The Concept of “Single Source” in the Equal Pay (Transparency and Reporting) Regulations

Author: Pamela Dingli

The principle of equal pay for equal work, or work of equal value, is a cornerstone of Maltese employment law, anchored in the Employment and Industrial Relations Act (Chapter 452 of the Laws of Malta) and progressively reinforced through Malta’s transposition of successive EU equality directives. The most recent development in this area is the transposition of Directive (EU) 2023/970 on pay transparency by way of the Equal Pay (Transparency and Reporting) Regulations, Legal Notice 173 of 2026, which introduces a single source criterion for determining whether employees not employed by the same employer may nonetheless be regarded as being in a comparable situation for the purposes of a pay comparison.

This article examines how Regulation 8 of LN 173 of 2026 defines, and arguably restricts, the concept of a “single source”, and compares this domestic formulation with the broader interpretation developed by the Court of Justice of the European Union under Article 157 TFEU, most notably in Lawrence (as mentioned hereunder), and as subsequently codified in Article 19 of Directive (EU) 2023/970. It traces the origins of the single source doctrine, compares Malta’s approach with the transposing legislation of other Member States, and considers whether Regulation 8’s restrictive formulation is compatible with EU law and with the interpretative obligations placed on Maltese courts and tribunals, including by reference to the Industrial Tribunal’s reasoning in Jan Sammut v HSBC Bank Malta plc.

Maltese Regulations and the EU Directive

Regulation 8 (1) of Legal Notice 173 of 2026 (S.L.452.172) stipulates that female and male workers shall be deemed to be in a comparable situation not only when they are employed by the same employer but also when their pay conditions are established by a single source.  Regulation 8 (2) contains the presumption that a single source exists ONLY when:

1. Undertakings are controlled by the same persons and
2. When their economic activity is essentially of the same nature. [1]

Article 19 of the Directive (EU) 2023/970 likewise recognises that female and male workers shall be deemed to be in a comparable situation when a single source establishing the pay conditions exists but does not impose the aforementioned additional restrictions of Regulation 8 (2).[2] This might indicate that Malta has narrowed the Directive’s concept of “single source’’.

Another fundamental difference between the Directive and Regulation 8 of LN 173 of 2026 is based on the specifications of one of Malta’s large employers, that is, the Public Service. Indeed, the provision expressly stipulates that bodies falling within the public service and namely any ministries and government departments appointed as the employer of public officers within the public service by the Public Service Commission, shall be treated as one single source.  Other public sector entities, authorities, corporations, agencies  or  other  bodies  shall  each  individually constitute a separate single source notwithstanding that such entities fall within the remit of the Government of Malta or are subject to coordination, policy direction or oversight by a central authority or body of the Government of Malta’. [3]

The Origins of the Concept of “Single Source’’ in Equal Pay Law

Prior to the much recent EU Directive 2023/970, the CJEU relied on Article 157 of the TFEU (previously Article 141 TEC) in order to affirm this notion of “single source.’’

Defrenne v. Sabena (No. 2) of 1976, was the primary case establishing the direct effect of the then Article 119 EEC (Article 157 TFEU, which was previously Article 141 TEC). The judgement did not expressly address “single source” but established that Article 119 could apply not just to state action but to collective agreements and individual contracts, laying groundwork for later comparator questions. It set out that direct effect applies “in particular” to two categories (1) discrimination originating directly in legislation or collective agreements, and (2) unequal pay for equal work in the same establishment or service.

The preliminary reference from the UK Court of Appeal to the CJEU in A.G. Lawrence and Others v Regent Office Care Ltd[4].is the CJEU’s decision which directly considers the “single source” test for the purposes of Article 157 TFEU. The case concerned female catering and cleaning workers whose employment had been contracted out to a different employer, by means of an outsourcing situation. These workers tried to compare their pay to that of men still employed by the original employer.  The CJEU held that Article 141 TEC could not apply because where the differences in pay cannot be attributed to a single source, there is no body responsible for the inequality which could restore equal treatment. Thus, such a situation does not come within the scope of Article 141(1) EC.

