Employment and Industrial Relations Law

A Case Study on the Principle of Equal Pay for Equal work

26 Sep 2023

8 min read

Authors: Ann Bugeja, Christine Borg Millo & Miguel Mallia

Case Number 2929

In the case of Jonathan Micallef et vs AirMalta p.l.c. vs The Union of Cabin Crew Members, decided by the Industrial Tribunal on the 25th of July 2023, a collective agreement which existed between AirMalta p.l.c and the Union of Cabin Crew allowed for employees within the same pay scale category to have large discrepancies in their salary. Furthermore, certain employees with a higher pay scale received less pay than other employees within a lower pay scale category. The plaintiffs alleged that the specific clause in the collective agreement allowing for such discrepancies were discriminatory and overall go against the principle of ‘Equal Pay for Equal Work of Equal Value’ which is considered “an essential and indispensable part of the Acquis Communautaire”[1].

AirMalta p.l.c disagreed, stating that the principle of ‘Equal Pay for work of Equal Value’ was respected and that the contractual clause was implemented under objective criteria and applicable to all employees equally. The employer further stated that the clause in discussion was non-discriminatory.

The Union of Cabin Crew, as the other defending party, rejected the claim that it had entered into a prejudicial collective agreement and stated that there was no discriminatory treatment implied.

A. The Principle of Equal Pay for Equal Work

    The principle of ‘Equal Pay for Equal Work’ is enforced through the Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast), the Charter of Fundamental Human Rights and in case law of the European Courts of Justice. The International Labour Organisation (ILO), which aims to promote rights at work, encourages  employment opportunities, enhance social protection and strengthens dialogue on work-related issues, whilst upon the principle’s recognition, dictates:

    Equal Pay for equal work means that similarly qualified men and women will be paid equally when they perform the same or virtually the same work in equivalent conditions”.

    Hence, unequal pay for the same work is considered a form of direct discrimination.

    The Directive directly stipulates that work carried out by the employee is to be remunerated in an objective and proportional manner in relation to colleagues performing work of equal value. The ILO further elaborates on the topic by discussing that “When women and men perform work that is different in content, involving different responsibilities, requiring different skills or qualifications, and is performed under different conditions, but is overall of equal value, they should receive equal remuneration.”

    Moreover, the EU Pay Transparency Directive will further strengthen this principle. The Directive will give employees the relevant information needed to determine whether they are being treated fairly, while giving them access to claim their rights on pay transparency. It will give employees the right to request information pertaining to their individual salary level and the average salary level for employees doing the same work or work of equal value. Employers will be obliged to submit reports on their employee’s pay gap separately by gender. If the gap is more than five percent (5%) and cannot be justified by an objective reason, then an assessment is conducted on the employer in cooperation with worker’s representatives. If from the assessment it results that there was discriminatory treatment, the victims are entitled to adequate compensation with the burden of proof falling under the employer.

    B. The Transposition of Equal Pay for Equal Work in Maltese Law

    Article 14 of the Constitution of Malta transposes the right of Equal Pay for Equal Work in all aspects of legislation in a general manner. The said article does not only delve into the adherence of such principle, yet it also incorporates a promotional approach to the “elimination of all forms of discrimination between sexes”.

    On the other hand, articles 26 and 27 of the Employment and Industrial Relations Act, Chapter 452 of the Laws of Malta specifically stipulate this right. It is applied and further  enforced through Article 30 of the same Act,  in that the Industrial Tribunal may take measures upon complaints received, including but not limited to the annulment of any discriminatory contractual clause and compensation to any aggrieved party.

    C. The principle of ‘Equal Pay for Equal Work’ and Air Malta’s discriminatory collective agreement

    Article 27 of The Employment and Industrial Relations Act reads as follows:

    “Employees in the same class of employment are entitled to the same rate of remuneration for work of equal value:

     Provided  that  an  employer  and  a  worker  or  a  union  of workers as a result of negotiations for a collective agreement, may agree on different salary scales, annual increments and other conditions of employment that are different for those workers who are employed at different times, where such salary scales have a maximum that is achieved within a specified period of time; and

    Provided further that any distinction between classes of employment based on discriminatory treatment otherwise than in accordance with the provisions of this Act or any other law shall be null and of no effect”.

