The Concept of Single Source of Employment – Widening the Net for Equality of Pay?

The concept of Single Source of Employment is intimately linked with the notion of “equal pay for equal work”, a notion which is not only enshrined in our Constitution and which guarantees the constitutional right that women workers enjoy equal rights and the same wages for the same work as men, but is also regulated by the Employment and Industrial Relations Act (EIRA) which requires that employees in the same class of employment are entitled to the same rate of remuneration for work of equal value.  The said provisions are in line with Malta’s obligation as an EU Member State to ensure that the principle of equal pay of male and female workers for equal work or work of equal value is applied and this in terms of Article 157 of the EU Treaty (previous Art. 141 of the EC Treaty).

A claim for discrimination based on unequal treatment undoubtedly requires the identification of a comparator, or as described under our law a “class” of employment. Where there is a collective agreement in place, the various classes of employment are normally defined therein.  In default of a collective agreement, one would need to look at the work actually performed or expected to be performed, irrespective of the actual titles given.

However, does the comparator/class of employees need to be employed with the same employer of the claimant?  This question becomes increasingly relevant in the case of those businesses who employ through the utilisation of various entities.

In a preliminary ruling determined by the European Court of Justice called upon by the Court of Appeal of England and Wales (Civil Division) to interpret the aforementioned Article 141 of the EC Treaty[1], the ECJ noted that there was nothing in the wording of Article 141(1) EC to suggest that the applicability of that provision is limited to situations in which men and women work for the same employer. Nonetheless, the ECJ held that for an action of  discrimination to be successful in cases where the employer is different, the alleged differences must be attributed to a single source as otherwise there would be nobody which may be held responsible for the inequality and which may restore equal treatment. The body responsible for the state of affairs will often be the same employer of both the complainant and the comparators, but is not always the case.

Reference to the principle of single source has been invoked for the first time locally in a case currently being determined before the Industrial Tribunal in Jan Sammut v HSBC Bank Malta plc.  The claimant requested the Industrial Tribunal to order the joinder into the suit of HSBC Holdings plc (UK) and this despite the fact that the claimant justified such request on the basis that he alleged that he was discriminated against when compared to other individuals employed within the group. The said request was dismissed, which decision was confirmed by the Court of Appeal[2], on the basis that the claimant failed to prove that the individuals referred to were “comparators”.  Whereas the Court held that the complainant was still in a position to attempt to prove that the individuals in question were comparators since he had not yet declared closure of his evidence before the Industrial Tribunal, the Court of Appeal has made it amply clear that the principle of single source only arises when one is able to prove that the employees allegedly receiving preferential treatment are indeed comparators.

Considering the lack of application of the single source principle by our courts, it may be pertinent to briefly analyse how this has developed in other European jurisdictions, notably in the UK, to better understand its implications.

In Robertson & ORS vs. Department for Environment, Food and Rural Affairs,[3] the UK Courts had to determine whether claimants working in a particular government department may indicate as comparators other civil servants working in another government department under different pay conditions on the basis that they all had one and the same employer,  namely the Crown. The UK Courts, based on the preliminary ruling of the ECJ in the Lawrence case, held that the fact that the complainants and the comparators have the same employer is not in itself sufficient for the purpose of comparing the pay of men and women for equal work. For comparability purposes, one may need to look outside the confines of individual contracts of employment and outside the legal relationship to a wider perspective. Common employment is neither a necessary nor a sufficient condition for comparability in equal pay cases. Whereas the Crown was undoubtedly the employer and the single source of pay, the UK Courts noted that each government department was delegated the power to negotiate and set most aspects of the civil servants working for the relative department and consequently these were not negotiated centrally.  This resulted in divergences in salary scales and terms of service. The UK Courts ultimately determined that there were two sources of the difference in pay, one for the applicants’ pay and the other for the comparator’s pay.  The fact that the Crown retained a legal power after delegation, which had not been exercised over pay conditions in the particular case, did not make the Crown “the body responsible” for the actual negotiations over pay by the individual departments resulting in the pay differences complained of. The fact that the Crown could equally revoke or alter the delegation did not change that conclusion. The simple fact of common employment by the Crown was not sufficient to attribute the terms and conditions to the Crown as a single source responsible for determining levels of pay of the departments in question. Therefore, in terms of this decision it would appear that it is not enough for a claimant to show that he/she has the same employer as his/her comparator. The employer must also be responsible for setting the terms of both employees.