The question which must be asked is whether there a single body which is responsible for the setting of the pay or could remedy the pay terms of both the claimant and the comparator. If the answer is in the affirmative, a comparison is permitted even across formally separate employers. If no single body has the power to set pay or to remedy pay claims, the claim fails. This failure is not due to the fact that there is no discrimination but because there is no party to whom responsibility is attributed.  The CJEU confirmed that Article 157 does not apply to situations where differences in pay conditions of workers of different sex are not attributed to a single source. [5] Advocate General VerLoren van Themaat in Commission v Denmark[6] stressed that limiting comparisons to the same workplace could undermine equal pay, particularly in female-dominated sectors. Advocate General Geelhoed identified three cross-employer situations where a single source may exist lists, namely:

1. Legislation governing pay across several undertakings, establishments or services;
2. Collective agreements or regulations applying to several undertakings;
3. Or where the conditions of pay are laid down for more than one organisation or business within a holding company or conglomerate. [7]

In Enderby, the CJEU held that Article 157 TFEU requires an employer to objectively justify pay differences between jobs, even where separate collective agreements apply. This supports the principle that a common employer can constitute a single source, regardless of whether the jobs are of the same nature. This may conflict with Regulation 8 of LN 173 of 2026, which limits a single source to undertakings under common control carrying out economic activity of the same nature.[8] In Asda Stores Ltd v Brierley, the Employment Tribunal found as a matter of fact that a single source existed, on the basis that Asda’s Executive Board exercised oversight over both the retail and distribution arms of the business. However, this finding was not the basis on which the case was ultimately decided. The Supreme Court dismissed Asda’s appeal on the separate UK law  “common terms” test under section 79(4) of the Equality Act 2010 (and section 1(6) of the Equal Pay Act 1970), holding that the relevant question was whether the depot comparators would have been employed on the same or substantially the same terms had they hypothetically worked at the claimant’s establishment. The Court declined to determine whether the single source test in terms of EU law offered an alternative route to the same conclusion, leaving that question “to be considered in a future case.” This case illustrates how a tribunal may find single source as a factual matter in a large, centrally-governed organisation, but it is not itself authority that a common employer will always satisfy the single source test as a matter of law[9].

Selwyn, whilst commenting on the UK Equality Act, observes that a common employer does not automatically constitute a single source. Selwyn refers to Robertson v Department for Environment, Food and Rural Affairs where the claim failed because responsibility for employment terms had been transferred to individual departments, meaning there was no common source of pay.  Selwyn further explains that, where a comparator works at a different establishment, the claimant must show a real possibility that the comparator could perform similar work.

EU Directive 2023/970 and Member State Law

The explanatory memorandum to EU Directive 2023/970 expressly adopts the “single source” principle established in Lawrence. A single source exists where pay conditions arise from statutory provisions, collective labour agreements applicable to several companies, or when the terms and conditions of employment are laid down centrally for more than one company within a holding company or conglomerate. Article 19 therefore adopts the broader “single source” concept from Lawrence. 10

Slovakia, in its transposition of this EU Directive, dictates that the assessment of whether or not, men and women perform equal work or work of equal value shall also include ‘a comparison of men and women employed by different employers for whom the same remuneration conditions are established, where those conditions are laid down by a single source.’11 Similarly, paragraph 5 of Article 4 of the Italian Legislative Decree expressly codifies the Lawrence principles by stipulating that a single source exists when the pay conditions derive from law or from national collective labour agreements, or derive from company agreement or regulations established for multiple organizations or undertakings forming part of a corporate group. 12

Although these provisions have not yet been extensively interpreted by national courts, no other cited Member State appears to restrict the concept of “single source” to undertakings controlled by the same person and carrying out economic activities of the same nature. This supports the argument that Regulation 8 of LN 173 of 2026 adopts an unusually restrictive approach to the “single source” principle, which is not inherent in Directive 2023/970 or the Lawrence doctrine.

 ‘’Single Source’’ under Regulation 8: Compatibility with the Lawrence Principles

The question that comes to mind is whether or not the restrictive presumption of Regulation 8 (2) is compatible with the Lawrence principles and thus in line with the EU Directive.

