Over the past week I have been organising a webinar for BEERG members on the proposed EU Directive on gender pay transparency.  The proposed Directive aims

“…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”.                                                  (See the EU proposal here) 

While writing the webinar announcement, I noted that:

“this would be the first EU employment law Directive that, once adopted, would not apply to post-Brexit Britain.”

As I wrote this sentence a thought occurred to me: Is this entirely true? From this thought sprung two important questions:

1. Could the new Directive apply in Northern Ireland because of the Protocol?
2. And, if so, how could that be done?

Now, let me say straightaway that I have no idea what the answers to these two questions might be. And, I am fairly certain, nor does anyone else. That’s because we have never been here before.

We have never been in a situation where a sovereign country, the UK, agrees in an international treaty that one part of its territory, in this case Northern Ireland, will continue to align with the laws of a “sovereign equal”, to use David Frost’s words, in certain areas, in this case, equality laws.

That’s what the Protocol on Ireland/Northern Ireland, attached to the UK/EU Withdrawal agreement provides for, that Northern Ireland will continue to be subject to certain EU laws, mostly to do with the import and export of manufactured goods and food stuffs, but also with the EU’s suite of equality law.

The UK Prime Minister, Boris Johnson, called and won an election on the basis of his “oven ready deal”, a deal which included the Ireland/Northern Ireland Protocol.

Article 2 of the Protocol says:

Article 2

Rights of individuals

1. The United Kingdom shall ensure that no diminution of rights, safeguards or equality of opportunity, as set out in that part of the 1998 Agreement entitled Rights, Safeguards and Equality of Opportunity results from its withdrawal from the Union, including in the area of protection against discrimination, as enshrined in the provisions of Union law listed in Annex 1 to this Protocol, and shall implement this paragraph through dedicated mechanisms.
2. The United Kingdom shall continue to facilitate the related work of the institutions and bodies set up pursuant to the 1998 Agreement, including the Northern Ireland Human Rights Commission, the Equality Commission for Northern Ireland and the Joint Committee of representatives of the Human Rights Commissions of Northern Ireland and Ireland, in upholding human rights and equality standards.

When we go to Annex 1, we find listed:

• Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services
• Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation
• Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin
• Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation
• Directive 2010/41/EU of the European Parliament and of the Council of 7 July 2010 on the application of the principle of equal treatment between men and women engaged in an activity in a self-employed capacity and repealing Council Directive 86/613/EEC
• Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security

When you go to the Brexit section of Equality Commission for Northern Ireland website you find:

What is the UK Government’s commitment to equality and human rights after Brexit?

Prior to the UK’s departure from the European Union (EU) in January 2020, the UK Government committed to ensuring that certain equality and human rights in Northern Ireland would continue to be upheld after Brexit. This commitment was set out in the Ireland/Northern Ireland Protocol to the Withdrawal Agreement reached with the EU.

Commitment not to reduce certain equality and human rights after Brexit

In particular, under Article 2 of the Protocol, the UK Government committed to ensuring that the protections currently in place in Northern Ireland for the rights, safeguards and equality of opportunity provisions set out in the chapter of the same name in the Belfast (Good Friday) Agreement will not be not reduced as a result of the UK leaving the EU.

This means, for example, that the Northern Ireland Assembly and the Northern Ireland Executive cannot act in a way that would reduce certain equality and human rights in Northern Ireland, as a result of the UK leaving the EU.

Commitment to keep pace with certain equality rights after Brexit

The UK Government has also committed to ensuring that some of Northern Ireland’s equality laws will keep pace with any future changes to certain EU equality laws.

This means that if the EU amends or updates the EU equality laws set out in Annex 1 to the Protocol, after 1 January 2021, Northern Ireland equality laws will keep pace with those changes.  This is designed to ensure that certain Northern Ireland equality laws will not fall behind minimum EU standards of protection in anti-discrimination. (NB: Our underlining)

While what is being proposed is not an amendment to existing Directive, but a completely new Directive, BUT seeing that the new Directive is designed to make existing Directives more effective, there is an argument that, if adopted, it would have to apply to Northern Ireland?

What’s in the proposed Directive?

In the press release announcing the Directive, the President of the European Commission, Ursula von der Leyen, said that “Equal work deserves equal pay. And for equal pay, you need transparency”.

