C-147/02

ALABASTER

OPINION OF ADVOCATE GENERAL LÉGER delivered on 30 September 2003 1

1. This case provides an opportunity for I — Legal background the Court to clarify, or indeed reconsider, the case of Gillespie. 2That case related to the principle of equal pay for men and women and, more particularly, women's pay during their maternity leave. A — Community law

3. Article 119 of the Treaty establishes the principle of equal pay for men and women. 4It provides as follows:

5. Directive 76/207/EEC 6establishes the principle of equal treatment of men and women for the purposes of access to employment and working conditions. 7 That principle is intended to remove any discrimination on grounds of sex, either 8. Article 8 of Directive 92/85 relates to directly or indirectly, by reference in parti- maternity leave. It provides as follows: cular to marital or family status. 8

6. Article 2(3) of Directive 76/207 provides that the directive is without prejudice to '(1) Member States shall take the necessary provisions concerning the protection of measures to ensure that workers within the women, particularly as regards pregnancy meaning of Article 2 are entitled to a and maternity. continuous period of maternity leave of at least 14 weeks allocated before and/or after confinement in accordance with national legislation and/or practice.

(a) the rights connected with the employ- ment contract of workers within the 11. Under section 164 of the Act, an meaning of Article 2, other than those employee is entitled to statutory maternity referred to in point (b) below; pay if she has been employed for a continuous period of at least 26 weeks with the same employer by the 15th week before the expected week of confinement, her normal weekly earnings are over a certain level, she has given the employer the (b) maintenance of a payment to, and/or appropriate notice and the baby is due entitlement to an adequate allowance within 11 weeks. for, workers within the meaning of Article 2;

(3) The allowance referred to in point 2(b) 12. Under section 165(1) of the Act, shall be deemed adequate if it guaran- statutory maternity pay is payable for a tees income at least equivalent to that maximum of 18 weeks.

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13. Section 166(1) of the Act provides that No 1335 of 1996 ('the Regulations'), lay there are two rates of pay, the higher rate down certain conditions for applying the and the lower rate. Act with regard to statutory maternity pay.

14. Section 166(2) of the Act prescribes that the higher rate is a rate equivalent to 18. Regulation 21(2) of the Regulations 90% of the woman's normal weekly earn- defines the 'appropriate date' as the first ings for a period of eight weeks immediately date of the 14th week before the expected preceding the 14th week before the week of confinement, or the first day in the expected week of confinement or the lower week in which the woman is confined, rate, whichever is the higher. The lower rate whichever is earlier. is a flat-rate weekly payment.

'In any case where a woman receives a backdated pay increase which includes a sum in respect of a relevant period, normal weekly earnings shall be calculated as if such sum was paid in that relevant period even though received after that period.' 25. On 12 December 1995 Mrs Alabaster received a salary increase with effect from 1 December. However, this salary increase was not reflected in her statutory maternity pay calculation because it came after the relevant period for calculating normal earn- ings. II — The main proceedings

21. Mrs Michelle K. Alabaster was an employee of Woolwich pic ('the Wool- wich') in the United Kingdom from 7 December 1987 to 23 August 1996. 26. Pursuant to Regulation 21(3) of the Regulations, the relevant period in Mrs Alabaster's case began on 1 September 1995 and ended on 31 October 1995.

22. In May 1995 she became pregnant.

23. She commenced maternity leave on 8 27. Regulation 21(7) of the Regulations January 1996. Her expected week of was not applicable in Mrs Alabaster's case confinement was 11 February 1996 since it only entered into force on 12 June although she gave birth on 2 February 1996. In any event, the provision would not 1996. have applied because her pay increase was

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the woman is entitled to have that pay rise relates such as the numbers of rise taken into consideration in calcu- hours worked, and the reason for lating or re-calculating the earnings- the pay increase? related element of her SMP?

(2) Is the answer to Question 1 affected by whether the effective date of the pay (iv) Does it follow that if there is a rise commences: (i) prior to the begin- reduction in pay after the end of ning of the woman's maternity leave, the relevant period but before the (ii) prior to the ending of the period of end of the woman's period of the earnings-related period of her SMP, maternity leave, her SMP should or (iii) on some other date and, if so, be calculated or re-calculated to on what date? take account of the reduction of pay, and if so, how is this to be done?'

(3) If the answer to Question 1 is in the affirmative,

IV — First question (i) how should the calculation or re- calculation of the normal weekly earnings in the relevant period take into account the pay rise? 33. The first question relates to the inter- pretation of Article 119 of the Treaty and the Gillespie judgment.

