DEC-E2006-016 Full Case Report

Summary (1)

Employment Equality Act, 1998 Sections 7 and 19 - Employment - Pay - Grounds other than Gender

Background:

The complainant commenced employment with the respondent organisation on 23rd September, 2002 as a Service Representative on the Investigation Team. He resigned from his position on 20th February, 2004. While in employment he raised the issue of his remuneration and after his resignation he alleged that persons recruited by the respondent in 2003 were given a higher remuneration than that given to persons recruited in 2002. It is the complainant's contention that this was discriminatory on the grounds of gender and in this regard he has named a female comparator who was recruited in 2003 and who received a higher starting salary. The respondent denies the allegation of discrimination on the grounds of gender and argues that there are grounds other than gender for the difference in pay between the complainant and the named female comparator.

Conclusions and Decision:

The Equality Officer found that there were 'grounds other than gender' for the difference in remuneration paid by Citigroup to Mr. Andrew Lally and the named female comparator. Therefore the Equality Officer held that the respondent did not discriminate against the complainant on grounds of gender in relation to his remuneration.

Cases Cited:

Equality Officer Decisions

Cassidy v Citigroup - DEC-E2005/035
Persaud v The Shelbourne Hotel - DEC-E2004-075

Labour Court Determination - A Company v A Worker - ED/01/11

ECJ - Brunnhofer v Bank de Osterrichischen Postparkasse - C-381/99

1. DISPUTE

1.1 The dispute concerns a claim by Mr. Andrew Lally that he is entitled to equal pay with a named female comparator in terms of Section 7 of the Employment Equality Act, 1998-2004. The complainant also alleges that he was subjected to victimisation by the respondent within the meaning of Section 74(2) of the 1998-2004 Act. The respondent denies the allegations and submits that there are grounds other than gender for the difference in pay between the complainant and the named female comparator.

2. BACKGROUND

2.1 The complainant commenced employment with the respondent organisation on 23rd September, 2002 as a Service Representative on the Investigation Team. He resigned from his position on 20th February, 2004. While in employment he raised the issue of his remuneration and after his resignation he alleged that persons recruited by the respondent in 2003 were given a higher remuneration than that given to persons recruited in 2002. It is the complainant's contention that this was discriminatory on the grounds of gender and in this regard he has named a female comparator who was recruited in 2003 and who received a higher starting salary. The respondent denies the allegation of discrimination on the grounds of gender and argues that there are grounds other than gender for the difference in pay between the complainant and the named female comparator.

2.2 Consequently the complainant referred his complaint to the Director of Equality Investigations under the provisions of the Employment Equality Act, 1998-2004. In accordance with her powers under Section 75 of that Act the Director then delegated the claim to Gerardine Coyle, Equality Officer on 1st July, 2005 for investigation, hearing and decision and for the exercise of other relevant functions of the Director under Part VII of the Act. A hearing took place on 10th August, 2005 at which the Equality Officer indicated to the parties her intention to examine the issue of grounds other than gender for the difference in pay as a preliminary issue in accordance with Section 79(3) of the Employment Equality Act, 1998-2004. A submission was received initially from the respondent and the complainant was afforded the opportunity to respond to it. The complainant's submission was received on 17th October, 2005. The Equality Officer sought further additional information from the respondent on 13th March, 2006 and this was received on 30th March, 2006.

3. SUMMARY OF THE RESPONDENT'S SUBMISSION

3.1 The respondent organisation was established in Ireland in 1965 targeting the corporate sector. Employee numbers have increased from 79 in 1993 to 1,100 in 2004. The organisation provides a range of financial products and services to corporate clients both in Ireland and internationally. In 1998 the Dublin Service Centre was established. All salary recommendations are reviewed by the UK Compensation Team and are then submitted to the respondent's headquarters in the US for corporate review and approval. The office in Dublin is advised by the US in relation to the funds that can be allocated for salary and bonus reviews.

3.2 According to the respondent the complainant commenced employment with the respondent organisation on 23rd September, 2002 and he was employed as a Service Representative in the Investigations Department. The respondent says that the complainant first raised concerns regarding his salary in one-to-one meetings that he had with his Supervisor and Department Manager in July and August, 2003. An informal meeting also took place between the complainant and the Local Business Head in respect of compensation following a salary review in February, 2004. It is the respondent's submission that the complainant's concerns on remuneration related to the fact that new hires in 2003 were being offered higher starting salaries than the salaries of existing staff recruited in 2002. The respondent notes that the complainant resigned from the respondent organisation on 23rd January, 2004 and his last day of employment was 20th February, 2004. It is the respondent's submission that at no time during the currency of his employment did he raise a grievance of gender discrimination. According to the respondent he was invited to meet with Human Resources and complete an exit interview (as is standard practice) but he failed to attend.