Pay Conditions arising from statutory provisions:

Although Regulation 8 does not expressly exclude statutory provisions from constituting a “single source”, it arguably does not fully capture them, since it requires the relevant undertakings to be controlled by the same person and to carry out economic activities of essentially the same nature. By contrast, sector/industry-specific Maltese Conditions of Work Regulations apply to undertakings that are rarely under common control and may cover diverse economic activities. For example, the Domestic Service (Conditions of Work) Regulation Order applies broadly to domestic service roles in private households, making it legally questionable whether all covered activities can be regarded as being of the same nature.13

Employment terms laid centrally for more than one company within a conglomerate:

Centrally established employment terms within a conglomerate may also fall outside Regulation 8 because the latter requires the undertakings to carry out economic activities of essentially the same nature. This is problematic because financial conglomerates may comprise entities engaged in fundamentally different activities, such as banking and insurance. 14 In fact, the statutory definition of ‘financial sector’ permits a financial conglomerate to comprise various entities that simultaneously engage in economic activities of a different nature such as banking services and insurance services.15 Notwithstanding their statutory classification of a financial conglomerate, a comparison between the economic activities carried out by banking entities, such as deposit-taking and lending, and those carried out by insurance undertakings raises doubts as to whether both types of entities engage in economic activities of the same nature.

The same argument applies to non-financial conglomerates, which generally comprise undertakings engaged in different or unrelated economic activities. 16Accordingly, it may be questioned whether undertakings within a conglomerate can be regarded as carrying out economic activities of the same nature for the purposes of Regulation 8.[10]

Employment terms laid centrally for more than one company within a holding corporation:

Under Article 2 of the Companies Act, a parent undertaking may exercise dominant influence over subsidiary undertakings and may therefore constitute a holding company. 18 The MFSA’s definition of a holding company does not require the undertakings within the structure to carry out economic activities of the same nature.19 Accordingly, Regulation 8’s requirement that undertakings carry out essentially the same economic activity may mean that its definition of a “single source” does not fully encompass undertakings within a holding corporation.

Pay conditions arising from collective agreements:

Collective agreements in Malta are usually reached at the level of the entity. It is very rare that collective agreements apply to any job, profession or branch in a whole sector, 20 where the undertakings concerned do not carry out economic activities of the same nature or are not controlled by the same person or persons. In light of this, one may argue that Regulation 8 (2) does capture collective agreements within the definition of a ‘single source’, but only when reached at the entity level.

Bypassing Malta’s Rigid Interpretation of ‘’single source’’

The restrictive interpretation of the “single source” requirement under Regulation 8 of the Maltese LN 173 of 2026 may be circumvented through the  vertical and horizontal direct effect of EU Treaty provisions. Article 157 TFEU has direct effect, allowing individuals to rely on it before national courts, together with the CJEU’s interpretation of the provision, including the Lawrence “single source” principle. In fact, in Jan Sammut v HSBC Bank Malta plc, the Maltese Industrial Tribunal relied on Article 157 TFEU and relevant CJEU jurisprudence.21 Accordingly, the Tribunal may similarly rely on Article 157 and Lawrence when interpreting “single source” under the new LN 173 of 2026.

The principle of indirect effect, exemplified in Marleasing, further requires national courts, so far as possible, to interpret national law consistently with the wording and purpose of an EU directive.22  According to this principle, in order to achieve the result which the directive pursues, national courts must interpret domestic law, as far as possible, in the light of the wording and purpose of the directive concerned. This should take place regardless of whether the national law was adopted before or after the directive, and regardless of whether the dispute is vertical (that is between the individual and the state) or horizontal (that is, between an individual and another individual or a private entity). Accordingly, Maltese national courts have the legal obligation to interpret the concept of ‘’single source’’ under Regulation 9 of LN 173 of 2026 in light of the EU Directive 2023/970.

Jan Sammut vs HSBC Bank Malta Ltd

In Jan Sammut v HSBC Bank Malta plc, Sammut alleged that his remuneration was discriminatory because he was paid less than employees performing work of equal or lesser value. He sought to use HSBC Group employees, including the CEO, as comparators and sought the joinder of HSBC Holdings plc on the basis that it could constitute a “single source” responsible for the alleged pay inequality.

