transfer of an undertaking a directly effective right to claim, while in when the relevant catering and clean- the employment of the respondents, pay ing contracts were contracted out to equal to that of the male workers employed the respondents; by the Council.

requested a preliminary ruling on the sation effected within numerous public following questions: services during the 1980s and 1990s. In this connection activities which it was considered might also be carried out by private undertakings were put out to tender and privatised. The hope was that the '1. Is Article 141 9directly applicable in introduction of market forces would result the circumstances of this case (as set in cost savings and greater efficiency. The out in this judgment) so that it can be degree to which this turned out to be the relied upon by the applicants in case varies from one Member State to national proceedings to enable them another. In the United Kingdom, the decen- to compare their pay with that of men tralised authorities, the counties, were in the employment of the North York- required to contract out a wide range of shire County Council who are perform- activities which they had previously per- ing work of equal value to that done by formed under their own management. the applicants?

26. For the employees concerned, the result 2. Can an applicant who seeks to place of this process was that they transferred reliance on the direct effect of from a public employment relationship to a Article 141 do so only if the respon- private one. This has, as a rule, impli- dent employer is in a position where he cations for their terms and conditions of is able to explain why the employer of employment. The legal position, remuner- the chosen comparator pays his ation and ancillary conditions of employ- employees as he does?' ment within the public sector tend gen- erally to differ from those normally obtain- ing in the private sector. This means that the transfer from a public to a private employer may bring with it social con- sequences for the employees affected thereby, irrespective of whether those employees happen to be men or women. V — Assessment

that there is also disagreement as to wherever, on the facts of the particular whether that directive applies to the vari- case, sex discrimination in respect of pay ous categories of appellants. These issues can be identified by using the criteria of and other potentially linked issues have, equal work and equal pay. National legis- however, been distinguished in the main lation may not in this regard create any proceedings. The parties to the main pro- artificial barriers. The appellants refer in ceedings agree that the national court this connection to section 1(6) of the 1970 should solely refer to the Court of Justice Act. a question confined to the interpretation of Article 141 EC. In view of the fact that the Court of Appeal, in its referring judgment, expressly excludes potential questions con- cerning the applicability of the directive, such questions may not here be addressed. 30. The appellants take the view that, given the particular circumstances of this case, they ought to be allowed to use the Council's male employees as their com- parators. The only thing that has been changed is the identity of the employer. They are, however, still in the 'same 28. The contracting-out in the present case service' and continue to perform the same coincidentally happens to involve a service work, which has been deemed to be in which many female employees are equivalent to the work performed by male affected. Particularly from the views workers employed by the Council. They expressed and the arguments presented by argue that it follows from paragraph 23 of the appellants in the main proceedings, it is the judgment in Worringham and Humph- evident that, in their view, the fact that the reys 10 that persons employed in the same activities or services contracted out are service may well have different employers. mainly performed by women provides Although the appellants in the present case r e a s o n s for c o n s i d e r i n g w h e t h e r changed their respective employers, that Article 141 EC is applicable in this case. fact, they contend, should not have any One reason for this probably lies in the fact bearing on the comparability of their work that Directive 77/187 certainly does not and conditions of employment with those apply to all of the appellants concerned. of workers who remained in the employ- ment of the Council. Were it to have such a bearing, this would constitute a lacuna in the protection which Article 141 EC is intended to provide.