3.3 In relation to the claim for equal pay with the named female comparator the respondent states that any disparity which exists in pay between the complainant and the named female comparator can be explained by the respondent's policy for fixing salaries and market forces. The respondent notes that the complainant's complaint to a Rights Commissioner under the Industrial Relations Acts, 1969 and 1990 was that when he began work people with similar qualifications/experience to him and employed to do similar work were getting salaries of €18,000 - €19,000. However since February, 2003 new recruits were awarded higher salaries and that the salary disparity was admitted by his manager. Having heard the complaint the Rights Commissioner's recommendation stated that employers have to react to market demands and this can often result in having to pay higher salary rates in order to recruit new employees. The respondent notes that the complainant did not raise the issue of gender discrimination in his complaint to the Rights Commissioner.

3.4 It is the respondent's submission that, on the facts, there is no evidence to support the claim made by the complainant. The respondent submits that it is clear from a review of the salary data for the Department in question that no case of gender discrimination is disclosed either prima facie or otherwise. It is the respondent's submission that, while it must abide by the provisions of the Employment Equality Act 1998, it is not obliged by statute, common law or custom and practice to pay all its employees the same rate of pay, such that, provided it can objectively justify the reason for any disparity in pay rates, it is entitled to pay different rates for like work. The respondent contends that its position is substantiated by the Decision of the Equality Officer in Cassidy v Citigroup (2) and in the case of Brunnhofer v Bank de Osterrichischen Postparkasse (3) in which it was found inter alia "that individual work capacity or the effectiveness or quality of work actually performed by an employee" are factors which can be taken "into account and can have an effect on the employee's ... posting and pay". It is, therefore, the respondent's submission that it is implicit from the above that an employer has a general right to regulate the remuneration packages of its employees provided that it does not, directly or indirectly, discriminate on any of the nine grounds. Therefore the respondent states that an employer is permitted to vary the remuneration of its employees, even where those employees are performing like work, for objectively justifiable reasons such as qualifications, experience, performance and market forces.

3.5 The respondent states that it fixes remuneration for new recruits based on a number of factors which include:
- academic qualifications
- previous relevant work experience
- language/technical proficiency (if required for the role)
- compensation of peer group
- market data (Watson Wyatt Salary Survey)

According to the respondent salary levels for existing employees of the respondent organisation are reviewed annually and performance of the individual throughout the year determines an employee's annual increase. Reward for performance is a common method of reviewing salary and is recognised as an inherent aspect of an employer's internal management policies. The respondent says that the operation of performance based reward generally results in employees who perform like work being paid different salaries as employees will not all usually perform in the same manner or to the same standard.

3.6 The respondent states that when the complainant left the employment of the respondent organisation in February, 2004 there were 90 employees in the investigation team i.e. 64 females and 26 males. Set out below is the salary ranges for all males and females in the same Department as the complainant in accordance with number of years service.

The respondent states that it is clear from the above table that all employees, male and female, recruited in 2003 were being paid more than employees with one year's experience. Therefore the respondent submits that the disparity in pay cannot be on grounds of gender.

3.7 The respondent acknowledges that in the period 2000 to 2003 existing employee salaries fell below the market median as the percentage increases awarded fell below the market percentage increases. This occurred because the respondent made a decision to align expense management locally with corporate strategy globally. Between 2000 and 2002 the respondent says that new hires salaries were also suppressed in order to maintain equity within the full population and this led to a problem as salaries on offer to new hires were not as competitive with competitors in the markets. According to the respondent new hire salaries were set competitively against the market beginning in 2003 in order to ensure that key talent joined the bank. The respondent says that despite having to offer higher salaries to attract people to take positions in the respondent organisation in 2003 it was not in a position until August, 2004 to make a market adjustment to the salaries of existing employees recruited in the period 2000 to 2003 whose salaries, in many cases, were less than those being offered to the 2003 recruits.

