Discrimination on benefits based upon length of service?
If you refuse to take into account an employee's previous service with another company in your group, does that raise legal issues?
If you refuse to take into account an employee’s previous service with another company in your group, does that raise legal issues? In Tyrolean Airways Tiroler Luftfahrt Gesellschaft the European Court of Justice was asked to consider this question in the context of age discrimination.
Tyrolean Airways and Lauda Air are two wholly owned subsidiaries of Austrian Airlines. The merger of Austrian Airlines and Lauda Air followed an agreement between management and employees in 2003. Since then, the employment conditions of the flight and cabin crews of those two companies have been governed by a single collective agreement, which makes no provision for account to be taken of periods of employment previously completed with Tyrolean Airways. The relevant clause in the affected employees’ contract of employment provides that the flight and cabin crews are to be graded in categories A or B. Further, it states that ‘….[the] advancement from category A to category B shall occur on the completion of three years of service, that is, exactly three years after the recruitment of the employee as a member of the cabin crew’.
The ECJ had to consider whether it was unlawful age discrimination to refuse to take into account previous experience with other airlines in the group when deciding when an employee moved from Category A to Category B. The ECJ held that in this case it was not discriminatory to take into account previous experience with other airlines in the group.
"...while a provision... is likely to entail a difference in treatment according to the date of recruitment by the employer concerned, such a difference is not, directly or indirectly, based on age or on an event linked to age. It is the experience which may have been acquired by a cabin crew member with another airline in the same group of companies which is not taken into account for grading, irrespective of the age of that cabin crew member at the time of his or her recruitment. That provision is therefore based on a criterion which is neither inextricably nor indirectly linked to the age of employees, even if it is conceivable that a consequence of the application of the criterion at issue may, in some individual cases, be that the time of advancement of the cabin crew members concerned from employment category A to employment category B is at a later age than the time of advancement of staff members who have acquired equivalent experience with Tyrolean Airways”.
This case is likely to be of interest to employers who sit within a group of companies. Following this decision, it is unlikely that an employee will be able to successfully argue that the law prohibiting age discrimination requires an employer to take into account employment with a group company when determining when to increase benefits, pay etc. The terms of the particular contract (or agreement with the Unions) may still be important in identifying whether you are contractually able to say that the previous service does not count.
Paul McFarlane, Partner, email@example.com