35. The answer to that question depends on the scope to be given to the Gillespie judgment. I shall therefore begin by con- sidering the scope of that judgment (section 38. The Court of Appeal in Northern A below). But I shall also set out the Ireland, which was seised of the dispute, difficulties which the Gillespie judgment referred four questions to the Court for a raises (in section B) and look at how the preliminary ruling. It asked, in essence, Court's case-law on the subject has evolved whether the principle of equal pay required in this area (section C). Those two matters that the plaintiffs continue to receive full will lead to a consideration of whether a pay while on maternity leave or, if applic- woman's right to have a pay rise taken able, that they receive a pay rise awarded account of in her maternity pay ought not before or during their maternity leave. to be based on Directive 92/85 rather than on the principle of equal treatment (section D).

39. The Court replied to those questions as follows:

A — The scope of the Gillespie judgment

36. The facts giving rise to the dispute in '12 The definition in the second paragraph Gillespie were analogous to those in this of Article 119 provides that the con- case. cept of pay used in the abovemen- tioned provisions includes all consideration which workers receive directly or indirectly from their employers in respect of their employ- ment. The legal nature of such con- 37. Ms Gillespie and 16 other workers sideration is not important for the took maternity leave during 1988. In purposes of the application of Article November 1988 they had obtained back- 119 provided that it is granted in dated pay increases which took effect on 1 respect of employment....

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19 However, that directive does not apply fore requires that a woman who is still ratione temporis to the facts of the linked to her employer by a contract of present case. It was therefore for the employment or by an employment national legislature to set the amount relationship during maternity leave of the benefit to be paid during must, like any other worker, benefit maternity leave... from any pay rise, even if backdated, which is awarded between the begin- ning of the period covered by reference pay and the end of maternity leave. To deny such an increase to a woman on maternity leave would discriminate against her purely in her capacity as a worker since, had she not been preg- 20 That being so, it follows that at the nant, she would have received the pay material time neither Article 119 of the rise. EEC Treaty nor Article 1 of Directive 75/117 required that women should continue to receive full pay during maternity leave. Nor did those provi- sions lay down any specific criteria for determining the amount of benefit to be paid to them during that period...

5

21 As to the question whether a woman on maternity leave should receive a pay rise awarded before or during that period, the answer must be yes.

40. The Court therefore held that the principle of equal pay laid down in Article 119 of the Treaty did not require that women should continue to receive full pay during maternity leave nor did it lay down 22 The benefit paid during maternity specific criteria for determining the amount leave is equivalent to a weekly pay- of maternity benefit payable to them. On ment calculated on the basis of the other hand, it found that the principle of average pay received by the worker at non-discrimination does require that the the time when she was actually work- maternity benefit must include pay rises ing and which was paid to her week by awarded between the beginning of the week, just like any other worker. The relevant period and the end of maternity principle of non-discrimination there- leave.

45. The Commission agrees with Mrs 43. The United Kingdom submits that Alabaster's analysis. It contends that if a although the pay increases in Gillespie were Member State opts for a system of mater- decided on before or during the plaintiffs' nity pay based on a woman's earnings, that maternity leave, they were backdated to the system must comply with Article 119 of the relevant period. In its judgment therefore Treaty. This means, following Gillespie, the Court simply found that a pay increase that maternity pay must reflect any pay of that kind must be reflected in the amount rises awarded before or during the woman's of maternity benefit. The Court did not, maternity leave. however, establish a principle that any pay rise awarded before or during the period of maternity leave but outside the relevant period must be reflected in the maternity benefit. In the United Kingdom's view, such an interpretation of Gillespie would create considerable legal uncertainty as well as a whole host of practical difficulties.

46. I believe that the scope of the Gillespie judgment is clear. In my view the Court 44. Mrs Alabaster challenges that reading established a principle under which mater- of Gillespie. She submits that there is nity pay calculated on the basis of a nothing in the judgment to support the woman's earnings during a specified period claim that the pay rises were backdated to must reflect any pay rise awarded between the relevant period. In any event she the beginning of the relevant period and the considers that the wording of the Gillespie end of maternity leave.

