Opinion of Mr Advocate General Cosmas delivered on 14 July 1998. - Regina v Secretary of State for Employment, ex parte Nicole Seymour-Smith and Laura Perez. - Reference for a preliminary ruling: House of Lords - United Kingdom. - Men and women - Equal pay - Equal treatment - Compensation for unfair dismissal - Definition of 'pay' - Right of a worker not to be unfairly dismissed - Whether falling under Article 119 of the EC Treaty or Directive 76/207/EEC - Legal test for determining whether a national measure constitutes indirect discrimination for the purposes of Article 119 of the EC Treaty - Objective justification. - Case C-167/97.



European Court reports 1999 Page I-00623



Opinion of the Advocate-General

I - Introductory remarks

1 The House of Lords has referred to the Court of Justice for a preliminary ruling five questions on the interpretation of Article 119 of the Treaty and the provisions of Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions. (1)

2 The dispute in the main proceedings arose in relation to two employees who were dismissed by their employers before they had completed two years' employment. The ground on which the cases were brought is that those employees were deprived of the right `not to be unfairly dismissed', recognised under United Kingdom legislation, because they did not satisfy the requirement for obtaining such a right of having completed two years' continuous employment prior to the date of dismissal.

3 The questions referred seek to ascertain whether the above requirement of two years falls within the scope of Article 119 of the Treaty or of Directive 76/207, whether it entails indirect discriminatory treatment of women in comparison with men (and if so, under what circumstances may such treatment be objectively justified) and also whether the award of compensation, provided for, inter alia, under the same United Kingdom legislation as a sanction for unfair or unlawful dismissal, constitutes `pay' under Article 119 of the Treaty, or whether it falls under Directive 76/207.

II - Legal framework

A - The Community legal framework

4 Article 119 of the EC Treaty provides as follows:

`Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work.

For the purpose of this Article, "pay" means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives, directly or indirectly, in respect of his employment from his employer.

Equal pay without discrimination based on sex means:

(a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement;

(b) that pay for work at time rates shall be the same for the same job.'

5 That article was given detailed expression by Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women. (2)

Article 1 of Directive 75/117 lays down in particular that that principle means, for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration, without, however, in any way altering the content or scope of that principle as defined in Article 119 of the Treaty. (3)

6 One year after the adoption of Directive 75/117, Directive 76/207 was adopted; according to Article 1, its purpose was to put into effect in the Member States the principle of equal treatment for men and women as regards access to employment and as regards working conditions.

7 Article 2(1) of Directive 76/207 provides that the principle of equal treatment is to mean that `there shall be no discrimination whatsoever on grounds of sex either directly or indirectly by reference in particular to marital or family status'.

8 Article 5 of the directive states:

`1. Application of the principle of equal treatment with regard to working conditions, including the conditions governing dismissal, means that men and women shall be guaranteed the same conditions without discrimination on grounds of sex.

2. To this end, Member States shall take the measures necessary to ensure that:

(a) any laws, regulations and administrative provisions contrary to the principle of equal treatment shall be abolished;

...'

9 Article 6 requires Member States to introduce into their national legal systems such measures as are necessary to enable all persons who consider themselves wronged by failure to apply to them the principle of equal treatment `to pursue their claims by judicial process'.

B - The national legal framework

10 In the United Kingdom the right of employees not to be unfairly dismissed was first laid down in the Industrial Relations Act 1971. This was in harmony with the International Labour Organisation Recommendation No 119 (1963), according to which termination of employment should not take place without a valid reason.

11 At the time material to the facts in the main proceedings, the right of employees not to be unfairly dismissed was governed by sections 54 to 80 of the Employment Protection (Consolidation) Act of 1978 (hereinafter `the 1978 Act'), as amended in 1985. (4)

12 In particular, section 54 of that Act provides that in every employment to which that section applies every employee shall have the right not to be unfairly dismissed by his employer.

13 Pursuant to section 57, in determining whether the dismissal of an employee was fair or unfair, it is for the employer to show what was the reason for the dismissal, and that it was a reason falling within subsection 2 or some other reason of a kind such as to justify the dismissal (subsection 1).

The reasons falling within subsection 2 may relate to the capability or qualifications of the employee, to his conduct, to the fact that he was redundant or that he could not continue to work in the position which he held without contravention of a duty or restriction imposed by or under an enactment. However, certain reasons are regarded expressly by the Act as inadmissible, such as pregnancy and trade union activities.

Where the employer has fulfilled the requirements of subsection 1, the determination of the question whether the dismissal was fair or unfair is to depend essentially on the specific circumstance, including the size and administrative resources of the undertaking, in accordance with equity and the substantial merits of the case (subsection 3).

14 Under section 68, where an industrial tribunal finds that the grounds of a complaint are well founded, three remedies are available, which are to be explained to the complainant. In particular:

(a) The tribunal may order reinstatement of the employee, if the latter so wishes. The employer must treat the complainant as if he had not been dismissed. The tribunal specifies the rights of the employee. In particular, the employer must pay to the employee any amounts which would have been payable to the latter if he had not been dismissed (section 69(2)).

(b) If reinstatement is not practicable, the tribunal may order the employer, his successor or an associated employer to re-engage the employee in employment comparable to that from which he was dismissed or other suitable employment, specifying the terms on which re-engagement is to take place, including remuneration, claims covering the period of dismissal, seniority, date by which the order must be complied with by the employer, and so forth (section 69(4)).

(c) Lastly, where the above solutions are not appropriate or are unlikely to be successful, the tribunal may make an award of compensation for unfair dismissal (section 68(2)).

15 In the latter case, the award is to consist, in general terms, of the following: first a basic award, aimed at compensating for pay lost by the employee as a result of the dismissal (section 73); and secondly a compensatory award which the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in so far as that loss is attributable to action taken by the employer (section 74).

16 It should be noted, in particular, that in certain cases the Act provides for the payment of an additional award of compensation. Under section 71(3), such cases are, in particular:

`a dismissal which is an act of discrimination within the meaning of the Sex Discrimination Act 1975 which is unlawful by virtue of that Act' (subsection 3(b)), and also

`a dismissal which is an act of discrimination within the meaning of the Race Relations Act 1976' (subsection 3(c)).

17 The right not to be unfairly dismissed, however, is subject to a significant condition as to time. Section 64 of the Act, as amended by the Unfair Dismissal (Variation of Qualifying Period) Order 1985, (5) provides that section 54 is not to apply to the dismissal of an employee from any employment if the employee was not continuously employed for a period of not less than two years ending with the effective date of termination.

18 That condition underwent variations which, I consider it worth pointing out, more or less reflect the philosophy of the political parties which were successively in power in the United Kingdom over the last 30 years or so.

As the evidence adduced by the parties shows, that temporal restriction was first introduced by the Industrial Relations Act 1971 (section 28) when it was set at 104 weeks (approximately two years).

In 1974 the Trade Union and Labour Relations Act 1974 repealed the above Act, but reintroduced protection of employees against unfair dismissal, laying down the relevant qualifying period as one year, which subsequently became (under the Labour Government) 26 weeks.

The 1978 Act retained the period of 26 weeks.

In 1979, under a Conservative Government, the Unfair Dismissal (Variation of Qualifying Period) Order 1979 doubled the qualifying period, extending it to one year.

In 1980 the Conservative Government partially amended that qualifying period, extending it, in respect of workers in small undertakings, in other words undertakings employing less than 20 persons, to two years (section 8 of the Employment Act 1980).

Those qualifying periods (namely one year for undertakings with more than 20 employees and two years for undertakings with less than 20 employees) applied until 1985, that is to say, until the qualifying period was set at two years for all categories of employees by the 1985 Order.

III - Facts

19 As the documents in the main proceedings relate, Nicole Seymour-Smith started work on 1 February 1990 with C. & Co. Estate Agents as a secretary. After about two months, according to the applicant, her employer began to treat her in a humiliating way. Inter alia she alleges that after the cleaner was dismissed he required her to clean the office, maintaining that that formed part of her duties as a secretary and that it was `women's work' inappropriate for the male staff in the office to perform. He also called her offensive names in front of the other staff. The applicant was subsequently dismissed on 1 May 1991.

20 Accordingly, in her complaint to the Industrial Tribunal, the applicant sought a declaration that her dismissal was unfair and an order that the employer pay her compensation.

21 From the order of the Divisional Court (p. 3), it appears that the complaint could not be registered because the applicant had not completed two years' employment with her former employer, in accordance with the 1985 Order.

22 Laura Perez commenced employment on 19 February 1990 with M.S. Restoration Limited as an office manager/personal assistant to one of its directors. According to the applicant, that director was satisfied with her performance and had repeatedly promised that he would give her various benefits, including shares in the business and the position of company secretary in a new company which was being set up The company was in fact set up, but the applicant was not given the position of company secretary or shares in the company, whereupon she complained to the director. A few days later, the applicant went on leave but when she returned on 25 March 1991 the director gave her notice.

23 Consequently the second applicant complained to the Industrial Tribunal, claiming that her dismissal was unfair and seeking compensation from her former employer.

24 The Central Office of Industrial Tribunals informed her by letter that it would not register her complaint because she had not been employed for more than 2 years as was required under the 1985 Order.

