Employment Update - The Word from on High: Indirect Discrimination

Employers who pay casuals less than permanent employees – even where most of them are women who are casuals because of family responsibilities – are not guilty of ‘indirect discrimination’, says the High Court.

This month the majority of the High Court in the State of New South Wales v Amery [2006] HCA 14 (13 April 2006) held that the NSW Department of Education and Training (Department) did not indirectly discriminate against 13 casual female employees of the Education Teaching Service (Service) by paying them lower salaries than permanent employees.

The casuals were paid in accordance with the lower pay scale prescribed by the relevant industrial instruments (Industrial Instrument). In a 6-1 decision the High Court found that it was not unreasonable for the Department not to pay above award rates, or that it was not a Department ‘requirement’ or condition of employment that casual employees should cease casual employment to access the higher pay scale.

Chief Justice Gleeson and Justices Heydon, Callinan, Gummow, Hayne, Crennan upheld the appeal by the State of NSW and found against the 13 female casuals. Justice Kirby dissented.

An employer indirectly discriminates against an employee on the grounds of sex if it requires the employee to comply with a condition which a ‘substantially higher proportion of persons from the opposite sex comply or are able to comply, being a condition which is not reasonable having regard to the circumstances of the case and with which the employee is not able to comply’. 

• The Award prescribes different pay scales for permanent and casual teachers. The casual pay scale consists of five levels. Level Five on the casual pay scale corresponds to Level Eight on the 13 level permanent teacher pay scale set out in the Award. The 13 teachers left permanent teaching positions in the Service because of family responsibilities and returned as casual teachers and were paid the highest level of the casual pay scale prescribed in the Award.

• The casual teachers argued that the Department required them to acquire employment as permanent teachers in the Service as a 'condition' to them being able to receive the higher pay scale prescribed for permanent teachers under the Award (Condition).

• The proportion of male permanent teachers in the Service is higher than the proportion of female permanent teachers. This is because, in order to apply for a permanent teaching position, applicants must stipulate the geographical areas in which they are prepared to work. More women than men place geographical limitations on their applications due to family responsibilities. This negatively impacts on their ability to obtain permanent teaching positions.

The employees argued that the Condition is unreasonable as the work performed by ‘supply’ or longer term casuals teaching in a school for a continuous period is ‘equivalent to that performed by a permanent teacher’ in terms of the value of the work performed, their responsibilities and the level of their experience. They said they could not ‘comply’ with the Condition because of their family responsibilities as permanent positions were often further from their homes and contained less flexibility.

Justices Gummow J, Hayne J and Crennan J found that no Condition had been imposed by the Department.

They held that it is necessary to analyse the terms and conditions of the 13 employees specifically as casual teachers, not generally as teachers, as the rights and obligations of casual and permanent teachers vary dramatically. On this basis no comparison could be made between all teachers and therefore there was no Condition imposed on a casual that another casual could not meet.

They held that differences between casual and permanent teachers in the Service are characteristic of the composition of the Teaching Service. It was held that this arrangement was not created by a ‘decision or practice’ of the Department, but was imposed by the Teaching Services Act.

If there was a condition imposed by the Department – was it reasonable?

Justice Gleeson found that a Condition was imposed but that it was not unreasonable.

Gleeson CJ stated that it was the Department’s ‘policy and practice of paying [casual] teachers in accordance with the award’ that imposed the impugned Condition (that casuals could not access the higher pay).

Gleeson CJ assessed however that it would have been unreasonable for the Department to pay the female casuals over-award payments so that they were not required to cease employment as casuals and obtain permanent teaching positions. It would have upset the wage structure that was set out in the Industrial Instrument.

The Court said that permanent and casual teachers have different obligations and responsibilities and it is ‘not unreasonable to pay them differently’. For instance, permanent teachers may have be deployed to geographically distant schools and must transfer to another school if required.

Even if the employee proves that the employer imposed a requirement with which the employee could not comply and which a higher percentage of persons from the opposite sex comply, it appears the real test is whether it was reasonable in the circumstances. Arguably, the employer is able to excuse such a disproportionate impact by highlighting issues of managerial difficulties in operating a large workforce, industrial sensitivities and the fact that the division in the workforce was established under an Act as relevant factors in asserting that the ‘requirement’ is not unreasonable.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.