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54. Paragraphs 21 and 22 of the judgment a preliminary ruling must be yes. The Court are expressed in terms that are clear and may therefore decide that, under the Gille- general. Paragraph 21 states: 'As to the spie judgment, statutory maternity benefit question whether a woman on maternity calculated on the basis of a woman's leave should receive a pay rise awarded average earnings during a specified period before or during that period, the answer must include pay rises which are awarded must be yes'. Similarly, paragraph 22 states before or during her maternity leave, but that '... a woman... must... benefit from any outside the relevant period laid down by pay rise ... which is awarded between the national law. beginning of the period covered by refer- ence pay and the end of maternity leave...'. Finally the operative part of the Gillespie judgment states in clear and general terms as follows: 57. However, like the United Kingdom, I think that Gillespie raises a number of difficulties. In view of those difficulties, and the way in which the case-law has de- veloped, I propose to invite the Court not to uphold the judgment in Gillespie. As we 'To the extent that it is calculated on the shall see, as Community law currently basis of the pay received by a woman before stands, it is on Directive 92/85, rather than ... maternity leave, the amount of benefit on the principle of equal pay, that a must include pay rises awarded between the woman's right to have her pay rise taken beginning of the period covered by the into account ought to be founded. reference pay and the end of maternity leave, as from the date on which they take effect.'

63. The Court held in paragraphs 16 to 20 59. In Gillespie, 17 the Court inferred from of the Gillespie judgment that Article 119 that principle that a woman who is on of the Treaty does not apply to women on maternity leave must, like any other worker maternity leave. The reason for that exclu- who is actually working, benefit at once sion is that the prohibition laid down by from any pay rise, even if it is awarded Article 119 of the Treaty only applies in outside the relevant period or during her cases involving discrimination between men maternity leave. This requirement means and women, whereas the Court takes the that the pay rise must be reflected in the view that a woman on maternity leave is in amount of salary or benefit paid to the a special situation requiring that she be woman during her maternity leave. afforded special protection, but which is not comparable with any other situation. The Court thus concluded that Article 119 of the Treaty does not require that women continue to receive full pay while on maternity leave, nor does it lay down any criterion for determining the amount of maternity benefit. 60. However, the particular feature of the Gillespie judgment is the fact that, in so doing, the Court applied the principle of non-discrimination to a woman on mater- nity leave and, more particularly, to the pay she receives during that time.

64. Yet at the same time the Court held in paragraphs 21 and 22 that the principle of non-discrimination requires that maternity benefit calculated on the basis of the pay received by the woman must take account of any pay rise awarded before or during 61. It seems to me that this particular application of the principle of equal treat- ment raises two sets of difficulties. 18 — It is perhaps useful to point out that by 'the principle established in Gillespie' I mean the Court's finding that the principle of non-discrimination requires that statutory maternity pay based on the woman's earnings during a specified period must include pay rises awarded before or 16 — Ibid, (paragraph 29). during her maternity leave (see paragraph 22 of the 17 — Paragraphs 21 and 22. Gillespie judgment).

66. Ultimately, the Gillespie judgment seems to fall part way between two approaches, which should have been taken 70. But if the principle of non-discrimina- to their logical conclusion. The first is to tion is to be applied correctly, account must exclude application of the principle of non- also be taken of any adverse matters arising discrimination during maternity leave. before or during maternity leave. Therefore, However in that case the principle cannot if the woman were to suffer a reduction in entail an obligation to take account of a pay or loss of earnings before or during her rise when calculating maternity benefit. The second is to apply the principle of non- discrimination to a woman on maternity leave. However in that case Article 119 of 19 — SIT order of the national court of 2 6 February 2002 [paragraphs 16 and 17) and Question 3(III)and (IV) the Treaty requires that the woman receive referred for a preliminary ruling. her full salary during the whole period of 20 — See, inter aha , the written observations of the United Kingdom (paragraphs 26 and 2 7 ). her maternity leave. 21 — See the Gillespie judgment , paragraph 11.

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maternity leave, the principle of non-dis- effect moves the relevant period to the end crimination would demand that such reduc- of the pregnancy, which is the time when tion or loss too be reflected in the amount women are statistically less able to work of her maternity benefit. To do otherwise normally. would be to apply the principle of non- discrimination inconsistently, which would be incompatible with the requirements of the principle of legal certainty.