25 The applicants subsequently sought leave from the Queen's Bench Division of the High Court to move for judicial review of the variation of section 64 of the Act by the 1985 Order, claiming that it was contrary to Directive 76/207. Leave to move for judicial review was granted on 12 September 1991.

26 The applicants argued before the Divisional Court that the above two-year rule was indirectly discriminatory as regards women and that it was not objectively justified. In that connection they relied on statistical evidence from which it appeared that over the period 1985 to 1990 the percentage of women who did not fulfil the two-year requirement was greater than the equivalent percentage of men. The Secretary of State did not dispute those statistics, but maintained that they did not show that the rule was discriminatory and that in any case it was objectively justified on grounds of social policy, consisting in making it easier for employers to take on more staff.

27 On 20 May 1994, the Divisional Court dismissed the application, holding that the 1985 Order did not constitute discriminatory treatment of women contrary to Directive 76/207; if, however, that had been the case, no objective grounds capable of justifying discrimination had been put forward.

28 The applicants appealed against that decision to the Court of Appeal. On 31 July 1995 that Court held that the 1985 Order was indirectly discriminatory at the relevant time in breach of Directive 76/207 and was not objectively justified. The Court of Appeal had also granted the applicants leave to put forward a further argument that the 1985 Order was contrary to Article 119 of the Treaty. However, the Court of Appeal refused to make an order of `certiorari' on that point, since it was not satisfied that compensation for unfair dismissal was `pay' within the meaning of Article 119 of the Treaty.

29 On appeal, the House of Lords decided to set aside in part the Court of Appeal's decision. Since it entertained doubts as to the classification and lawfulness of the national measure in question from the point of view of Community law, it referred the following questions to the Court of Justice for a preliminary ruling:

IV - Questions referred for a preliminary ruling

`1. Does an award of compensation for breach of the right not to be unfairly dismissed under national legislation such as the Employment Protection (Consolidation) Act 1978 constitute "pay" within the meaning of Article 119 of the EC Treaty?

2. If the answer to Question 1 is "yes", do the conditions determining whether a worker has the right not to be unfairly dismissed fall within the scope of Article 119 or that of Directive 76/207?

3. What is the legal test for establishing whether a measure adopted by a Member State has such a degree of disparate effect as between men and women as to amount to indirect discrimination for the purposes of Article 119 of the EC Treaty unless shown to be based upon objectively justified factors other than sex?

4. When must this legal test be applied to a measure adopted by a Member State? In particular at which of the following points in time, or at what other point in time, must it be applied to the measure:

(a) when the measure is adopted;

(b) when the measure is brought into force;

(c) when the employee is dismissed?

(5) What are the legal conditions for establishing the objective justification, for the purposes of indirect discrimination under Article 119, of a measure adopted by a Member State in pursuance of its social policy? In particular, what material need the Member State adduce in support of its grounds for justification?'

V - Reply to the questions referred

A - Preliminary remarks concerning the first two questions

30 The first question asks whether compensation for unfair dismissal, such as that provided for under the 1978 Act, constitutes `pay' within the meaning of Article 119 of the Treaty. The second question asks essentially, whether the conditions governing the right not to be unfairly dismissed, including a qualifying period such as that in issue, fall within the scope of Article 119 or Directive 76/207.

31 From a comparison of the two questions, in conjunction with the provisions of the 1978 Act set out above and the facts in the main proceedings, it appears that the issues raised in the first two questions are different and that from a logical and legal point of view consideration of the second question should precede that of the first.

32 The dispute in the main proceedings does not in fact relate to the payment or level of compensation but to whether the applicants were entitled not to be unfairly dismissed, that is to say, without reason. Moreover, even were it to be held that the applicants were so entitled, payment of compensation is not automatic, but depends on a prior finding by the competent court that their dismissal was unfair. Lastly, compensation constitutes one of the sanctions which the national court may impose for unfair dismissal, but not the only one. Consequently, consideration should properly first be given to the second question.

33 However, since the applicants and the Commission consider that the reply to the first question affects the reply to the second, it will do no harm, for the sake of completeness, to examine the questions in the order in which the national court placed them.

B - Question 1

34 The applicants and the Commission, relying inter alia on Case C-262/88 Barber (6) and Case C-33/89 Kowalska, (7) maintain that compensation for unfair dismissal, such as that sought in the main proceedings, constitutes a benefit which the employer pays to the worker when a contract of employment is terminated and as a result thereof and, consequently, constitutes pay within the meaning of Article 119 of the Treaty.

35 The United Kingdom Government contends, however, as far as the substance of the question is concerned, that such compensation does not constitute pay in the above sense, because it is awarded where a condition of employment is disregarded, not for work performed. Consequently, in that Government's view, the essential character of pay, as remuneration for work performed, is lacking.

36 As the Court held in the abovementioned judgments, the concept of pay, within the meaning of the second paragraph of Article 119, comprises any other consideration, whether in cash or in kind, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment from his employer; consequently the fact that certain benefits are paid after the termination of the employment relationship does not prevent them from being in the nature of pay, within the meaning of Article 119 of the Treaty. In particular, compensation paid by an employer to an employee in respect of his dismissal on economic grounds is a form of deferred pay to which the worker is entitled by reason of his employment but which is paid to him on termination of the employment relationship with a view to enabling him to adjust to the new circumstances arising from such termination. Accordingly, such compensation falls within the scope of Article 119 of the Treaty. (8)

37 For the same reason, compensation awarded by an employer to an employee in respect of unfair dismissal, as in the present case, constitutes, in the broad sense, `pay' which falls within the scope of Article 119.

38 The arguments of the United Kingdom Government cannot be accepted. The fact that in cases of unfair dismissal work is not actually performed is not important, since the non-performance of work is not due to the employee but to the employer, who has brought about the unfair dismissal. In that case, as the United Kingdom legislation lays down, moreover, compensation is intended to provide the employee with what he would have been entitled to receive had the employment relationship not been wrongfully terminated by the employer. Consequently the basis of that compensation is also the employment relationship.

Case 149/77 Defrenne III, (9) on which the United Kingdom Government relies, does not provide an argument in support of its point of view. In that judgment, it was held that a condition of employment, such as the setting of an age-limit after which employment would be terminated, did not fall under Article 119 of the Treaty (paragraph 24). That issue will arise, however, in the context of the second question rather than this question, which does not relate to a condition governing dismissal but to compensation, in other words, according to the Court's case-law on the subject, to deferred pay.

C - Question 2

39 The applicants maintain that, if it is accepted that compensation constitutes pay within the meaning of Article 119 of the Treaty, then the right not to be unfairly dismissed, giving rise to entitlement to the compensation in question, also falls within the scope of that article rather than that of Directive 76/207. Moreover, they point out that, according to the case-law of the Court, Article 119 has both vertical and horizontal direct effect; if the rule in question was held to be contrary to the principle of equal pay, the possibility of relying on Article 119 would allow them to assert a right to compensation directly against their employer. That could not be done by means of Directive 76/207, a fact which would deprive the principle of the prohibition of discrimination of any practical effect.

40 The Commission puts forward a similar view. In addition it points out that the conditions under which an employee becomes entitled to compensation, such as, in this case, where there is a right not to be unfairly dismissed, fall under Article 119. Conversely, other situations, such as, for example, reinstatement or re-engagement of the dismissed employee, fall under Directive 76/207.

41 The United Kingdom Government is of the opinion that, irrespective of the reply to the first question, the second question relates to a condition governing dismissal, which falls within the scope of Directive 76/207.

42 The view taken by the applicants and by the Commission cannot be accepted.

43 First of all, it must be emphasised that the question whether a national measure falls within the scope of one or another rule of Community law must be decided on the basis of objective criteria, in the light, on the one hand, of the particular scope of each Community rule which falls prima facie to be applied, and, on the other hand, of the nature of the national measure at issue and the facts of the particular dispute. Consequently no account is taken of subjective considerations, such as which rule offers the more effective means to achieve the result that the individuals concerned envisage. That applies irrespective of the fact that the following analysis will show, I believe, that the national measure at issue is directly, and indeed manifoldly, contrary to Directive 76/207 which, moreover, provides almost as effective means as Article 119 to remedy the situation in which the applicants found themselves.

44 As regards substance, it should be noted that in Case 149/77 Defrenne III, an employee had been dismissed because she had reached an age-limit that was lower than that applicable to men, and the question raised was whether that constituted discrimination. In its judgment, cited above, (10) the Court made a clear distinction between equality of men and women as regards pay, which falls under Article 119, and equality in respect of other working conditions, which fall under Articles 117 and 118, and further found that any financial consequences of working conditions - such as the compensation claimed by Ms Defrenne - were not enough to bring them under Article 119.

45 In particular the Court stated that:

`In contrast to the provisions of Articles 117 and 118, which are essentially in the nature of a programme, Article 119, which is limited to the question of pay discrimination between men and women workers, constitutes a special rule, whose application is linked to precise factors.

In these circumstances it is impossible to extend the scope of that article to elements of the employment relationship other than those expressly referred to.

In particular, the fact that the fixing of certain working conditions - such as a special age-limit - may have pecuniary consequences is not sufficient to bring such conditions within the field of application of Article 119, which is based on the close connection which exists between the nature of the services provided and the amount of remuneration.' (11)

46 From that judgment it follows that the Treaty requires only the first form of equality, whereas the second is confined to the regulation of employment relations which is, in principle, a matter for the Member States, unless the Community has laid down secondary legislation in that area. In view of the fact that, obviously, at the time when Ms Defrenne's employment was terminated (1968) Directive 76/207 had not yet been adopted, the Court concluded that the dispute in the main proceedings was subject to the principles and provisions of national and international law applicable in the Member State in question (paragraph 30 et seq.).

