Case Number

HCJ 1758/11

Date Decided

5-17-2012

Decision Type

Original

Document Type

Full Opinion

Abstract

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]

Can a showing of a wage gap between a female employee and a male employee for equal work or work of equal value at the same workplace can “automatically” substantiate a cause of action under the Equal Pay for Female and Male Employees Act 1996 (hereinafter: the Equal Pay Act) as well as under the Equal Opportunities in Employment Act 1988 (hereinafter: the Equal Opportunities Act)? The implication of this questions for our matter is in regard to the option granted by the Equal Opportunities Act to award compensation without actual showing of damages, that does not exist in the Equal Pay Act.

Background: The First Petitioner (hereinafter: the Petitioner) won a suit she had filed with the Regional Labor Court against the First Respondents (“Home Center”, and hereinafter: the Respondent) under the Equal Pay Act after it was found that the compensation she received for her employment with the Respondents was 35 per cent lower than the compensation for a man who worked for the Respondent at the same job (hereinafter: Mor) and once the Respondent failed to show any justification for this gap. It was noted, among others, that the fact that the Petitioner’s pay was set following a negotiation between her and the branch manager, where she asked for pay (NIS 3,500 per month) that was lower than pay for which Mor asked (NIS 5,000 per month) cannot justify the significant pay gap between the two. The Regional Labor Court went on to hold that once it was found that the Respondent violated the provisions of the Equal Pay Act, then the Petitioner’s suit was to be granted under the Equal Opportunities Act as well. In this context, the court noted that since it was demonstrated that the Petitioner’s pay was established according to her own demands rather than by the initiative of the Respondent, she must not be awarded the maximum rate of compensation as stipulated by the Equal Opportunities Act. Therefore the Regional Court set the amount of compensation for the Petitioner at NIS 6,944 – which is identical to the sum awarded her under the Equal Pay Act. An appeal and a counter appeal that were submitted to the National Labor Court examined the issue of whether proving a claim under the Equal Pay Act automatically establishes a cause of action under the Equal Opportunities Act as well. The majority opinion of the National Labor Court decided the above issue in the negative while examining the circumstances under which the burden of proof shall shift to the employer under section 9 of the Equal Opportunities Act. In this context the majority decided that in order for the burden to be shifted to the employer’s shoulders, the employee must first present evidence demonstrating discrimination or unequal treatment by the employer. The majority judges further held that the employee must present to the Court evidence and documents that demonstrate to the necessary standard that that this is a discriminating employer. The mere proof of the claim under the Equal Pay Act does not, in the perspective of the majority judges, meet such necessary standard. Hence this Petition.

The High Court of Justice (in a decision written by President (Ret.) D. Beinisch and joined by Justices I. Amit and N. Hendel) granted the Petition for the following reasons:

The Equal Pay Act was designed to address one of the most common expressions of discrimination between men and women in the workforce, and thus establishes a burden of proof that favors to great extent the female employee when proving her claim – in a suit under the Equal Pay Act it is sufficient to point to gaps in pay between a man and a woman who perform the same work (or a generally equal job or a job of equal value), that the employer fails to show a relevant justification under the consideration detailed in section 6(a) of the Equal Pay Act in order to prevail in the claim (an outcome based test). But on the other hand, the Act limits the extent of compensation that may be awarded to a female employee who suffered discrimination.

The considerations detailed in section 6(a) of the Equal Pay Act do not constitute an exhaustive list. However, demonstrating other considerations that are not listed in section 6(a) of the Equal Pay Act requires that these considerations, too, are of the same type listed in the section and point to the fact that the gaps in pay are a necessary result of the “nature of character of the relevant work.” In this context, the High Court of Justice (as opposed to the position expressed in the dissenting opinion of Judge Virt-Livne) ruled that the employer’s freedom of contract must not be recognized as a single consideration which my justify wage discrimination between men and women.

The Equal Opportunities Act was designed to address different types of discrimination toward various groups and requires demonstrating a causal connection between the prohibited consideration taken into account by the employer and the decision the employer made in regard to the employee. Still, the Act permits awarding compensation to the employee without requiring a showing of harm, as well as establishes a criminal sanction against the discriminating employer.

On its face, it seems that in light of the difference in the manner in which the causes of action in the Equal Pay Act and the Equal Opportunities Act are defined, it is insufficient to only prove the claim under the Equal Pay Act in order to necessarily and “automatically” substantiate a claim under the Equal Opportunities Act. Each of these Acts was designed to target different types of discrimination in the workforce, establishes different tests to proving the discrimination, and mandates different sanctions to be placed upon the discriminating employer. Under these circumstances creating a complete overlap between the causes of action established in the two acts is inconsistent with the purposes that each act was designed to achieve and the problems with which each of the acts is meant to deal.

On the other hand, the Equal Opportunities Act acknowledges the difficulty faced by an employee required to prove the motives of the employer, and it stipulates in section 9(a) that should the employee prove that he or she meets the requirements of possesses the skills that the employer set for the purpose of the issue subject to the discrimination claim, the burden would shift to the employer in order that the employer could undermine the discrimination claim and prove that the decision regarding the employer was not based on a prohibited consideration. It is therefore asked what the minimal evidentiary burden necessary is in order to shift the burden of proof under the Equal Opportunities Act toward the shoulders of the employer, and whether proving the claim under the Equal Pay Act meets such evidentiary burden.