32. The appellants point out that the Court, in the light of the twofold objective (economic and social) of Article 141 EC as enunciated in Defrenne II, 11 has consist- '... a comparison of duties within the same ently rejected any attempt to impose artifi- fixed establishment of an undertaking or cial constraints on the realisation of the even within a single undertaking will not principle of equal pay. They cite in this always be sufficient. In certain circum- regard, inter alia, the judgment in Mac- stances comparison with work of equal arthys, 12 in which the Court ruled that the value in other undertakings covered by the national statutory requirement of contem- collective agreement in question will be poraneity constituted an impermissible necessary.... in sectors with a traditionally restriction on the scope of Article 141 EC. female workforce, comparison with other sectors may even be necessary. In certain circumstances the additional criterion of "the same place of work" for work of equal value may therefore place a restriction on the principle of equal pay laid down in 33. The appellants then go on to refer to Article [141 EC] and amplified in the the Opinion of Advocate General VerLoren directive in question. The mere fact that such a supplementary condition for equal

11 — Case 43/75 Defrenne v Sabena [1976] ECR 455. 12 — Case 129/79 Macarthys v Smith [1980] ECR 1275. 13 — Case 143/83 Commission v Denmark [1985] ECR 427.

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pay which has no foundation in Article when categorising actual instances where [141 EC] or in the directive has been added women are placed at a disadvantage at must in any event be regarded as an work.' infringement of the Treaty.'

34. The appellants argue further that Advocate General Lenz has also rejected a formalistic approach. They cite his Opinion in Enderby, 14 at point 15 of which he states that: 'The purpose of a conceptual 35. The appellants conclude by referring to scheme [direct and indirect discrimination] the principle of effectiveness and the right is to comprehend methods by which of access to the courts. Member States, they women are placed at a disadvantage in argue, are obliged to take measures to their working lives and not to create ensure that the right to equal pay can be additional obstacles to claims being made effectively relied on before national courts. before the courts in respect of sex-related A provision such as section 1(6) of the 1970 pay discrimination. For this reason, a Act, under which a female employee may formalistic approach should not be adopted use as her comparator only a male employee working in the same employ- ment, has the result that, if she is unable to 14 — Case C-127/92 Enderby [1993] ECR I-5535. find a male comparator, she will be

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36. Mitie Secure Services Ltd ('Mitie'), which is one of the respondents in the main proceedings, the Commission, and the United Kingdom take the view that the appellants cannot invoke Article 141 EC in 37. The United Kingdom Government also the present case. The Commission does not, refers to the judgment in Defrenne II. 16 It as a matter of principle, exclude a compari- takes the view that it follows from that son with employees working for other judgment that the direct effect of employers. Citing point 60 of the Opinion Article 141 EC is limited to those cases in of Advocate General Cosmas in Angestell- which courts can detect discrimination on tenbetriebsrat der Wiener Gebietskran- the basis of a legal analysis. While this kenkasse, 15 the Commission argues that it discrimination may be either direct or is inherent in the notion of discrimination indirect, the crucial factor is the frame of that the same individual or entity must be reference which enables a court to conclude responsible for the difference in treatment. that there is discrimination on grounds of The United Kingdom Government and sex. Where the pay terms of different Mitie also do not exclude a comparison employers cannot be traced to a single with employees working for other source, the United Kingdom Government employers as such, but take the view that submits, pay discrimination on grounds of there must be a common source from sex cannot be confirmed on the basis of a which the terms or conditions of employ- purely legal analysis. By way of illustration ment at issue in the specific case can be it presents the situation in which one employer provides a higher rate of pay than another employer. Employees of the 15 — Case C-309/97 Angestelltenbetriebsrat der Wiener Gebietskrankenkasse [1999] ECR I-2865. The Commis- sion refers to the passage in which the Advocate General notes that '... the principle of equal pay laid down by 16 — Cited in footnote 11. The United Kingdom Government Article [141 EC] is clearly aimed at the body responsible refers in the present context to paragraphs 19 to 22 of that for adopting the rules in question.' judgment.

38. The second problem that has been alluded to is that an employer who is accused of pay discrimination on the basis of sex, on the ground that he pays his workers a lower rate than that received by c o m p a r a t o r s w o r k i n g for a n o t h e r 40. The United Kingdom Government is employer, is not in a position to explain also unable to accept the appellants' argu- that difference or to explain why the ment concerning effectiveness and access to difference in pay is objectively justified. For that reason also the Commission, Mitie and the United Kingdom Government take 17 — Cited above in footnote 14. 18 — Cited above in footnote 12. the view that a difference in remuneration 19 — Case C-200/91 Coloroll Pension Trustees [1994] must be traceable to one source alone. They ECR I-4389.