47 In Case 19/81 Burton, the Court was asked whether a condition that a male employee must have reached the age of 60 before he was entitled to voluntary redundancy benefit, whereas women were so entitled at the age of 55, constituted discrimination on grounds of sex and if so which Community provisions governed the situation. In its judgment, (12) the Court stated:

`... the question of interpretation which has been referred to the Court concerns not the benefit itself, but whether the conditions of access to the voluntary redundancy scheme are discriminatory. That is a matter covered by the provisions of Directive 76/207 ... and not by those of Article 119 of the Treaty or Directive 75/117' (paragraph 8).

Subsequently the Court gave consideration to the question in the context of Article 5 of the Directive, stating that:

`According to Article 5(1) of Directive 76/207 application of the principle of equal treatment with regard to working conditions, including the conditions governing dismissal, means that men and women are to be guaranteed the same conditions without discrimination on grounds of sex. In the context of the directive the word "dismissal" must be widely construed so as to include termination of the employment relationship between a worker and his employer, even as part of a voluntary redundancy scheme' (paragraph 9).

48 The Court employed similar considerations when it examined, in the light of Directive 76/207, in particular Article 5(1), the following situations:

- the dismissal of an employee when she reached a certain age in connection with a mass redundancy caused by the closure of part of an undertaking's plant; (13)

- the dismissal of an employee by a State authority on the ground that she had reached or gone beyond the statutory retirement age for civil servants; (14)

- also, albeit formulated very succinctly, the dismissal of an employee which, according to the employer, was due to redundancy, but according to the dismissed employee and the national court was due to the employee's stated intention to undergo gender reassignment. (15)

49 In this case, the 1978 Act lays down the right of employees not to be unfairly dismissed and sets out the terms and conditions of that right. The contested variation of section 64 introduces an exception to that rule as regards one category of employees - those employees who have not completed two years' employment, who are deprived of that right. Both the rule and the exception constitute terms under which the dismissal of employees is permitted and, consequently, fall within the scope of Directive 76/207 and, in particular, of Article 5(1).

50 The applicants, in particular, and indirectly the Commission as well, appear to consider that, since compensation for unfair dismissal constitutes `pay' within the meaning of Article 119 of the Treaty, the impugned period of two years, inasmuch as it constitutes a condition governing dismissal, is also a condition governing `pay'. They therefore hope, perhaps, that if the condition is set aside as contrary to the principle of equal pay, their dismissal will in any case be regarded as unlawful, and by virtue of the horizontal effect of Article 119, they will be able to assert directly against their employer their entitlement to the compensation provided for by the Act.

51 That argument requires a series of impossible logical and legal leaps.

52 First, it is not true that, in the specific circumstances, any infringement by the two-year rule against Community law automatically entails the applicants' dismissal being unlawful and hence payment of compensation.

The contested provision, as stated above, excludes employees who have served less than two years, such as the applicants, from the rule applied to other employees.

The rule applicable to the latter, however, is not that, after two years' employment, dismissal is in any case unfair, in other words that dismissal is prohibited. On the contrary, dismissal is allowed, but must, however, be justified by fair and lawful reasons, subject to review by the competent court. If that court finds that the legal requirements are not satisfied, the dismissal is regarded as unfair and the system of sanctions against the employer becomes applicable, one of which is compensation for the dismissed employee.

Even if the two-year qualifying period introduced indirect discrimination, as the applicants and the Commission maintain, the legal consequence, in accordance with settled case-law, would be the setting aside of the defective provisions and the restitution of the equality encroached upon, by granting to the group who have suffered discriminatory treatment the right granted to the advantaged group. (16) That right, as set out above, is not that dismissal is automatically unfair, but that it should take place on lawful grounds, which are subject to review by the competent court. Consequently the most that the applicants may gain by a declaration that the provisions at issue introduced indirect discrimination is, essentially, consideration by the competent court of the merits of their dismissal; only if, and provided that, the court held their dismissal to be unfair, would they be entitled to compensation under the Act. Any recognition that the group to which the applicants belong have a right greater than that granted by the settled provisions of the Act to employees in the advantaged group, that is to say that all dismissals which have taken place before completion of two years were regarded as unfair, would in reality create new inequality for those already affected and would be outside the letter and spirit of the provisions on equal treatment.

53 From the preceding argument it follows that even if the compensation to which an employee is entitled for unfair dismissal does constitute `pay' for the purposes of Article 119 of the Treaty, nevertheless it bears merely an indirect relation to the requirement as regards dismissal, which constitutes the subject of the second question referred to the Court. As has already been held in Defrenne III, the fact that certain working conditions have financial consequences does not suffice to make Article 119 of the Treaty applicable to them.

Of course, the employee, in performing his work, has pay in view. That does not, however, mean that all working conditions are also conditions governing pay, so that the provisions governing the latter are applicable to the former. If that were the case, the adoption of Directive 76/207 would have been redundant, since all the issues concerning working conditions would have fallen indiscriminately under Article 119 of the Treaty. That interpretation, however, is contrary to the actual letter of the provision and has properly been rejected by the Court.

54 One more clarification is required in order to complete my argument on the question of the legal framework in which the case should be set.

Certain judgments appear to extend the meaning of `pay' to include the conditions or the system by means of which pay is earned. Thus in Barber, cited above, the Court, having held that a pension paid under a `contracted-out scheme' constituted pay under Article 119 of the Treaty (paragraph 28), subsequently held that the imposition of an age condition which differed according to sex was contrary to that article, because `Article 119 prohibits any discrimination with regard to pay as between men and women, whatever the system which gives rise to such inequality' (paragraph 32, emphasis added).

In its judgment in Nimz, (17) the Court also held that rules contained in a collective agreement governing what was practically an automatic reclassification in a higher salary grade came in principle within the concept of pay as defined in Article 119 of the Treaty (paragraph 10). Accordingly, it was further held that the taking into account of a lesser period of service for employees working full-time in relation to part-time employees for the purpose of salary increases introduced discrimination against women contrary to Article 119, where it was shown that a significantly smaller number of men belonged to the latter category (paragraph 15).

55 From those judgments, however, the conclusion cannot be drawn that the Court has so broadened the definition of `pay' that all working conditions or advancement in seniority are covered by the term. That is because, as the Court has clarified, moreover, in its subsequent case-law, account was principally taken in those judgments of the direct and practically automatic link of the criterion in question with pay, a link which made it possible to include the criterion in a broad definition of pay.

56 For instance, in Case C-1/95 Gerster, it had been claimed, in reliance on the judgment in Nimz, that a system which provided for different calculation of length of service for civil servants working full-time on the one hand and those working part-time on the other was contrary to Article 119 rather than to Directive 76/207. In its judgment in Gerster, (18) the Court rejected that argument, emphasising that in Nimz promotion was practically automatic and consequently had a direct link with pay; conversely, the rules at issue in the main proceedings were indirectly linked to pay and consequently did not fall under Article 119 of the Treaty but under Directive 76/207, in the light of which the question raised was accordingly examined (paragraphs 22 et seq.).

57 In conclusion, the compensation to which Question 1 refers constitutes simply an indirect and possible consequence of the right not to be unfairly dismissed to which Question 2 refers. Consequently, the fact that compensation falls under Article 119 of the Treaty does not affect the nature of the latter right as a condition governing dismissal which falls under Directive 76/207. Accordingly, the question whether denying employees who have not completed two years' employment the right not to be unfairly dismissed constitutes discrimination against women must be decided on the basis of the provisions of Directive 76/207 rather than Article 119 of the Treaty.

D - The remaining questions

58 In Questions 3, 4 and 5, the national court asks essentially for clarification as to the conditions under which a measure such as the contested two-year requirement constitutes indirect discrimination against women, the point in time at which a court should apply the test for establishing such discrimination and when such discrimination may be regarded as objectively justified.

59 The national court raises the above questions with express reference to Article 119 of the Treaty. Nevertheless, in view of the reply to Question 2, the question of any conflict with Community law on the part of a national measure such as that at issue must be examined in the context of Directive 76/207.

60 The applicants maintain that the measure introduces indirect discrimination against women. That is because, from statistical evidence relied upon before the United Kingdom courts it appears, in their view, that the contested measure may affect more women than men, since the percentage of women with less than two years' employment in relation to the total percentage of the female working population appears greater than the percentage of men with a corresponding period of employment in relation to the total percentage of working men. According to the applicants, moreover, the contested measure is not objectively justified.

The United Kingdom Government has not disputed the statistics per se but observes that the disparity between the percentage of women employees affected by the contested measure as compared with the percentage of men is very small, and contends that it has recently been tending to disappear. At all events, according to the United Kingdom Government, the disparity is not so `large' or `considerable' as to indicate prima facie discrimination in accordance with the case-law of the Court. In addition, the United Kingdom Government considers that the point in time at which the test for any inequality should be applied is the time of dismissal. Lastly, it points out that the aim of the contested measure was principally to promote employment, but it states that it is not able to produce evidence to show that the measure had the desired effect on the employment market.