22 — The United Kingdom noted a further negative consequence 72. That would be all the more regrettable of the Gillespie judgment. It pointed out that under Directive 92/85, the Member States are free, with regard given that the purpose of the relevant to women's earnings during their maternity leave, to period in the United Kingdom appears to choose between paying a proportion of the woman's earnings and paying a flat-rate benefit (such as EUR 50 per be to protect women against any adverse week). It also explained that in the United Kingdom it is the employer who has the responsibility for calculating the events that occur before or during their amount of maternity benefit and that more than 70% of maternity leave. The United Kingdom employers are small- or medium-sized enterprises, so that it is unlikely that they have the necessary resources to make explained that this period was chosen so frequent, complex calculations. In view of those factors, the United Kingdom indicated that the principle established that the woman's average earnings would in Gillespie created an 'administrative nightmare for be calculated during a period in her employers' since it requires them to take account of all increases in pay awarded before or during maternity leave pregnancy (between the fourth and sixth regardless of the amount. The United Kingdom therefore explained that the Gillespie judgment could cause certain months) in which as a rule she is subject to Member States to abandon an earnings-related regime in few pregnancy-related health problems. favour of a flat-rate benefit one. I believe that the risk of provoking such change is real given the pressure which employers are one way or another able to exert on the competent authorities. Furthermore, a change of this order would be detrimental to women because the flat-rate regime is in most cases more unjust than the earnings- related one. However to my mind, it is not certain that Member States are entitled to make such a change. Article 1(3) of Directive 92/85 states expressly: 'This Directive may not have the effect of reducing the level of protection afforded to pregnant workers, workers who have recently given birth or who are breastfeeding compared with the situation which exists in each Member State on the date on which this Directive is adopted'. The provision could 73. However, as the United Kingdom therefore preclude the Member States invoking the freedom accorded by Directive 92/85 to justify a change of regime emphasised, by requiring that all matters entailing a reduction in the protection which women enjoy that arise prior to maternity leave be taken during their maternity leave in the Member State con- cerned. into account, the Gillespie judgment in

78. Similarly, the Court has found that the 76. Under the current case-law, the Court principle of equal pay precludes an applies the principles of equal pay and employer, when granting a Christmas equal treatment outside the period of bonus, from taking a woman's absence on maternity leave only. maternity leave into account so as to reduce the amount thereof. 28The Court also takes the view that the principle of equal pay demands that a woman continue to receive full pay where she is unfit for work before her maternity leave by reason of her 77. Thus the Court has held that the pregnancy, if men who are unfit for work principle of non-discrimination precludes have that right. 29 refusing to enter into a contract of employ- ment with a female worker on account of her pregnancy; 2 3dismissal of a female worker for the same reason; 24dismissal of a female worker for absences due to incapacity for work caused by illness resulting from her pregnancy; 25an employ- er's refusal to allow a woman to return to work on the ground that she failed to 79. It is clear that these various different events — recruitment, dismissal, return to work, assessment, bonus payments, sick 23 — Cases C-177/88 Dekker [1990] ECR I-3941, paragraph leave — occur outside the period covered 14, and C-207/98 Mahlburg [2000] ECR I-549, paragraph 30. by maternity leave. 24 — Cases C-179/88 Handels- og Kontorfunktionærernes For- bund, C Hertz') [1990] ECR I-3979, paragraph 13, C-421/92 Habermann-Beltermann [1994] ECR I-1657, paragraph 26, C-32/93 Webb [1994] ECR I-3567, para- graph 29, and C-109/00 Tele Danmark [2001] ECR 26 — Case C-320/01 Busch [2003] ECR I-2041, paragraph 47. I-6993, paragraph 34. 27 — Thibault, paragraph 33. 25 — Case C-394/96 Brown [1998] ECR I-4185, paragraph 28. By that judgment the Court reversed its earlier case-law in 28 — Case C-333/97 Uwen [1999] ECR I-7243, paragraph 51. Hertz (paragraph 19) and Case C-400/95 Larsson [1997] 29 —Case C-66/96 Høj Pedersen and Others [1998] ECR ECR I-2757, paragraph 26. I-7327, paragraph 41.

84. The Court rejected that argument on '...pregnant workers and workers who have the ground that Article 11 of Directive recently given birth or who are breastfeed- 92/85 only applies to pay or benefits ing are in an especially vulnerable situation received by workers in the context of which makes it necessary for the right to maternity leave.34Since the dispute in that maternity leave to be granted to them but case concerned incapacity for work before which, particularly during that leave, can- maternity leave, the Court held that Article not be compared to that of a man or a 119 of the Treaty required that a woman woman on sick leave'. 31

32 — Ibid., paragraphs 29 to 36. 30 — Case C-411/96 Boyle [1998] ECR I-6401. 33 — Paragraph 38. 31 — Ibid., paragraph 40. 34 — Paragraph 39.