The Tribunal and Court of Appeal adopted the following two-stage approach:

1. Comparator stage: Sammut must first establish that Beane and Williams are his legal comparators in terms of pay and employment conditions.
2. Single-source stage: Only if Sammut succeeds in establishing the comparators can the Tribunal consider whether a “single source” was responsible for the alleged inequality and capable of restoring equal treatment, and consequently whether HSBC Holdings plc should be joined to the proceedings.

As Sammut failed to prove that the CEO as a valid comparator, the Tribunal did not ultimately determine whether HSBC Holdings plc constituted a “single source”.

Importantly, although LN 173 of 2026 was not yet promulgated, and therefore was not yet in force, the Tribunal relied on CJEU jurisprudence concerning Article 157 TFEU and the concept of “single source”. It recognised that comparators need not necessarily work at the same establishment and that workers employed at different establishments may be compared where their pay conditions derive from the same single source. It also recognised that comparisons are not limited to employees working for the same employer or at the same time. The Tribunal further noted the CJEU’s development from an initial focus on employees within the same establishment towards the broader principle that Article 157 is not confined to situations involving men and women working for the same employer.23

Conclusion and Findings

In view of the above, the Maltese definition of a ‘’single source’’ under Legal Notice 173 of 2026 adopts a narrower approach than that developed under Article 157 TFEU and the EU Pay Transparency Directive. Such an approach may fail to capture situations recognised by the CJEU in which the source of pay inequality derives from sectoral collective agreements, statutory provisions, or centrally determined employment terms applicable across groups of companies, holding companies or conglomerates. While this restrictive approach may be mitigated through the direct effect of Article 157 TFEU and the doctrine of indirect effect as largely developed by CJEU caselaw, it uncertain how the Industrial Tribunal will interpret the new Regulations. Whether it will ultimately be construed in conformity with EU law remains a matter for future jurisprudence.

From a practical standpoint, employers operating in Malta should not assume that Regulation 8’s narrower, common-control-and-same-activity formulation marks the outer limit of permissible pay comparisons. Pay conditions set by statute, sector-wide Wage Regulation Orders, group-level policies, or centrally negotiated collective agreements may still expose an employer to a pay equality claim under the direct and indirect effect of Article 157 TFEU, regardless of how Regulation 8 (2) is ultimately construed by the Industrial Tribunal. Pending clearer guidance from the Maltese courts, employers, their HR functions, and their legal advisors would be well advised to review remuneration structures across affiliated entities, holding structures, and group-wide arrangements against the broader Lawrence “single source” standard, rather than relying solely on the narrower domestic presumption, so as to pre-empt rather than merely respond to future claims and reporting obligations under LN 173 of 2026.

Bibliography:

Primary Sources:

Case 143/83 Commission v Denmark [1985] ECR 427

Case C-106/89 Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECLI:EU:C:1990:395 < https://eur-lex.europa.eu/resource.html?uri=cellar:384f064c-f467-4dda-a3cb-a44d930a6e25.0002.06/DOC_1&format=PDF> accessed 28/07/2026

Case C-127/92 Dr. Pamela Mary Enderby v Frenchay Health Authority and Secretary of State for Health. Reference for a preliminary ruling: Court of Appeal (England) – United Kingdom https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:61992CJ0127

Case C-320/00 A.G. Lawrence and Others v Regent Office Care Ltd and Others, European Court Reports, Summary of the Judgement https://infocuria.curia.europa.eu/tabs/affair?lang=en&sort=AFF_NUM-DESC&searchTerm=%22C-320%2F00%22&publishedId=C-320%2F00

Companies Act, Chapter 386 of the Laws of Malta, Article 2

Directive (EU) 2023/970 of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (Text with EEA relevance) Article 19

Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02002L0087-20240109.

Domestic Service (Conditions of Work) Regulation Order, LN 142 of 2026

European Commission, Proposal for a Directive of the European Parliament and of the Council to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms, COM (2021) 93 final, Explanatory Memorandum

Financial Conglomerates Regulations, S.L. 330.06, Regulation 2

Italian Legislative Decree of 7 May 2026, no. 96 Implementation of Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023, aimed at strengthening the application of the principle of equal pay between men and women for equal work or work of equal value through pay transparency and its related enforcement mechanisms (p. 1) (Official Gazette no. 125 of 1-6-2026)

Jan Sammut vs HSBC Bank Malta plc , Industrial Tribunal, 30^th January 2026, Case no. 3516