The Commission takes basically the same view as the applicants, but makes a side reference to an American-inspired system for reviewing statistics and determining whether there is any indirect discrimination which does not, however, appear to be in keeping with the settled case-law of the Court on those questions.

61 I take the view that the basis on which the applicants and the Commission place the question, and which the United Kingdom accepts, is not correct. That is not only - or rather not so much - because the contested measure itself does not appear to introduce a distinction, or discrimination, to the detriment of women employees, either by its nature or by its results. In my view the measure is contrary to Directive 76/207 but for a more fundamental reason.

62 In particular I propose to argue that inasmuch as the two-year rule at issue on the one hand allows dismissal of an employee (whether a man or a woman) on grounds referable to the employee's sex, and on the other hand prevents that employee, if he or she believes himself/herself thereby wronged from seeking an effective legal remedy, to that extent alone it is directly contrary to Articles 5 and 6 respectively of Directive 76/207. That applies regardless of whether the percentage of women affected is greater or smaller than that of male employees, and, above all, regardless of whether the dismissed employee has been employed for two years, one year, six months, or a single day.

63 I shall first expand on the correct view, as I see it, and subsequently examine certain aspects of the parties' arguments.

E - My views on the case

64 First of all, the nature of the two-year rule at issue must be more closely examined in the context of the 1978 Act, in particular its aim and function.

65 As is shown by the file on the case, including the Parliamentary debates on the extension of the qualifying period to two years, which took place in 1985, the provision to that effect in the Act pursued, over the years, two basic objectives.

66 The first was to give an employer a reasonable period to assess the capacities and productivity of the employee in order to decide whether he was able to satisfy the requirements of the job for which he had been selected and whether he should be definitively engaged. It appears that in laying down the `qualifying period' in question the UK legislature, particularly when the period was short, was attempting to reconcile the employer's need to select the appropriate staff for his undertaking unhampered with the need to protect the employee from any arbitrary dismissal and also with the need not to extend the employee's state of uncertainty as to his future for too long.

67 With the successive extensions, in particular the last, a further purpose was given prominence. As is clear from the evidence available, and from the grounds set out in the measure at issue, the extension of the qualifying period to two years was considered expedient in order to encourage employers to recruit new staff. On that view, when the qualifying period is short, employers hesitate to take on new staff because they are afraid that they will become embroiled in legal actions and will be obliged to pay compensation to employees whom they might have to dismiss after a short qualifying period. Conversely, on the same view, if the employer knows from the outset that he has a longer period available to decide whether to keep on an employee he will be more prepared to recruit staff, in the knowledge that there is a longer period within which he may dismiss them without having to suffer any consequences.

68 From all the foregoing, the conclusion must be drawn that the successive extensions and reductions in the qualifying period were part and parcel of the policy of each government on labour relations, employment and economic development. From a broader point of view, moreover, it is certain that they reflected the general philosophy as regards those areas of the political parties which held power from 1971 onwards in the United Kingdom.

69 At this point a clarification is necessary. It is true that, according to the case-law, where a measure which introduces discrimination is `objectively justified' it is not contrary to the principle of equal treatment. (19) In this case, however, there is no question of reviewing `objective justification'. In fact such review arises at a later stage, that is to say, once it has been found, in accordance with the criteria laid down in the case-law, that the measure under consideration does introduce discrimination. Conversely, clarification of the nature and purpose of a measure such as that at issue is of significance at the present stage of the investigation because it is connected to the extent to which the national measure is of concern to Community law and, consequently, the extent of the review to be carried out by the Court.

70 In my opinion, in so far as the adoption of a longer or shorter qualifying period before there can be unfair dismissal constitutes a means of exercising government policy and is ultimately a political choice, it falls within the scope of Articles 117 and 118 of the Treaty. Those articles, as the Court has repeatedly held, are simply in the nature of a programme. (20) Accordingly, the adoption of measures in areas which are covered by the above articles is in principle a matter for the Member States, which enjoy in that connection a wide margin of discretion, (21) unless the Community decides to lay down specific measures in the area in question, using the powers conferred by other provisions of the Treaty. (22)

That, moreover, was the case with the adoption of Directive 76/207 which, as concerns working conditions, did not have its basis in a specific provision of the Treaty (see the third recital in the preamble), and therefore cited the general Article 235 as its legal basis (see the first citation in the preamble).

71 As regards in particular the question of the dismissal of employees, apart from Directive 75/129 on collective redundancies, (23) there do not appear to be any Community provisions regulating that question in a general way in the Member States. Moreover Directive 76/207, with which this case is concerned, treats the matter from a particular point of view, in other words that of equal treatment for men and women as regards the conditions governing dismissal.

Consequently, in the circumstances of this case, the fundamental question of Community law is not whether the two-year qualifying period, per se, is long or short, nor whether it promotes the interests of employees or not, or is a reasonable or unreasonable social measure. A measure such as that at issue is of concern to Community law solely in so far as it may introduce discrimination on grounds of sex prohibited by Directive 76/207.

72 Where a measure, such as that at issue, is in part subject to Community law, in my view the Court has an obligation to review the measure to that extent and the consequences of any infringement of the principle of equal treatment will be commensurate. In that case, in other words, a ruling finding an infringement and its consequences must be confined to that part, without touching upon the rest, from the point of view of Community law at least. That follows from the more general principle that, in principle, invalidity of a part does not automatically mean that the entire measure is invalid, unless it is clear that the whole cannot function without the invalid part. Certainly it is the national court which has jurisdiction to assess the extent of the consequences of such a finding by the Court in the framework of national law. However, it would be useful to point out to the national court the extent to which it is bound by a ruling of the Court to that effect, in other words, that it is not obliged by Community law to regard the national measure as invalid on all points, but should exercise its unfettered jurisdiction.

73 Next, the way the contested measure operates must be clarified.

74 The measure at issue has two dimensions. A substantive dimension, whereby it is permitted to dismiss unfairly employees with less than two-years' employment, even on grounds referable to their sex, and a procedural dimension, whereby dismissal within the above period gives employees no entitlement to legal protection even if they consider their dismissal to be the result of discrimination on grounds of sex. Accordingly the contested measure is, on the first point, directly contrary to Article 5 of Directive 76/207 (see below under (a)), and on the second point is directly contrary to Article 6 of that directive (see below under (b)).

(a) Article 5 of the directive

75 Article 5(1) of the directive provides that men and women are to be guaranteed the same working conditions, including the conditions governing dismissal, without discrimination on grounds of sex. In addition, according to Article 5(2)(a), the Member States are to take all the measures necessary to ensure that any laws contrary to the principle of equal treatment are abolished.

76 As has been consistently held, Article 5(1) of the directive is sufficiently precise and unconditional to be capable of being relied upon by an individual before a national court as against the State in order to exclude the application of any national provision which does not conform to that article. (24) In addition it must be accepted that Article 5(2), cited above, also has the same character.

77 In this case the 1978 Act lays down, in its fixed provisions, the right of employees not to be unfairly dismissed. Formulated differently, it requires the employer not to dismiss an employee without lawful and fair reason. Discrimination on grounds of sex does not constitute such a reason, however. As stated above (point 16), dismissal constituting an act of discrimination within the meaning of the Sex Discrimination Act 1975 entails payment of additional compensation by the employer to the employee wronged. It follows that, in its fixed provisions, the 1978 Act regards dismissal on grounds referable to sex as an especially serious case of unfair dismissal which is not only prohibited but in addition is penalised more heavily than other cases of unfair dismissal.

78 The contested measure provides that the right not to be unfairly dismissed is not enjoyed by employees who have not completed two years' continuous employment for the same employer. In other words, by introducing an exception to the fixed rules, it enables the employer to dismiss an employee without having to give a reason provided the employee has not yet been employed for two years. According to the applicants' written observations, the Act expressly introduces certain exceptions to the above exception, with the consequence that there is a return to the rule (that is to say, application of the fixed provisions which do not provide for a qualifying period). Those cases are, for instance, dismissal because of union activities (section 58(1)), dismissal because of pregnancy, maternity and so forth. Among those exceptions there do not appear to figure grounds referable to sex, and neither the United Kingdom Government nor the other parties who have submitted observations make any assertion to the contrary. Consequently, by contrary inference, it must be accepted that the 1978 Act a priori regards as not unfair, and consequently allows, dismissal of an employee even if it takes place for reasons directly or indirectly referable to sex, provided that dismissal occurs before completion of two years' employment.

79 Such a construction is, however, directly contrary to Article 5(1) of the directive. That conflict is fundamental and does not depend on the facts of each case nor is there a need for indirect evidence. In particular:

80 First, it does not depend on whether the employee wronged is a woman or a man, given that equal treatment concerns both women and men. A male employee could equally well find himself in a position analogous to that of the present applicants as the following example will show. Let us suppose that, because the messenger who delivered documents, supplies and so forth in the first applicant's company has retired, the manager allocates that work to a newly-engaged male administrative employee despite the fact that there are women available at the same level or lower than him, on the ground that it is a man's work; because he protests, the employee is dismissed. Proceedings in which the employee concerned complains that he has suffered discrimination on grounds of sex are rejected as inadmissible, in reliance on the measure at issue. How can the employee in question protect himself? Should he perhaps argue that the two-year qualifying period adversely affects him because it works to the detriment of women, and should the question whether the complaint is well founded depend on whether the measure affects `considerably more' women or not? I consider such a view to be absurd and inconsistent. The incongruity of such a construction reveals, I believe, the fundamentally flawed nature of the measure at issue and the need for equal protection of persons wronged of both sexes.