In the HCJ’s view, the burden placed upon the employee is a relativity light burden. It is sufficient that the employee who claims discrimination due to belonging to one of the identity groups detailed in section 2 of the Act show that he meets the requirements and possesses the skills set by the employer for a particular purpose, or that he was able to demonstrate prima facia evidence that the employer discriminated against him in order to shift the burden onto the employer. It is possible that under particular circumstances a significant gap in pay between a female employee and a male employee would be sufficient to shift the burden of proof in a claim under the Equal Opportunities Act onto the employer’s shoulders. The issue of passing the test of whether there are prima facia evidence for discrimination will be settled according the circumstances of the case, and strict standards should not be set in this context. Therefore, there is not place for the requirement raised in by the majority of the National Labor Court that the female employee be required to present evidence and documents to sufficiently show that this is a discriminating employer.

Where the employee has successfully met this evidentiary burden, the burden shifts onto the employer to prove that the discrimination is a necessary result of the nature and characteristic of the job, as mandated by section 2(c) of the Equal Opportunities Act, or that it is based on some good reason that is not rooted in one of the prohibited considerations detailed in section 2(a) of the Equal Opportunities Act. In this context it is important to make clear that the Equal Opportunities Act explicitly lists the considerations that an employer is prohibited from considering when making decisions related to an employment relationship. Where the employer succeeds in showing that a seemingly discriminatory outcome is not based on one of the prohibited considerations but on another consideration or other considerations, the employer has met the burden to show that the employee was not discriminated against “because” of the prohibited considerations.

As for the case of the Petitioner in the matter before us, proving a claim under the Equal Opportunities Act meets the evidentiary burden necessary to shift the burden of proof in a claim under the Equal Opportunities Act onto the shoulders of the employer. Once a female employee has shown that a male employee at the same job (or a generally equal job or a job of equal value) for the same employer and in the same workplace receives a higher pay then her, and once the employer was unable to demonstrate a relevant justification for this gap which is a necessary outcome of the nature of the job or of its characteristic (according to section 6 of the Equal Pay Act), then seemingly the assumption that the root of the gap is the sex of the female employee is a necessary conclusion.

Under these circumstances the burden is shifted onto the employer to demonstrate there is no causal connection between the pay gap and the sex of the female employee, and thus the gap is not “because” of the employee’s sex. Should the employer meet this burden and prove that the sex of the female employee was not one of the considerations that led to the decision as to her pay, then the female employee has not claim under the Equal Opportunities Act. On the other hand, should the employer fail to meet the above burden, the necessary conclusion would be that the female employee has a claim under the Equal Opportunity Act and under the Equal Pay Act.

The Only argument that the Respondent here has is that the Petitioner’s pay was lower than Mor’s pay because the pay she asked for to begin with was lower.

In the HCJ’s view, an employer who demonstrates that it’s employees’ pays is determined through a negotiation, and this when the employer adopts an identical policy for men and women as to the pay of candidates for work, it may meet the burden in a suit filed against it under the Equal Opportunities Act. This, when it is able to demonstrate its pay policy without it being influenced by the sex of the candidates or other considerations prohibited by section 2(a) of the Act. Still, the greater the pay gap between male and female employees, the heavier the burden on the employer to show that the sex of the employee did not serve as a consideration in establishing her pay and that her pay was set lower only because she initially asked for lower pay in the negotiation. In other words, gaps in the relative negotiation power between employees may be used as a reasonable explanation for a certain gap in their pay, but to the extent that the gap is more significant it will become more difficult for the employer to demonstrate that the gap is wholly rooted in the differences in the employees’ negotiation powers and that it is not rooted – even in part – in one of the prohibited considerations listed in section 2(a) of the Equal Opportunities Act.

Under the circumstances of the case, in light of the significant gap between the Petitioner’s pay and Mor’s pay, the mere fact that the two initially asked for different pay does not have the evidentiary force required in order to permit the employer to meet the burden shifted to it under the Equal Opportunities Act. Therefore, demonstrating this fact, and in the absence of any additional evidence from the employer, does not alleviate the concern that the sex of the female employee served as a consideration in setting her pay. In this context it should be noted that the fact that it was shown that the employer does not have a policy of discriminating against women may be taken into account in determining the extent of compensation awarded under the Equal Opportunities Act, as indeed was held by the Regional Labor Court. However, it is irrelevant to the issue of proving the claim itself, once it was found that the relevant comparator group in our case is the other employees in the branch where the Petitioner worked, rather than the entire employee body of the Respondent.

Therefore, the Petition against the decision by the National Labor Court is granted. The High Court of Justice ordered granting the Petitioner’s claim under the Equal Opportunities Act due to her discrimination because of her sex and due to the Respondent’s failure to meet the burden of proof. In light of the delay in submitting the Petition, the HCJ does not find it fit to award the Petitioner compensation under the Equal Opportunities Act. To the extent that the Petitioner followed the decision by the National Labor Court and returned the compensation awarded to her in the Regional Court under the Equal Opportunities Act, the Respondent is not obligated to compensate her now under the Equal Opportunities Act. However, to the extent that the Petitioner still must return the compensation awarded her under the Equal Opportunities Act, this obligation is reversed. In light of the delay in submitting the Petition, there is also no place to award costs in favor of the Petitioners.

Keywords

Employment, Constitutional Law -- Equality Before the Law, Labor -- Discrimination

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