Permanent pay increases and equal-value work: Spiteri v ST Microelectronics

The Court of Appeal distinguished a reward for performance from a permanent salary increase that went on benefiting its recipient in later years, whatever their later performance. That distinction decided Spiteri’s equal pay appeal.

The pay system challenged

Roberta Spiteri worked as an EDP Technician. She claimed that she was paid less than colleagues in the same class of employment who were doing work of equal value. She asked for the unequal treatment to end, for the employer’s liability to be recognised and for compensation for the earnings she had lost.

ST Microelectronics defended its performance appraisal system. It maintained that differences in pay reflected individual performance and competence. Salary adjustments awarded through the appraisal process carried forward into later years. Spiteri was not covered by the collective agreement arrangements.

The Tribunal dismissed her claims. It found no proven unfairness in the appraisal process, accepted evidence critical of her performance and noted that her pay had at times been higher than a colleague’s. It also considered that permanent increments could be protected because they had become part of salary.

Why the appeal succeeded

The Court held that Spiteri did the same work, of equal value. Individual performance did not change that value. Earlier appraisal awards had created continuing salary differences, even where the people who received them later performed less well.

The Court distinguished those permanent increases from a bonus or allowance rewarding a particular year. The collective agreement exception in article 27 of the Employment and Industrial Relations Act (Cap. 452) did not apply to these arrangements.

It upheld Spiteri’s first three claims and sent the remaining claims back to the Tribunal for evidence and a decision on compensation. It did not fix an amount.

The proceedings ended in settlement

A Tribunal decree of 10 October 2018 records that the claims were withdrawn after the parties reached an agreement. The terms of the settlement were not disclosed, so the case produced no compensation award.

Significance for pay, restructuring and exits

For a business reviewing pay before a restructuring, the practical starting point is the history of each salary component. An annual appraisal record may explain when a difference arose. It does not answer whether that difference should stay built into basic pay. A review should keep three things apart: the duties attached to the role, the assessment of the individual’s performance, and the contractual mechanism used to reward it.

The same question now has a wider setting. The pay transparency rules require pay to be set on objective, gender-neutral criteria that the employer can explain. A pay structure in which old appraisal awards remain in basic salary indefinitely will be harder to explain under those rules.

In the exit of an executive or specialist employee, an unresolved pay claim can affect the value of a settlement alongside notice and the other termination terms. Before a release is agreed, a useful calculation identifies the comparators, the periods claimed, the salary differences and the records that support them. A severance figure based only on the current salary can leave that separate dispute unexamined.

These restructuring and exit points are applications of the decision, not part of it. Spiteri concerned equal pay during employment. It did not decide redundancy selection, unfair dismissal or how an executive’s severance should be calculated. Any claim connected with an exit still needs its own contractual and legal analysis.

Roberta Spiteri was assisted by Dr Aron Mifsud Bonnici.

Sources

• Industrial Tribunal, decision 2289 of 19 June 2014: the evidence, the Tribunal’s considerations and its decision.
• Court of Appeal (Inferior Jurisdiction), judgment of 30 September 2015: the Court’s reasoning on equal value and permanent increases.

Related: Equal pay and pay transparency in Malta · Pay transparency