81 Secondly, that conflict is direct and easily ascertainable on the basis of legal considerations alone. (25) Consequently, there is no need for anyone to have recourse to indirect evidence, that is to say to the investigation of statistical evidence which might reveal which sex is comparatively most adversely affected. Let us in fact imagine that the relevant statistical evidence over a certain period does not show a `large' or `considerable' disparity in percentage terms between the sex affected and that not affected, or shows that both sexes are similarly affected. Should we conclude in such a case that the national measure is consistent with the directive?

The answer is certainly no. A national measure which, on a proper construction, allows an employer to dismiss an employee on grounds referable to sex may in no way be legitimated by the fact that there is no significant disparity between the percentages of men and women employees affected.

82 Lastly, the above conflict is inherent in the measure, in the sense that it does not depend on the specific length of the qualifying period. Article 5 does not permit any period to be laid down within which an employee is not permitted to assert the relevant Community right. The directive in fact protects employees against discrimination on grounds of sex even before they are engaged, in other words from the time when they apply for employment. (26) Consequently, in view of the broad construction given to the term `dismissal' (27) it must be recognised that dismissal on grounds of sex is prohibited however short the length of employment of the person concerned might have been.

83 I should like to enlarge somewhat upon that point because the impasse to which the solution of `indirect discrimination' being pressed upon us by the parties leads will thus become more apparent.

84 As is clear from the background to the case and the hearing, after the Industrial Tribunal had refused to register the applicants' complaints, the procedure before the other United Kingdom courts took on the character of a collateral review of the compliance of the national measure with Community law. The applicants are challenging the validity of the last variation in 1985 by which the length of the qualifying period was extended to two years, arguing that the measure at issue constitutes indirect discrimination against women because statistical evidence shows that it (potentially) affects a larger number of women than men.

85 According to a statement made during the hearing by the Agent of the United Kingdom, which was not disputed, the applicants are seeking to have the measure at issue set aside as contrary to Community law so that the one-year qualifying period applicable before 1985 will apply to them. (28) That, of course, is understandable, in view of the fact that these particular applicants, who were employed for a period longer than one year, would benefit from such an outcome, (29) since each applicant's dismissal could finally be assessed on the merits by the Industrial Tribunal, and a decision reached as to whether it was unfair, on the same conditions as apply to employees who have been dismissed after two years' employment.

86 If it is accepted that the two-year requirement at issue constitutes discrimination in view of the percentages relied upon by the applicants, that will give rise to the following paradox. As is clear from the order for reference, and was confirmed by the United Kingdom Agent at the hearing, the difference in the percentages of men and women affected by the measure at issue as it now stands does not differ substantially from the difference in the percentages ascertained at a time when the pre-1985 version was in force.

If, however, the requirement at issue had the same repercussions, by analogy, both before 1985, when the qualifying period was one year, and after 1985, when it was extended to two years, then the problem does not lie in the specific length of the qualifying period but in the fact that it was laid down at all. That finding, regardless of any other possible repercussions, (30) supports, I believe, the view put forward above, because it indicates that the problem with the rule at issue is more fundamental and goes beyond the framework in which the applicants seek to confine it.

87 Moreover, if the defect in a measure such as that at issue lies in the adoption of a qualifying period per se, the adoption of a qualifying period suffered from the same defect all along and the measure at issue is contrary to Article 5(2)(a) of the directive. That is because, in 1985, not only did the United Kingdom fail to abolish the qualifying period in question as it was obliged to do, but further extended its length.

(b) Article 6 of the directive

88 As has been held, Article 6 of the directive requires the Member States to take sufficiently effective measures to achieve the aim of the directive, so that the persons concerned may profitably rely on those measures before national courts. In addition, that article constitutes the expression of a general principle of law underlying the constitutional traditions common to the Member States which is also laid down by Articles 6 and 13 of the Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950. By virtue of Article 6 of the directive, interpreted in the light of that principle, all persons have the right to obtain an effective remedy in a competent court against measures which they consider to be contrary to the principle of equal treatment laid down in Directive 76/207. (31)

89 The measures which the Member States are obliged to take in that connection must include an effective system of penalties against the employer in order to have a real deterrent effect. Even though the directive does not prescribe the adoption of specific penalties, but leaves Member States free to choose between different solutions, it has been held that they may include measures requiring the employer to offer a post to the candidate discriminated against or to ensure reasonable financial compensation, backed up where necessary by a system of fines. (32)

90 Thus, in Johnston, the Court held that a legal provision to the effect that a ministerial certificate stating that the conditions for derogating from the principle of equal treatment for men and women for the purpose of protecting public safety was to be treated as conclusive evidence was contrary to Article 6. (33)

91 However, the requirements of Article 6 as regards real and effective judicial protection mean that account must be taken of the particular circumstances of each breach of the principle of equality. In particular, in the event of discriminatory dismissal contrary to Article 5(1) of the directive, it has been held that a situation of equality could not be restored without either reinstating the victim of discrimination or, in the alternative, granting financial compensation for the loss and damage sustained. (34)

92 Lastly, as the Court has held, Article 6 is clear and unconditional and those adversely affected may rely on it before national courts against a national measure which is contrary to it. (35)

93 In the present case, the fixed provisions of the 1978 Act contain a complete system of legal protection and sanctions against employers which, per se, is wholly consistent with the directive. However, one category of dismissed employees cannot take advantage of it because of the procedural consequence of the measure at issue. As already explained, that procedural consequence consists in the fact that dismissed employees who have not completed two years' employment are not entitled to appear before a court to claim that they have been the victims of discrimination on grounds of sex. For that reason such complaints by dismissed employees to the Industrial Tribunal cannot be registered. In fact, as the court of reference emphasised, `it is not disputed but that for the requirement of two or more years' continuous employment ("the two year rule") the industrial tribunal would have had jurisdiction to entertain the applicants' claims'.

94 Of course, in this case, the court hearing the case, before it can deal with the substantive issue and decide whether the dismissal in question constitutes discrimination on grounds of sex, will have to determine first whether the measure at issue is contrary to Community law. Only in the affirmative may the court lay that question aside and proceed to examine the substance of the case.

95 That complication does not, however, affect us here. The protection of Article 6 would become a dead letter if the persons concerned could not put forward all the pleas and arguments, substantive and procedural, on the basis of which they consider themselves to be the victims of discrimination on grounds of sex. Those arguments may be legally or substantively without foundation, when they will be rejected by the court. They may not, however, be regarded as inadmissible in principle. In fact it does not make sense to reject an action or the submission of a particular plea as procedurally inadmissible on the ground that precisely the legal requirement challenged by the action or plea is lacking. That is to beg the question and leads to a denial of legal protection.

96 It is also irrelevant that, after repeatedly seeking a legal remedy, the applicants managed to place before the courts at least one aspect of their problem, that is to say, the compliance of the requirement at issue with Community law. An important aspect of the effective judicial protection of the rights conferred by Community law is that it should be provided at the appropriate time, and at the earliest possible stage of the proceedings, so as to avoid waste of time and money on the part of those concerned in seeking a judicial remedy. For that reason, Article 177 of the Treaty enables any court or tribunal of whatever level to turn to the Court for elucidation of questions of interpretation of a Community nature.

As is clear from the hearing, if the Court finds the measure at issue to be contrary to Community law, the case will return to the House of Lords which, in turn will refer the case back to the Industrial Tribunal to be heard on the merits. That means, at best, that the Industrial Tribunal will decide on the validity of the applicants' dismissal approximately 10 years after the dismissals took place. Thus it is not impossible that the applicants will meet with significant difficulty in proving the dismissals to have been unfair, since it may be that the undertaking no longer exists, the relevant evidence may have been destroyed and witnesses may have left their employment. In such circumstances there is the risk that the employees wronged will be discouraged from seeking legal protection.

For those reasons I consider that, in so far as the measure at issue prevents the competent national court from providing effective legal protection to a dismissed employee who claims to have been the victim of discrimination on grounds of sex, and further prevents use of the possibility provided for in Article 177 of the Treaty, it is contrary to Article 6 of the Directive, as interpreted in the light of the more general principle mentioned above and Article 177 of the Treaty. (36)

97 It must be stressed, moreover, that the conflict between the measure at issue and Article 6 of the Directive is just as fundamental as the conflict with Article 5. Consequently, for the reasons set out above (points 79 et seq.) it is not connected with the sex of any particular person affected, with the percentages of men and women employees or with a particular length of employment.

98 I have examined the two aspects of the measure at issue separately for mainly practical reasons. However, the substantive and procedural aspects of a right are two sides of the same coin. It is, furthermore, clear that for that reason the measure at issue leads the employee into a vicious circle: if he has not completed two years' employment he cannot put his case before a court; and because he cannot put his case before a court he is not able to prove that he was a victim of discrimination on grounds of sex because of the two-year rule.

99 The consequence of the partial conflict of the measure at issue with Articles 5 and 6 of the directive is that the national courts will have to set it aside so that, on the one hand, proceedings brought by dismissed employees in which an issue of unequal treatment on grounds of sex arises will be held admissible and, on the other hand, the question whether each particular dismissal was due, directly or indirectly, to sex discrimination will be examined as to its merits.