In Armstrong & others v Newcastle Upon Tyne NHS Hospital Trust[4] the complainants, being domestic workers, argued that following the merger of two trusts (originally each employing a separate group of domestic workers with different employment conditions), the newly formed trust, though not being the entity creating the disparity, became the single source of employment and as a result was discriminating between them and their comparators. The UK Court rejected this argument. It held that the domestic workers formerly employed by one NHS trust could not compare themselves with the porters formerly employed by a different trust even following a merger of the two trusts into a single employer, because the difference in their terms was not attributable to a single source.

In Asda Stores Ltd v Brierley[5], the case concerned an equal pay claim by thousands of female supermarket staff wanting to compare themselves with men working in a network of warehouses and distribution centres. Though the latter are operating under a different management structure, the UK Court noted that Asda observed broadly common terms and conditions for the relevant groups across the sites.  In fact, the UK Court noted that Asda’s terms for retail workers and for distribution workers both applied wherever they worked. Accordingly, the Court agreed that the claimants, workers who worked at the retail outlets, could compare themselves to those workers employed at the distribution depot, even though the two groups worked at entirely different sites.  Asda tried to argue that the two sites consisted of two separate sources. Asda argued that retail pay was set by a committee of Asda’s board, whereas the distribution pay was set by the depot management, principally through collective bargaining. Asda’s case was that its effective delegation of responsibility to different internal structures was analogous to the delegation by the Crown of responsibility for pay to the different government departments, which was held in the Robertson case above quoted to preclude inter-departmental comparison.  This argument was not however upheld by the UK Courts. Firstly, the EAT (as confirmed by the Court of Appeal) noted that the situation in Robertson was exceptional and differed to this case on the basis that the power to negotiate and set pay and other conditions of employment bestowed upon the individual government departments. This was enshrined in statutory and other instruments that would have to be expressly revoked if the power was to be reclaimed and exercised centrally.  Furthermore, it was observed that in this case, the board of Asda had the power to interfere and the power to set or change terms. Therefore, as the executive board was ultimately responsible for pay across the two groups of employees, their terms and conditions derived from a ‘single source’ for equal pay purposes.

In light of the above, the potential for Article 157 claims should not be disregarded, particularly where large organisations are involved and pay inequalities arise between employees working under different terms and conditions at different establishments but in the same service. It is worth investigating whether there is a single source which takes responsibility for pay inequality and is capable of rectifying it. This could possibly derive from common management of a corporate group, for example. As we have seen, in any case, one needs to assess the actual and factual circumstances and above all, it must be shown that the claimants and the alleged “preferred” employees are truly comparators and in effect carrying out  equal work.

For further information about how GVZH Advocates can help you with your employment law query, kindly contact us on employment@gvzh.mt.

[1] Case C-320/00 -A.G. Lawrence and Others v Regent Office Care Ltd and Others – 17th September 2002;

[2] Court of Appeal (Inferior Jurisdiction) 47/2019LM Jan Sammut v HSBC Bank Malta plc – 12th June 2020;

[3] Court of Appeal of England and Wales (Civil Division) [2005] EWCA Civ 138, determined on 22nd February 2005;

[4] Court of Appeal of England and Wales (Civil Division) [2005] EWCA Civ 1608, determined on 21st December 2005;

[5] Court of Appeal of England and Wales (Civil Division) [2019] EWCA Civ 44, determined on the 31st January 2019

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