3.8 The respondent says that the economic reality of the recruitment market together with global policy of the respondent organisation in relation to salary increases, produced a situation whereby new recruits were receiving a higher salary than some existing employees. It was, and is, the intention of the respondent organisation to reward people for the work they perform on an equal basis and to reward the high achievers for their efforts. According to the respondent the anomaly which developed due to economic forces in the market was addressed and the disparity complained of no longer exists. The adjustment was a comprehensive exercise covering not only the complainant's Department but also the remainder of the respondent's Dublin Operations business. The respondent states that it is clear that insofar as any disparity in pay exists between male and female employees in the complainant's Department, either in relation to employees performing like work, or otherwise, same can be explained with regard to the respondent's policy for fixing salary scales for its employees. The respondent submits that the discrepancy falls within the exemption provided by Section 29(5) of the 1998-2004 Act and has now, in any case, been removed.

3.9 The respondent submits that this claim is misconceived and says that there is no evidence that the respondent discriminates between employees on the grounds of gender (or otherwise). It is the respondent's contention that the salary structure must be and is an internal matter for the employer, subject to legislative restrictions i.e. that the salary structure does not contravene employment legislation. In this case the respondent submits that there are grounds other than gender to explain the disparity in pay of which the complainant complains. The respondent asks that the complaint be disallowed without any further investigation.

4. SUMMARY OF THE COMPLAINANT'S SUBMISSION

4.1 The complainant states that he is pleased to note that the respondent has finally acknowledged that it was informed on at least one occasion in early 2004 of the possibility of he (the complainant) raising his concerns with an external body about discriminatory practices in remuneration. The complainant notes that the respondent previously claimed no knowledge of the complainant's intention to pursue this matter with external bodies if his concerns were not addressed. The complainant refutes again the assertion that he was invited to complete an exit interview to ascertain his reasons for leaving.

4.2 The complainant submits that the policy for fixing salaries in the respondent organisation (i.e. academic qualifications, work experience, language proficiency compensation of peer group, market data) has not been applied in practice to the case between himself and the named female comparator. It is the complainant's contention that the Rights Commissioner findings have no bearing on these proceedings.

4.3 The complainant notes that the respondent in its submission says that there is no evidence available to suggest a disparity in pay on grounds of gender. It is the complainant's understanding that both sexes are entitled to the same remuneration for like work of equal value under employment legislation, particularly if the named female comparator fares less well on factors such as academic qualifications, work experience, language proficiency, compensation of peer group and market data. Therefore, the complainant says that the question arises as to why he was paid less than the named female comparator for performing like work of equal value. It is the complainant's contention that the respondent fails to justify objectively the reasons for the disparity in remuneration between himself and the named female comparator on grounds other than gender. The complainant states that the respondent, in its submission, seems to suggest that the difference is due to work performance and he submits that it is not possible to evaluate the work performance of new recruits i.e. the named female comparator, because salaries are obviously fixed before commencing work. It is the complainant's submission that the respondent, by widening the debate from two employees to over 90 employees, intentionally makes the case impossibly difficult to argue because of the range of employees and the factors the respondent claims to take into account when fixing remuneration.

4.4 The complainant notes the most revealing admissions in the respondent's submission whereby it acknowledges that there was a disparity in pay between a male employee (the complainant) who commenced employment in September, 2002 and a female (the named female comparator) who commenced work in 2003 and both of whom were performing like work or work of equal value but one of whom was receiving more remuneration than the other. In terms of the respondent's statement that it was "not in a position until August, 2004 to make a market adjustment to the salaries of existing employees recruited in the period 2000 - 2003, whose salaries, in many cases, were less than those being offered to the 2003 recruits" the complainant asks if this is an admission that a male employee could be paid less than a female employee for like work of equal value. If this is the case the complainant contends that this would certainly be grounds for a complaint of gender discrimination. The complainant says that he understands this admission as a tacit acknowledgement that the respondent recognised the discriminatory pay system in operation at the time of his employment and took the steps to address this matter after he left the respondent's employment.

4.5 The complainant respectively submits that the respondent has failed to make a cogent case to support its claim that there was no gender discrimination in effect, whether intentionally or through policy oversight. It is the complainant's contention that the named female comparator was receiving a higher remuneration than the male complainant for like work of equal value.