100 I do not regard as justified the fear expressed by the applicants that, because Articles 5 and 6 do not have direct horizontal effect, Directive 76/207 cannot be pleaded against the employer and, consequently, does not provide as effective a means as Article 119 of the Treaty. (37)

In Case C-421/92 Habermann-Beltermann, a national law provided that night-time work by pregnant women was prohibited; a pregnant employee on night shifts was dismissed when it became known that she was pregnant at the time when she was engaged, in reliance on provisions which allowed an employment contract to be terminated on the ground that it was void, or on account of mistake. The defendant employer considered that because Directive 76/207 did not have horizontal effect, it could not be pleaded against the employer. In its judgment, (38) the Court rejected that argument, holding that the question referred to it concerned the interpretation of a directive that had already been transposed into national law and was designed to assist the national court in interpreting and applying the provisions at issue concerning the invalidity of contracts and mistake (paragraph 9).

Similarly, in this case, if the provisions at issue are removed, by virtue of the vertical effect of Articles 5 and 6 of the directive, it will be the fixed provisions of the 1978 Act that will be applicable for the rest in domestic law. Those provisions, interpreted in the light of the directive, provide sufficient protection to employees who consider themselves to have been dismissed unfairly on grounds of sex, as already stated. In view of the fact that any penalties imposed, in the event of a successful action brought by the person affected, will be arrived at on the basis of national law, no question of the `horizontal effect' of the directive can arise.

101 Consequently, when the competent national court proceeds to examine the merits of the cases, it must examine the grounds of each dismissal separately, from the point of view of whether it was based on sex, in which case the dismissal must be regarded as unfair. (39) In the contrary case, if, that is to say, the grounds of dismissal are unrelated to sex, the action may be dismissed. That is because, as already explained, to that extent the national measure pursues an objective outside the ambit of Community law and, consequently, outside the scope of Directive 76/207.

102 In addition, if no reasons are given for the dismissal (where, for instance, the employer, as a result of the formulation of the provision at issue, has put into effect a system of dismissal lacking in transparency), the provisions of the 1978 Act will have to be interpreted in the light of the Court's case-law, applied by analogy, in relation to the burden of proof regarding discrimination by the employer in putting into effect a system of pay lacking in transparency. Hence if the employee shows that, among those dismissed with no reason, or for the same reason, women considerably outnumber men, the employer must show that his practice does not involve discrimination, otherwise there is an infringement of the principle of equal treatment. (40)

103 On that point I have to express some perplexity. It has been stated by a British writer that dismissal, inter alia, in infringement of the Sex Discrimination Act 1975 (hereinafter `the SDA') is not subject to the 1978 Act's two-year rule and the person dismissed may seek satisfaction on the basis of the SDA. (41) In addition, as noted above (see footnote 15), in Case C-13/94 P. v S., despite the fact that dismissal on account of gender reassignment occurred before completion of two years' employment (paragraphs 3 and 4), the Industrial Tribunal examined the merits of the case, apparently by reference to the S.D.A. (paragraph 7).

Of course the questions whether the 1978 Act is applied in a particular way in relation to the S.D.A., whether the two Acts are applied cumulatively or not, whether the 1978 Act provides greater protection, and so forth, are for the national courts to decide. Moreover, the national courts will have to interpret the national provisions adopted before and after Directive 76/207 consistently with the latter, and where this is not possible, disapply the national provisions. (42)

It should, however, be pointed out that if the provisions of the 1978 Act at issue must be construed to the effect that dismissal on grounds of sex does not fall under the two-year rule, with the consequence that the dismissed employee may complain to the competent court and seek satisfaction on the basis of the fixed provisions of the 1978 Act, then the measure at issue cannot be regarded as contrary to the provisions of Directive 76/207. That is because a legislative measure which, on the one hand, ensures that the dismissal of an employee within the qualifying period of two years may not take place on grounds of sex, and on the other hand organises a system of penalties against the employer and a system of full legal protection of the persons wronged by any discrimination on grounds of sex, constitutes a general legislative measure which lays down a condition governing dismissal applicable without distinction to men and women. Such a measure is not contrary to any provision of Directive 76/207. (43) In that case, the problem does not arise at the level of the Act but in practice; in other words the only issue is whether the criterion was applied in a manner which led in fact to discrimination. (44)

F - The issue of indirect discrimination

104 I have already explained why I do not accept the basis of the parties' reasoning. I shall examine below certain aspects of that reasoning, principally in order to clarify, by contradistinction, what I believe to be the correct view, but also to cover the possibility of the Court preferring to take that second course.

105 It should be recalled that, according to the applicants and the Commission, the measure at issue entails indirect discrimination against women, since it concerns a comparatively greater number of women than men, and is not objectively justified. The United Kingdom Government takes the contrary view.

106 There is no doubt that the contested two-year qualifying period applies without distinction to men and women with less than two years' employment and, consequently, does not constitute direct discrimination on grounds of sex. Consequently, consideration must be given to whether the provision at issue introduces indirect discrimination, as the applicants and the Commission maintain.

107 As the Court has consistently held, discrimination arises through the application of different rules to comparable situations or the application of the same rule to different situations. (45) Indirect discrimination arises where a national measure, albeit formulated in neutral terms, works to the disadvantage of far more women than men. (46)

108 Given that, in the case of measures which are, at first sight, neutral, it is difficult both to identify possible discrimination and for those affected to furnish proof, the Court's case-law has elaborated certain criteria concerning the detection of discrimination and the distribution of the burden of proof. In addition, as the Court has pointed out, identification of indirect or covert discrimination `implies comparative studies of entire branches of industry and therefore requires, as a prerequisite, the elaboration by the Community and national legislative bodies of criteria of assessment'. (47)

109 The case-law concerning the criteria governing, and proof of, indirect discrimination was set in motion by Jenkins, (48) the locus classicus, and is now settled. (49) That case, and many of the cases that followed, interprets Article 119 of the Treaty in respect of a complaint of discrimination in treatment as regards pay of employees who work part-time (mainly women) as against employees working full-time (mainly men).

110 Moreover, in its judgment in Gerster, the Court applied the above case-law as it has developed to a case falling under the scope of Directive 76/207, namely a legislative provision which put workers into a disadvantageous position if they worked part-time in relation to workers who worked full-time for the purposes of length of service with a view to promotion. (50)

111 Where unequal treatment is connected with legislative provisions as in this case, the Court has stated: `[s]ince a difference in treatment has been found to exist, ... if it were the case that a much lower proportion of women than men work full-time, the exclusion of part-time workers from certain benefits would be contrary to Article 119 of the Treaty where, taking into account the difficulties encountered by women workers in working full-time, that measure could not be explained by factors excluding any discrimination on grounds of sex'. (51)

112 Since the case-law concerning discrimination in respect of pay against employees working part-time constituted the model for the case-law in the other areas as well, I would first point to certain characteristics of the above case-law and then examine whether and under what circumstances it may be applied to the present case.

113 It should be noted, first of all, that Community law equates indirect with direct discrimination on grounds of sex according to result. Consequently, even if evidence of indirect discrimination is necessarily itself indirect, nevertheless the aim is that the court should form a conviction as to the existence of discrimination that is, as far as possible, just as cogent as it would be in a case of direct discrimination. To that end statistics alone do not suffice, since by their nature they are likely to vary and be in general unsafe, whereas the most objective foundation possible for the assessment is required.

114 The case-law under examination is based on the finding that women employees `because of household and family duties for which they are frequently responsible, are not as able as men to organise their working time flexibly'. (52) That finding, which is a fact of common experience, is the objective foundation for the assessment of indirect discrimination in the above situation.

115 Consequently it must be determined whether there is in fact different treatment of employees working full-time and those working part-time, or whether the difference complained of is only apparent. If the latter is the case, the investigation is concluded at that stage and there is no examination either of numerical facts or as to whether the measure is objectively justified. (53)

116 If there is a difference in treatment, the Court, basing itself on evidence from the documents in the case, examines the proportion of men and women within each of the two groups and compares the results. If, as anticipated, the percentage of women in the group of part-time workers is `considerably higher' than the percentage of men and/or the percentage of women in the group of full-time workers is considerably lower than the percentage of men, (54) then the measure is regarded `in principle' (55) as contrary to the principle of equal treatment.