While the Directive still has to be agreed by the Council of Ministers and the European Parliament, the momentum behind it suggests it could move quickly through the procedures this year and then, as usual, Member States would have 2 years to transpose it into their own legislation.

Any company which has more than 250 employees will be within scope. Key features of the proposed legislation include:

• Pay transparency for job-seekers– Employers will have to provide information about the initial pay level, or its range in the job vacancy notice, or before the job interview. Employers will not be allowed to ask prospective workers about their pay history.
• Right to information for employees– Workers will have the right to request information from their employer on their individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value.
• Reporting on gender pay gap– Employers with at least 250 employees must publish information on the pay gap between female and male workers in their organisation, the overall gap and the median pay gap. They also need to disclose the proportion of female and male workers in each pay band. For internal purposes, they should also provide information on the pay gap between female and male employees by categories of workers doing the same work or work of equal value.
• Joint pay assessment– Where pay reporting reveals a gender pay gap of at least 5 % in any category of workers and when the employer cannot justify the gap on objective gender neutral factors, employers will have to carry out a pay assessment, in cooperation with workers’ representatives.
• Compensation for workers– workers who suffered gender pay discrimination can get compensation, including full recovery of back pay and related bonuses or payments in kind.
• Burden of proof on employer– it will be by default for the employer, not the worker, to prove that there was no discrimination in relation to pay.
• Sanctions to include fines– Member States should establish specific penalties for infringements of the equal pay rule, including a minimum level of fines
• Equality bodies and workers’ representativesmay act in legal or administrative proceedings on behalf of workers as well as lead on collective claims on equal pay.

The extent of the proposed changes should not be underestimated. Meeting these requirements will be difficult for many companies. Data will have to be generated. Appropriate units of comparison decided on. Reasons for disparities identified. Corrective action plans formulated. Consultation with employees’ representatives organised.

What happens if the Directive applies in Northern Ireland, but not in the UK? Would the appropriate units of comparison be confined to Northern Ireland, or would the whole of the UKNI have to be taken into account? In other words, would any UK-based company with operations in NI be within scope, even if only of the Directive’s data generation requirements?

Who is to decide if the proposed Directive will apply in Northern Ireland? Presumably, the European Union, if it thought it should apply, could raise the issue in the first instance in the Article 15 Joint consultative working group under 3 (b)

the Union shall inform the United Kingdom about planned Union acts within the scope of this Protocol, including Union acts that amend or replace the Union acts listed in the Annexes to this Protocol

Or the matter could be brought to the attention of the “Specialised Committee” provided for in Article 14 of the Protocol which allows under (c) the Committee to:

consider any matter of relevance to Article 2 of this Protocol brought to its attention by the Northern Ireland Human Rights Commission, the Equality Commission for Northern Ireland, and the Joint Committee of representatives of the Human Rights Commissions of Northern Ireland and Ireland;

What would happen if the EU says the proposed Directive, if adopted, should apply and the UK disagreed? Presumably, the question gets referred to the dispute procedure provided for in the Withdrawal Agreement, of which the Protocol is a part.

According to a note from the House of Commons Library, the Withdrawal Agreement, like the Trade and Cooperation Agreement, includes

… a dispute settlement system. These involve referral to an independent arbitration body if a dispute is not resolved between the two parties. The UK and EU have to nominate an equal number of independent arbitrators, with jointly agreed chairs.

However, there is an importance difference between the Withdrawal Agreement and the Trade and Cooperation, as the House of Commons Library points out:

An important difference between the two arbitration systems relates to the involvement of the Court of Justice of the EU (CJEU). Under the WA, if any dispute involves questions regarding interpretation of EU law, the arbitration panel must refer the interpretation to the CJEU. The CJEU’s ruling will be binding on the panel.

Does this mean that it would, ultimately, be the CJEU which decided if the new legislation was to apply in Northern Ireland? Or is the role of the CJEU restricted to answering questions about existing legislation which, presumably, is the position the UK government would take?

If this turns out to be the case, would legislation to transpose the Directive have to be introduced in Westminster or could it be introduced in the Northern Ireland Assembly? While the UK was a member of the EU transposition legislation always came before the Westminster parliament, even if it allowed for variations in Northern Ireland and Scotland.

As I said at the start of this Brexit Briefing, I have no idea as to the ultimate answers to these questions.

But if, as we suggested earlier, there is political momentum at the highest level in the EU Commission behind this Directive, they could present themselves before the end of this year.