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too continue to receive full pay if she is unfit if it is contrary to the provisions of for work. 35 Directive 92/85. 37

86. It follows from those judgments that, since the entry into force of Directive 92/85, the Court has drawn a distinction between two separate periods. The first covers pregnancy up to the beginning of maternity leave, and the second covers the period of D — The basis of the woman's right maternity leave. The Court applies Article 119 of the Treaty and the principle of equal treatment during the first period only. When the woman is on maternity leave, however, her position is considered in the 89. As we have seen, Directive 92/85 was light of the provisions of Directive 92/85 adopted on the basis of Article 118 A of the alone. That means that if the woman suffers unfavourable treatment during her mater- nity leave, such treatment is only prohibited 37 — See also to that effect Ghailani, D., 'La protection des droits liés a la grossesse et à la maternitée dans l'ordre juridique communautaire', Revue belge de sécurité sociale, 2002, p. 367 et seq. (pp. 383 and 386) and Berthou, K., and Masselot, A., 'Egalité de traitement et maternité. 35 — Paragraphs 35 and 37. Jurisprudence récente de la CJCE', Droit social, 1999, p. 36 — Paragraphs 22 to 24. 942 to 947 (p. 946).

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Treaty to confer special protection on 91. It seems to me that subparagraph (a) workers during pregnancy and maternity could be interpreted as covering pay rises leave. The Community legislature took the awarded before or during maternity leave. view that pregnant workers, workers who A worker's entitlement to benefit immedi- have recently given birth and workers who ately from a pay rise awarded to her may be are breastfeeding are in many respects a regarded as a 'right connected with [her] specific risk group and that measures ought employment contract'. 39 to be taken to ensure their safety and health. 38 It thus adopted a range of protective measures, such as the prohibition on dismissing women during pregnancy and maternity leave, and time off for antenatal appointments.

94. Furthermore it seems to me that the application of Directive 92/85 would enable certain adverse events that occur during 96. That view is supported by the wording maternity leave to be excluded. 42 of Article 11(2)(a) of Directive 92/85. Whilst immediate entitlement to the benefit of a pay rise awarded while a woman is on maternity leave can amount to a 'right' connected with her contract of employ- ment, it is difficult to argue that an obligation to reflect any reduction in or loss of earnings in the amount of maternity benefit constitutes such a 'right'. In other words the concept of 'rights connected with the employment contract' would require that account be taken of pay rises awarded 95. It will be recalled that the purpose of before or during maternity leave, but not of Directive 92/85 is to ensure that women are reductions in or losses of earnings suffered afforded special protection during their during maternity leave. Such reductions or maternity leave. In addition, Article 1(3) losses could occur only after the end of the of the Directive contains the idea that woman's maternity leave. Finally the inter- application of the Directive may not have pretation I have proposed is consistent with the effect of reducing the level of protection the current case-law on the protection of afforded to pregnant workers, workers who rights arising in connection with pregnancy have recently given birth or who are and maternity. 43 It entails applying only breastfeeding. It could be argued on the the provisions of Directive 92/85 to women basis of those two elements that a woman on maternity leave and in particular to their pay while on maternity leave.

V — Second question

102. The first two parts relate to the 99. By its second question the Court of detailed rules for applying the principle Appeal is asking whether the fact that a pay established in Gillespie. The national court rise takes effect before the beginning of is asking how a pay rise is to be taken into maternity leave, before the end of the account in calculating the woman's normal period of payment of the earnings-related earnings during the relevant period. It also element of maternity pay or, if appropriate, wishes to know whether the relevant period on some other date, has any effect on the prescribed by national law ought to be reply to the first question. changed.

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103. Those questions are clearly of funda- Gillespie in the event that the judgment mental significance to employers in the requires that maternity pay take account of United Kingdom. Following the judgment pay rises awarded before or during mater- in this case they will have to calculate or nity leave but outside the relevant period. review maternity pay in relation to all The Court of Appeal is asking whether women awarded a pay rise before or during Article 119 of the Treaty requires that, if it their maternity leave. Having regard to the does, other factors occurring before or large number of possible scenarios and during maternity leave must be taken into difficulties, the national court and the account, in particular any loss of or defendant in the main proceedings 44 seek reduction in earnings. detailed guidance on how to do this.

104. However it seems to me that those questions can only be dealt with applying the principle of procedural autonomy. 45In the absence of any Community legislation in this area, it is for the legal system of each Member State to lay down the detailed rules for applying the judgment delivered in this case, including any immediate imple- menting measures.

(2) However, Article 11(2)(a) of Council Directive 92/85/EEC of 19 October 1992 on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding (tenth individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC) requires that where statutory maternity benefit is calculated on the basis of the worker's average earnings during a specified period, that benefit must include any pay rises awarded before or during the worker's period of maternity leave.

(3) In the absence of any Community legislation in this sphere it is for each Member State to determine the detailed rules according to which the pay rises referred to in paragraph 2 are to be taken into account in the amount of the woman's statutory maternity pay.

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