As an indication, the case-law has expressly or tacitly considered that there was `a significant difference' with regard to the following percentages:

- in Case 171/88 Rinner Kühn, in the category of part-time workers 89% were women and 11% men. (56)

- in Case C-33/89 Kowalska, in the category of part-time workers the percentages for women were 77.3%, 97.8% and 90.2% according to service and hours worked per week. (57)

- in Case C-184/89 Nimz, in the same category the percentages of women were 77.3% and 90.2% according to hours worked per week, whereas the percentage of women in the category of full-time workers was 55%. (58)

- in Case C-127/92 Enderby, 98% of employees in the allegedly disadvantaged category were women, whilst in the allegedly advantaged category there were fewer women, or very slightly more women. (59)

- in Case C-100/95 Kording, 92.5% of employees working part-time were women. (60)

- in Case 243/95 Hill, of employees working on a job-sharing basis, the category suffering unfavourable legal treatment, 98% to 99.2% were women. (61)

117 Moreover, in order that employees who are prima facie the victims of discrimination should not be deprived of any effective means of ensuring that the principle of equality is adhered to, the case-law shifts the onus of proof, so that a measure which has in practice an adverse impact on substantially more members of one or other sex is regarded as contrary to Article 119 of the Treaty, unless the party bearing that onus shows that the measure is objectively justified. (62)

118 The fact that a provision is regarded as contrary `in principle' or `prima facie' to the principle of equal treatment means that it is presumed to be contrary to Community law provided it is not objectively justified, and examination of that question constitutes the final stage of the investigation. Thus, if the measure is objectively justified, `the mere fact that the provisions affect far more women than men cannot be regarded as constituting an infringement of Article 119'. (63)

119 From the foregoing it follows that determination of the question of indirect discrimination constitutes a complex assessment which takes account of objective and numerical factors alike. The percentages per se are not of absolute but rather of relative value, which follows from their relationship to all the other factors to be taken into account. Above all, they are an indication, not proof, of discrimination.

120 Accordingly, in order to determine whether there is indirect discrimination in the present case, consideration must first be given to whether the provisions at issue foster unequal treatment as between two categories of employees and whether that affects a considerably higher number of women than men. Only if the answers to those questions are in the affirmative does the question arise of the existence of objective factors unrelated to any form of discrimination which may justify the difference in treatment that has been established. (64)

121 As regards the first question, it should be noted that the provision at issue does not introduce different treatment for men and women within the same category, but between employees who belong to two different categories, in other words between those who have less and those who have more than two years' employment.

122 As regards the second question, from the statistical evidence covering the period 1985-1991, relied on by the applicants and set out in the order for reference, the following is apparent:

The percentage of men with less than two years' employment (`those affected') in the entire male workforce was 22.6% in 1985 and progressively increased to 28% in 1989, subsequently reducing by degrees to 25.5% in 1991. In the same years the corresponding percentages of women with less than two years' employment in relation to working population was 31%, 34.5% and 32.6%.

On the other hand, the percentage of men with more than two years' employment (`those advantaged') in relation to all men was, for the corresponding years: 77.4%, 73.4% and 74.5%, whilst the corresponding percentages for women were 68.9%, 65.6% and 67.4%.

Lastly, before 1985, the percentage of men with less than two years' employment was 13.8% of all male employees, whereas the corresponding percentage of women was 19.2%.

From those figures the applicants and the Commission conclude that women are comparatively worse affected than men; (65) the Court of Appeal reached the same conclusion. Conversely, the United Kingdom Government considers that such a conclusion does not follow from those statistics; that view was also taken by the Divisional Court.

123 I must state straight away that I have considerable reservations in respect of the adequacy and significance of that statistical evidence.

124 First of all, the method by which the calculations are arrived at is not correct and does not permit the necessary comparisons. In reality, according to the above case-law, applied by analogy, it should be possible to deduce from the statistics, first, the proportion in each group of male and female workers. Such evidence exists only for 1985, whereas for the remaining periods only the percentage of those affected of each sex of the total number of workers of that sex is given. If, however, the make-up of each group is unknown, it is not possible to draw a conclusion as to which sex is affected to a comparatively greater degree. From the evidence adduced, it appears simply that, both before and after 1985, there was a stable relationship between those affected and those not affected per sex and that the factors giving rise from year to year to an increase or decrease in the percentage of one sex influence the percentages for the other sex in approximately the same way.

125 Secondly, the statistical evidence submitted concerns employees who are potentially affected by the measure, not those who are actually adversely affected, that is to say, those dismissed. Where a national measure grants a financial advantage the sole criterion being the performance of full-time work, all employees working full-time will obtain the advantage, whereas all employees working part-time will be deprived of the advantage. Moreover, the advantage is specific and easily determined. In such a case, it suffices to know how many members there are in each group (in other words, how many are potentially affected by the measure) in order to know as well how many are affected in practice (in other words, how many have their pay increased or reduced).

Conversely, in the present case, the advantage given to the favoured group is not immediately determinable, but consists, as far as that group is concerned, in the obligation of the employer (reflecting the right of those employees) to give lawful reason for any dismissal and, as far as the other group is concerned, in the employer's discretion to dismiss those employees without fair reason (reflecting those employees' lack of a right). In that case, it is not known in advance how employers will exercise their discretion or fulfil their obligation and consequently how the measure will affect employees in practice.

Consequently, in order to determine the actual repercussions of a measure such as that at issue in a given period, there must be apparent at least (a) the percentages of men and women with less than two years' employment at that time and (b) the percentages of men and women who were dismissed during the same period. Only if the percentage of women dismissed is considerably greater than the corresponding percentage of men dismissed, in relation to the percentage of women and men with less than two years' employment, can there, in principle, be a question of indirect discrimination against women.

However, there can be no thorough examination if account is not also taken of the repercussions of the measure on the group which appears each time to be advantaged, taking the circumstances into account. In this case, the advantaged group appears to be the group of employees with two or more years' employment. If the results of the investigation of that group correspond to the figures for the group affected, then the measure at issue cannot be responsible for the statistical evidence adduced and the causes must be sought elsewhere.

Lastly, account must also be taken of the repercussions of the measure as it applied before 1985. That is because, if the percentages turn out to be the same in the two cases, as they do here, (66) then, perhaps, it is not the measure's specific length of two years but the adoption of a qualifying period per se which gives rise to the problem.

126 My third reservation consists in the fact that there have not been submitted, nor do there appear in the file, substantive grounds related to sex which, in conjunction with the statistics, show the difference in treatment to be `discrimination on grounds of sex'. The applicants repeatedly claimed that, in the light of the statistics which they had adduced, the measure at issue constituted such discrimination `by its very nature'. I have expressed the view above, however, that statistics alone do not constitute proof, and a more objective foundation is required for a determination of unequal treatment. (67)

127 I come finally to the question of how considerable the difference in the percentages is. The available evidence for 1985 shows as follows. Of a total of 18.73 million employed persons in the United Kingdom, 11.41 million (or 61%) were men and 7.32 million (or 39%) women. Those who had been in employment for more than two years numbered 13.92 million, of whom 8.85 million were men (or 63.5%) and 5.07 million women (or 36.5%). Those who had been employed for less than two years numbered 4.81 million, of whom 2.56 million (or 53.2%) were men and 2.25 million (or 46.8%) women.

Those statistics, for the reasons I have already explained, concern solely one limb of the comparison and, consequently, are insufficient from the point of view which interests us here. At all events, even were it to be considered that that evidence was very significant, I would make the following observations. From the evidence in question it appears in fact that the percentage of women employees with less than two years' employment as against men in the same category has increased in relation to the corresponding percentage in the category of employees with more than two years' employment. It is, of course, for the national court to assess the evidence in question as well as any required to be adduced in the future, as also the question whether the difference complained of is so considerable as to indicate indirect discrimination against women. (68) However, it is my personal opinion that a difference of that size is not so significant as to justify a finding that there is unequal treatment on the grounds of sex; at all events, it does not approach the percentages in the light of which the Court has held there to be indirect discrimination. (69)

128 As for the time at which any discrimination should be determined, it must be pointed out that, where direct discrimination is involved (as well as discrimination resulting from defective implementation of the directive as in this case), it is sufficient to examine the situation at the time when the measure was introduced. In that case the assessment is a legal one and consequently not linked in principle to calculations and investigations of the de facto situation generally.

Conversely, where indirect discrimination is linked to the repercussions of a legislative measure on the labour market, account must be taken of the fact that those repercussions are not instantaneous but require a certain period of time to manifest themselves. Consequently the relevant point in time cannot be either when the measure was adopted or when the applicants were dismissed, as has been proposed in the present case.

129 Furthermore, the measure was introduced (in 1985) six years before the applicants were engaged (1990). In those circumstances, statistics concerning the repercussions of the measure in 1985 are of little use after such a long time.

130 In my opinion, in a situation such as that in the main proceedings, the material time is the duration of the qualifying period. Consequently, any comparison must take account of the repercussions of the measure from the time when the person affected was engaged (terminus post quem) until the time when that person is dismissed (terminus ante quem). However, in order to avoid any fortuitous results and in view of the fact that the repercussions of the measure extend over a certain time, it is also useful to look at the results of the measure prior to and following the above relevant period in order to have a yardstick.

131 As regards justification for a measure introducing indirect discrimination, the case-law requires the measure to be necessary, appropriate and proportionate to the aim pursued. (70) Reliance on generalisations and abstract considerations of social policy cannot justify such a measure. (71)

132 In view of the fact that the national court has better knowledge of the situation within the Member State in question, it is for that court to evaluate the extent to which the national measure is justified from the above point of view. (72) In the present case, however, it is noted that no specific grounds and evidence capable of justifying objectively the measure at issue are apparent from the file on the case nor were any adduced by the United Kingdom Government, apart from general reasons of social policy.

133 Therefore, if a national measure such as that at issue was not contrary to the provisions of the directive from the point of view set out already, I would say that indirect discrimination against women follows only where, in practice, a much greater number of women than men with less than two years' employment are adversely affected in relation to the corresponding percentages of employees with more than two years' employment, and that situation cannot be justified objectively on grounds unrelated to sex.