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43. It is on the basis of that case-law not 41. The Commission, further, notes that open to question that the appellants in the part of the problem which has arisen ought main proceedings would succeed in their to have been resolved through the appli- claims if they were still employed by the cation of the Transfer of Undertakings Council or the DSO. The decision delivered Regulations. However, the Commission in the case of North Yorkshire County also points out that at the time of the Council v Ratcliffe is in this regard transfer of the undertaking the rates of pay unequivocal and entirely in accordance are frozen at that level. The rights and with the case-law of the Court. obligations passing to the new employer do not, however, go so far as to include the 22 — Cited above in footnote 11. 23 — Cited above in footnote 12. 20 — Cited above in footnote 11. 24 — Cited above in footnote 10. 21 — Cited above in footnote 12. 25 — Case C-381/99 Brunnhofer [2001] ECR I-4961.

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46. It is not evident from the wording of Article 141 EC that the comparison must be confined to one and the same employer. Its case-law demonstrates that the Court 49. This thus concerns three categories. has consistently stood by its requirement The first covers cases in which statutory that for a finding of direct discrimination rules apply to the working and pay con- there must be a clear difference in pay ditions in more than one undertaking, vis-à-vis male co-workers working in the establishment or service. By way of 'same establishment or service' (see, inter example, one may think of the salaries of

26 — For example, Defrenne II, Macarthys, Commission v 27 — Cited above in footnote 11. Denmark, Enderby and Angestelltenbetriebsrat der Wiener Gebietskrankenkasse, already cited above in footnotes 11, 28 — Cited above in footnote 12. 12, 13, 14 and 15 respectively. 29 — Cited above in footnote 19; see paragraphs 102 and 103.

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54. It is clear from the foregoing that the direct effect of Article 141 EC extends to employees working for the same legal person or group of legal persons, or for public authorities operating under joint 52. Advocates General Cosmas and Lenz, control, as well as cases in which, for and now the United Kingdom Government, purposes of job classification and remun- were right to stress this as being an essential eration, a binding collective agreement or criterion. Why is this so? Article 141 EC is statutory regulation applies. In all these

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cases the terms and conditions of employ- situation, that he would be able to align ment can be traced back to a common himself accordingly. Moreover: in which source. other undertaking are the activities 'of equal value' to be sought?

LAWRENCE AND OTHERS

effect of aligning ancillary and structural supplies the actual services and who is differences in remuneration, the responsi- responsible for the employees providing bility for which is traceable to a variety of those services. It does not imply any sources. responsibility for the terms and conditions of employment within the undertakings which provide the services purchased by the Council.

59. The particular circumstances under- lying the questions in the present reference provide no grounds on which to refine or distinguish the existing case-law of the 61. The argument that the services pro- Court in this regard. Where reorganisation vided by the Council itself and those of the public service results in a certain provided for it are ultimately funded from number of its existing activities being taken the same source is one which I consider over by private undertakings, this may, by forthwith to be untenable. Authorities pur- its very nature, have consequences for the chase goods and services on a large scale. employees affected. While they may be The Council cannot be obliged, when protected against specified social con- contracting out specified services, to sequences of such a transfer, as envisaged impose on the suppliers concerned a by Directive 77/187, Article 141 EC is not requirement that the terms and conditions intended for that purpose. Article 141 EC of employment for women whom they is, furthermore, inappropriate for such an employ must be the same as those of male end: ought female employees to forfeit the workers who perform equivalent work for hypothetical protection which they may the Council. A fortiori, this argument derive from it if the transferred activities cannot be used to oblige the present were 'mixed' activities? employers to continue to bring the working conditions of women whom they employ into line with those of men performing equivalent work for the Council.

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