Some court judgments do not make the headlines, despite their importance. One recent example was a decision of the Court of Appeal (COA) in the case Roberta Spiteri vs ST Microelectronics (Malta) Limited.

It did not deal with a criminal or a constitutional issue, butit dealt with an interestingand equally important employment issue.

This decision will certainly leave an impact on the workplace of hundreds of employees in Malta, and thus on a number of workplaces.

There are many workplaces where, in terms of their collective agreement or work practices, performance appraisals are in many instances held annually. Similarly, numerous are those cases where positive results in such appraisals lead to wage increases, commonly known as the “remuneration by performance appraisal”.

It has now been declared that this practice can well be against the law, and is considered discriminatory in terms of Article 27 of Chapter 452 of the Laws of Malta, more commonly known as the “equal pay for work of equal value” principle.

In essence, the case revolved around a claim advanced by the appellant before the Industrial Tribunal, arguing that as a result of the performance appraisal results, her wage was less in quantum than that of her counterparts in the same category and hence in her regard the company was discriminating in terms of the mentioned provision of the law.

On its part, the company argued against this saying that the system of performance appraisals was agreed to inthe collective agreement and that the same system wasalso accepted in other European countries.

The Department for Employment and Industrial Relations had given its advice on the matter, concluding that there was no discrimination.

The Industrial Tribunal came to the same conclusion, but the COA thought otherwise, quashed the Industrial Tribunal decision and decided in favour of the appellant.

The COA decided that, when an employee is given a wage rise rather than a bonus or allowance for a positive result obtained in an appraisal, such a wage increase may be the cause of discriminatory treatment from the point of view of the other employees in the same category, or other employees whose work is deemed to be of equal value withinthe organisation.

Amongst other considerations on which the COA based its conclusions, the court said that a one-time bonus or allowance is acceptable as the employee benefits of such bonus/allowance for that particular year alone. But giving a wage increase will mean that the employee will benefit from such a reward throughout the whole course of his employment, with the reward being carried forward year after year.

It is within this scenario that discrepancies in wages between workers whose work is considered of equal value will result, and hence the breach of the law.

One wonders whether the success achieved by the employee in this case will in the long run mean that employees actually stand to lose

To my knowledge, this is the first such decision and it should be of particular interest to unions and employers alike.

I would like to share some thoughts regarding this COA decision. The implementation and application of the EU piece of legislation against discrimination in employment, better known on the continent as the principle of “equal pay for equal work”, was incorporated into Maltese law in 2002, with a wider scope for interpretation.

Whereas EU law was intended to fight workplace discrimination based on sex, our legislator did not limit this principle solely to alleged sex-based discrimination.

The Department of Employment & Industrial Relations does valuable work, but this judgment illustrates that the conclusions of this department are not always correct, and they can at times be challenged.

This decision proves that we have a good system of checks and balances.

In giving any award, the Tribunal is to take into consideration the social policies of the government based on principles of social justice and the requirements of any national development plan and other economic policies of the government in the course of implementation.

Based on this, it has always been widely accepted that the Industrial Tribunal takes into consideration the actual and real workplace practices when deciding an issue.

The COA does not necessarily do that, and places the law in the forefront of its considerations when coming to conclusions. There is no doubt that this particular decision makes a lot of legal sense.

From an EU law point of view, as long as the transposition of the EU legislation into Maltese law came to afford wider protection to employees, then that is perfectly valid and legal.

From a Maltese law point of view, as correctly pointed out by the COA, the main effects of Article 27 of the EIRA are: the guarantee of a just system of wages; that this guarantee is applicable to employees in the same class/category of workers; and that no employee in such category is given a wage which is inferior to that of his/her comparable colleague.

The assessment to be made during a performance appraisal exercise remains at the complete discretion of the employer. The Court will not interfere in that as long as there is no claim of discrimination or injustice there. But as a consequence of those assessments, the employer may not increase wages but may solely give a one-time bonusor allowance to reward the result achieved by the em-ployee for that particular yearof assessment.

What is important is thatthe effects of that reward are not carried forward to the follow-ing year.

One wonders whether the success achieved by the employee in this case will in the long run mean that employees actually stand to lose.

On a very preliminary note, no allowance/bonus will be taken into consideration when computing pensions.

One also wonders whether this decision will have a long-term negative impact on career progression of employees at their work place.

Unless there is some contestation before the ECJ, this judgment is here to stay and to be followed. There is no doubt that many are those employers who have to change course.

Unions too have to take stock of this decision. Where agreements, individual or collective, provide for remuneration by performance appraisal, things have to change.

Otherwise there may be a state of discriminatory treatment at the workplace, something thatis unwarranted and unwanted by all.

One augurs that rather than a proliferation of cases, common sense will prevail, in the best interest of employers and employees alike.

Ian Spiteri Bailey is an employment lawyer and a CEDR qualified workplace mediator.

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