5. CONCLUSIONS OF THE EQUALITY OFFICER

5.1 In this claim it is the complainant's contention that he has been discriminated against on the grounds of gender in relation to his remuneration. The respondent has argued that there are 'grounds other than gender' in terms of Section 19(5) of the Employment Equality Act, 1998-2004 for the difference in pay between the complainant and the named female comparator. I have decided to examine the arguments on 'grounds other than gender' as a preliminary issue in accordance with Section 79(3) of the 1998-2004 Act. In making my decision I have taken into account all the submissions, both written and oral, made by the parties.

5.2 I note that the respondent sought to have this claim dismissed for the following reasons:
- During the course of his employment the complainant raised concerns about his salary but did not allege gender discrimination regarding same.

- The complainant failed to attend an exit interview with the respondent's Human Resource Department.

- The complainant brought this claim originally under the Industrial Relations Act, 1969 and 1990 to a Rights Commissioner who found in favour of the respondent. At the time no complaint was made of gender discrimination.

- The complainant failed to follow the respondent's grievance procedures to raise the issues of this current claim formally during the course of his employment.

It is the respondent's contention that the complainant should not be entitled to express his grievance in a particular way in what appears to be a deliberate attempt to fit it within the legislation. The respondent notes that it is a well established principle in employment law that failure to exhaust internal grievance procedures can deny relief that would otherwise be available to a complainant, in particular, in relation to the Unfair Dismissals Act, 1977-2001 and it is submitted that this principle is also accepted under the Employment Equality Acts, 1998-2004.

5.3 In support of this contention the respondent cites the Equality Officer Decision in the case of Persaud v The Shelbourne Hotel (3) and the Labour Court Determination in the case of A Company v A Worker (4) . The respondent submits that it is in the interests of the parties that all internal dispute resolution avenues should be explored before any matter is referred to an external body.

5.4 I concur with the respondent that it is advisable to progress claims through internal grievance channels before referring them to external bodies for investigation. However, having said that, the complainant is legally entitled to refer a claim under the Employment Equality legislation even if he has failed to avail of internal grievance procedures and even if he has failed to raise the nature of this complaint with the respondent.

5.5 The complainant alleges that when he was recruited by the respondent he was given a lower salary to that received by the named female comparator when she commenced employment with the respondent a year later. The complainant commenced employment with the respondent in September, 2002 and he was given a starting salary of €18,420. The named female comparator commenced employment with the respondent in June, 2003 and her starting salary was higher than that which was given to the complainant. With the agreement of both parties the named female comparator's actual starting salary will not be specified but suffice it to say it was higher than the complainant's starting salary.

5.6 The respondent provided me with details of persons recruited to the Investigation Team in 2002 and 2003. I note that all persons recruited to the Investigation Team in these two years were recruited as Service Representatives. In 2002 there were 14 staff recruited to the Investigation Team of whom ten were female and four were male. In 2003 a total of 14 staff were recruited to the Investigation Team of whom 11 were female and 8 were male. In 2002 the complainant's starting salary was lower than any of his other three male colleagues who commenced employment as Service Representatives with the Investigation Team that year. Furthermore it was higher than three of his female colleagues. I note that in 2003 the named female comparator's salary was lower than three of her male colleagues who commenced employment that year as Service Representatives with the Investigation Team and it was higher than five of her female colleagues who also commenced employment that year. It is clear from this information that starting salaries in the respondent organisation are clearly not determined or dictated by the employee's gender. Furthermore the complainant cannot be selective in who he names as a comparator to the exclusion of others employed as Service Representatives but who do not qualify as comparators because they are of the same gender as him or they earn less than him.

5.7 The complainant withdrew, in writing, his claim of victimisation following the hearing of this claim. It should be noted that the claim of victimisation was referred outside the time limits specified in Sections 77(5) and 77(6) of the Employment Equality Act, 1998-2004.

6. DECISION

6.1 On the basis of the foregoing conclusions I find that there are 'grounds other than gender' for the difference in remuneration paid by Citigroup to Mr. Andrew Lally and the named female comparator. Therefore, I find that the respondent did not discriminate against the complainant on grounds of gender in relation to his remuneration.

______________________
Gerardine Coyle
Equality Officer

24th April, 2006

notes

(1) This Summary is provided for convenience only and is not part of the Decision for legal purposes.

(2) Equality Officer Decision - DEC-E2005/035

(3) ECJ - C-381/99

(4)Equality Officer Decision - DEC-E2004-075
(5) Labour Court Determination - ED/01/11