Jan Sammut vs HSBC Bank Malta plc, Court of Appeal (Inferior) , 12^th June 2020, Appeal Number 47/2019LM

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Astra Emir (22^nd ed) Selwyn’s Law of Employment, Oxford University Press, 2022, p 171, 172

Cambridge Dictionary, ‘conglomerate’ https://dictionary.cambridge.org/us/dictionary/english/conglomerate accessed 27 July 2026

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GVZH, ‘Sources of Labour Law’, <https://gvzh.mt/services/practice-areas/employment-industrial-relations/sources-labour-law/> accessed 27 July 2026

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Thompsons Solicitors, ‘Single Source’, 11 October 2017, https://www.thompsonstradeunion.law/news/employment-law-review/weekly-issue-541/single-source, accessed 13/07/2026

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[1] Legal Notice 173/2026, Equal Pay (Transparency and Reporting) Regulations, Regulation 8.  

[2] Directive (EU) 2023/970 of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (Text with EEA relevance) Article 19.

[3] ibid [n1].

[4] (C-320/00), 17 September 2002

[5] Case C-320/00 A.G. Lawrence and Others v Regent Office Care Ltd and Others, European Court Reports, Summary of the Judgement https://infocuria.curia.europa.eu/tabs/affair?lang=en&sort=AFF_NUM-DESC&searchTerm=%22C-320%2F00%22&publishedId=C-320%2F00

[6] Case 143/83 Commission v Denmark [1985] ECR 427.

[7] Case C-320/00 A.G. Lawrence and Others v Regent Office Care Ltd and Others, European Court Reports, Opinion of Advocate General Geelhoed Document https://infocuria.curia.europa.eu/tabs/affair?lang=en&sort=AFF_NUM-DESC&searchTerm=%22C-320%2F00%22&publishedId=C-320%2F00

[8]  Case C-127/92 Dr. Pamela Mary Enderby v Frenchay Health Authority and Secretary of State for Health. Reference for a preliminary ruling: Court of Appeal (England) – United Kingdom https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:61992CJ0127

[9] Thompsons Solicitors, ‘Single Source’, 11 October 2017, https://www.thompsonstradeunion.law/news/employment-law-review/weekly-issue-541/single-source, accessed 13/07/2026.

10 European Commission, Proposal for a Directive of the European Parliament and of the Council to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women pay transparency and enforcement mechanisms, COM (2021) 93 final, Explanatory Memorandum.

11 Slovakia Act on Equal Pay for Men and Women for Equal Work or Work of Equal Value and on Amendments to Certain Acts 2026.

12 Italian Legislative Decree of 7 May 2026, no. 96 Implementation of Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023, aimed at strengthening the application of the principle of equal pay between men and women for equal work or work of equal value through pay transparency and its related enforcement mechanisms (p. 1) (Official Gazette no. 125 of 1-6-2026).

13 Domestic Service (Conditions of Work) Regulation Order, LN 142 of 2026.

14 Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02002L0087-20240109.

15 Financial Conglomerates Regulations, S.L. 330.06, Regulation 2.

16  Cambridge Dictionary, ‘conglomerate’ https://dictionary.cambridge.org/us/dictionary/english/conglomerate accessed 27 July 2026.

[10] Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993, SD Glossary: ‘Conglomerate’ <https://www.unescwa.org/sd-glossary/conglomerate> accessed 27/07/2026.

18 Companies Act, Chapter 386 of the Laws of Malta, Article 2.

19 Malta Financial Services Authority, ‘Holding Company’ < https://www.mfsa.mt/glossary/holding-company/> accessed 27 July 2026.

20 GVZH, ‘Sources of Labour Law’, <https://gvzh.mt/services/practice-areas/employment-industrial-relations/sources-labour-law/> accessed 27 July 2026.

21 Jan Sammut vs HSBC Bank Malta plc , Industrial Tribunal, 30^th January 2026, Case no. 3516

22 Case C-106/89 Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECLI:EU:C:1990:395 < https://eur-lex.europa.eu/resource.html?uri=cellar:384f064c-f467-4dda-a3cb-a44d930a6e25.0002.06/DOC_1&format=PDF> accessed 28/07/2026.

23 ibid [n21].