G - Summary

134 Since the dispute in the main proceedings concerns the interpretation of Directive 76/207 rather than Article 119 of the Treaty, I do not consider that it is necessary to reply to Question 1. In accordance with the solution I have proposed, a distinction should be drawn between the aspects of a national measure, such as that at issue, which are of direct concern to Community law and those which are not of direct concern (at least at present). I consider also, that, since the measure is contrary to Directive 76/207 for fundamental reasons and regardless of the sex of the person affected, there is no point in examining whether, in the light of what is, in my opinion, insufficient and weak evidence, the measure introduces indirect discrimination in particular against women.

The consequence of the solution I propose is that the persons affected will be able to obtain effective protection in the context of national law, but solely in respect of the matters covered by Directive 76/207, in other words solely if their dismissal was on grounds of sex. Conversely, if the view of the applicants and the Commission prevailed and the provision at issue were removed, every dismissal would have to be reviewed to establish whether it was unfair in general, even though it was on grounds unrelated to sex. That, however, would go beyond the framework and purposes of Directive 76/207.$

VI - Conclusion

In view of the foregoing, I would propose that the Court reply to the questions referred to it for a preliminary ruling as follows:

A national measure such as that at issue in the main proceedings, which deprives employees dismissed before they have completed two years' continuous employment for the same employer of the right not to be unfairly dismissed, is contrary to Articles 5(1) and 6 of Directive 76/207, in so far as such a measure on the one hand allows dismissal on grounds referable to the employee's sex, and on the other hand makes it impossible or exceptionally difficult to provide a legal remedy for dismissed employees who consider themselves thereby wronged.

(1) - OJ 1976 L 39, p. 40.

(2) - OJ 1975 L 45, p. 19.

(3) - See, for example, Case 96/80 Jenkins v Kingsgate [1981] ECR 911, paragraph 22.

(4) - Similar provisions are now contained in Part X of the Employment Rights Act 1996, Chapter 94, et seq.

(5) - S.I. 1985/782.

(6) - [1990] ECR I-1889.

(7) - [1990] ECR I-2591.

(8) - See Barber (paragraphs 12 to 20) and Kowalska (paragraphs 9 to 11), both cited above.

(9) - [1978] ECR 1365.

(10) - See footnote 9 above.

(11) - Paragraphs 19, 20 and 21. See also Case C-1/95 Gerster [1997] ECR I-5253, paragraph 21 et seq.

(12) - [1982] ECR 555.

(13) - Case 151/84 Roberts v Tate & Lyle [1986] ECR 703, paragraphs 30 to 32.

(14) - Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) [1986] ECR 723, paragraphs 32 to 34.

(15) - Case C-13/94 P v S and Cornwall County Council [1996] ECR I-2143, paragraph 12. It should be noted that in that case, despite the fact that the dismissal took place in December 1992, after the completion of one and a half years' employment, the Industrial Tribunal which referred questions to the Court for a preliminary ruling examined the substance of the case and considered whether the dismissal constituted discrimination on grounds of sex, without raising the issue of the qualifying period as was done in this case.

(16) - See, for instance, Kowalska, cited in footnote 6, paragraph 20; Case C-184/89 Nimz [1991] ECR I-297, paragraph 21; and Case C-200/91 Coloroll [1994] ECR I-4389, paragraph 29, and so forth.

(17) - Cited in footnote 16.

(18) - Cited in footnote 11.

(19) - See point 118 below.

(20) - See, inter alia, Defrenne III, cited in footnote 9, paragraph 19; Case 126/76 Zaera [1987] ECR 3697, paragraph 14; and Joined Cases C-72/91 and C-73/91 Sloman Neptun [1993] ECR I-887, paragraph 25. However, those articles are not devoid of any legal effect but constitute an important aid for the interpretation of other provisions of the Treaty and of secondary Community law in social matters (see the latter two judgments, at paragraphs 14 and 26 respectively).

(21) - See Zaera, cited in the preceding footnote, paragraph 14, and Sloman Neptun, paragraph 26. Sale also Case C-343/92 De Weerd and Others [1994] ECR I-571, paragraph 28; Case C-317/93 Nolte [1995] ECR I-4624, paragraph 33; Case C-444/93 Megner [1995] ECR I-4741, paragraph 29; Case C-280/94 Posthuma [1996] ECR I-179, paragraph 26. Of course the Member States may adopt, in the context of their social policy, new measures even though they are more stringent than the previous measures, provided that those measures are not contrary to the principle of equal treatment (see, for example, Case C-137/94 Richardson [1995] ECR I-3407, paragraph 29, and Posthuma (paragraph 29)). Nevertheless, there must be no going to the other extreme, to reach a situation where, by means of Community provisions of specific and restricted scope, the policy of the Member States could be reviewed, and possibly overturned, in areas where the Community had not as yet wished to legislate (see Defrenne III, cited in footnote 9, paragraph 32; Case 170/84 Bilka [1986] ECR 1607, paragraph 42, and others).

(22) - See Case 43/75 Defrenne II [1976] ECR 455, paragraph 63. From this point of view, notwithstanding the difficulties and complexities of the matter, I would observe that the Community could have undertaken a global examination of the problem of working conditions, having regard to its obvious repercussions on the achievement of the internal market.

(23) - Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies (OJ 1975 L 48, p. 29).

(24) - Case 152/84 Marshall I [1986] ECR 723, paragraphs 52 and 55; Case C-188/89 Foster and Others [1990] ECR I-3313, paragraph 21; Case C-345/89 Stoeckel [1991] ECR I-4047, paragraph 12. Moreover, Article 5(1) may be pleaded against a public sector body in order to obtain compensation for infringement of the directive (Foster, paragraph 22). It may not, however, be relied upon against private employers except when the employer is the State (Marshall I, paragraph 48).

(25) - In that respect, it is similar to direct discrimination on grounds of sex.

(26) - See Case C-180/95 Draehmpaehl v Urania Immobilienservice [1997] ECR 2195, paragraph 24, which concerned compensation in a case where a male job applicant had not been selected on grounds of his sex.

(27) - See point 47 above.

(28) - It should be pointed out, however, that the same Agent, when asked whether that would in fact be the consequence in domestic law or whether, on the contrary, there would no longer be any qualifying period, stated that he did not know.

(29) - Despite the fact that there is no evidence concerning the size of the undertakings in which the applicants were employed, it must be presumed that they employed more than 20 persons. Before 1985 in fact, the qualifying period was two years for employees in small undertakings (less than 20 persons) and one year for employees in large undertakings (above 20 persons ) - see point 18 above. If the applicants were employed in a small undertaking they would not have challenged the 1985 Order because if it was set aside and the previous rule revived that would not help them at all.

(30) - If the Court adopted the applicants' views, it would, sooner or later, be called upon to review the requirement of one year (not to mention the intermediate system which applied prior to 1985 in respect of employees in small and large undertakings - see above, point 18), subsequently the sixth-month requirement, and so forth. That demonstrates, I believe, the absurdity of attempting to draw conclusions as regards the nature of a measure such as that at issue from statistics concerning its possible repercussions.

(31) - Case 222/84 Johnston [1986] ECR 1651, paragraphs 17 to 19.

(32) - See Case 14/83 Von Colson and Kamann [1984] ECR 1891, paragraph 18 et seq.; Case C-177/88 Dekker [1990] ECR I-3941, paragraph 23; Case C-271/91 Marshall II [1993] ECR I-4367, paragraphs 22 to 24; Draehmpaehl, cited above in footnote 26; and others.

(33) - Johnston, cited in footnote 31, paragraph 21.

(34) - Marshall II, cited in footnote 32, paragraph 25.

(35) - See Von Colson, cited in footnote 32, paragraph 22; Case 248/83 Commission v Germany [1985] ECR 1459, paragraph 10; and Marshall II, cited in footnote 32, paragraph 35.

(36) - See, inter alia, Case C-213/89 Factortame and Others [1990] I-2433, paragraph 18 et seq. and Joined Cases C-430/93 and C-431/93 Van Schijndel and Others [1995] ECR I-4705, paragraph 18. See also the judgment in Case 61/81 Commission v United Kingdom [1982] ECR 2601, which concerns a defective transposition of Article 6 of Directive 75/117.

(37) - Perhaps the applicants are afraid that, not being able to rely on the directive against the employer, they will be obliged to claim compensation from the Member State on the ground that the directive has been wrongly implemented in accordance with the case-law initiated by Francovich I (Joined Cases C-6/90 and C-9/90 [1990] ECR I-5357).

(38) - [1994] ECR I-1657.

(39) - See Dekker, cited in footnote 32, paragraph 10.

(40) - See Case 109/88 Danfoss [1989] ECR 3199, paragraph 11.

(41) - See S.D. Anderman, The Law of Unfair Dismissal, 2nd ed., London, Butterworths, 1985 (p. 17, footnote 17(iv)) - without, however, reference to any provisions or other explanation. Nevertheless, other writers do not make similar mention as regards the exceptions to the two-year rule (see Sweet & Maxwell's Encyclopedia of Employment Law, paragraph 1-6103 et seq.), but examine the judgment of the Court of Appeal in the present case in the context of indirect discrimination on grounds of sex under the Sex Discrimination Act (ibid., paragraph 1-4003 (4)).

(42) - See Case C-334/92 Wagner Miret [1993] I-6911, paragr