    Article 27 explicitly implements the principle of ‘Equal Pay for Equal Work’. In fact, the case of Jonathan Micallef et vs Airmalta p.l.c. and l-Union of Cabin Crew Members[2] which discusses an alleged discriminatory clause in the collective agreement between the employer (AirMalta p.l.c) and the Union for Cabin Crew is centred on the interpretation of this provision. The allegedly discriminatory contractual clause between AirMalta p.l.c and the Union of Cabin Crew states that:

    “The five (5) years covered by this Collective Agreement, commencing on 1st January, 2018, are subject to a minimum increase of one thousand euro (€1,000) in take home-pay when compared to the best year as chosen by the employee for the period 2014, 2015, 2016 and 2017 as stipulated in the Agreement dated 24th August 2016 (Appendix A) and applicable to employees in employment at the date of signing of this Agreement but excluding part-time employees. If in any year, the employee will not reach the best year threshold plus one thousand euro (€1000), the minimum increase threshold mechanism will apply.

    A corrective mechanism bonus consisting of the different between the actual gross earning of that particular year (2018-2022) and the best take-home added with a top-up of one thousand euro (€1000) will be given, the said bonus will be reflected in the January following the applicable year salary. The take home pay for reduced hours employees shall be calculated on 50% of the average of full-time employees’ take-home pay as long as they work two (2) flights per week.”

    The quoted clause from the collective agreement between the Air Malta p.l.c and The Union for Cabin Crew allowed for wage increases up to 2022 to be based on the best year chosen by the employee between 2014 and 2017. The employees would then receive a minimum of a one-thousand-euro (€1000) bonus on top of the best annual ‘take-home’ pay. The plaintiffs argued that this was discriminatory since the total annual ‘take-home’ pay selected from the mentioned years by the employee also included allowances and overtime pay, apart from the basic salary. Therefore, employees who did not build up overtime hours did not get paid the same despite having the same basic salary. This further allowed for employees on a higher pay scale to be remunerated less than employees in a lower pay scale category. It also allowed for employees within the same pay scale category to have large discrepancies in their ‘take home pay’.

    Furthermore, the Tribunal determined that individuals who were working reduced hours due to personal circumstances such as maternity leave, health issues, or caregiving responsibilities between 2014 and 2017 who were transferring over to full time hours after the stipulated time period, were discriminated against. Employees suffering from such previous disadvantages were not allowed to choose their best paying year between 2014 and 2017 as stated in the collective agreement and their ‘reduced hours’ salary was just doubled instead as a form of compensation as they made the transfer.

    The Tribunal deemed such a clause as being discriminatory and in direct violation of articles 26 and 27 of the Act. Additionally, article 30 of the Act gave the Tribunal the authority to declare such clause as being invalid while compensating the employees collectively a total of five hundred and eight five thousand- and fifty-six-euro (€585,056) to be paid within one (1) month by AirMalta p.l.c.

    In calculating the compensation to be paid, the Tribunal took into account the economic effects that the COVID-19 pandemic caused to the defending society Airmalta p.l.c. Efforts in introducing a ‘social pay’  scheme of one thousand two hundred(1200) euro adopted by the society to avoid redundancies was also taken into consideration when computing the compensation awarded to the plaintiffs. Pertinently, twenty percent (20%) in contributory negligence was reduced from the compensation awarded.

    [1] The ‘Acquis Communautaire’ refers to all treaties, EU legislation, international agreements, court verdicts, fundamental rights and principles and standards laid out in the treaties. Hence the concept is imperative in the European Union.

    [2] The full text can be accessed here.