Ombudsman for Equality

A presumption of discrimination can be rebutted by presenting acceptable reasons

Even practices where employers apply remunerative terms in a way resulting in one or more employees finding themselves in a less favourable position than one or more other employees of the opposite sex while performing the same work or work of equal value for the same employer do not necessarily constitute discrimination.

These situations do create a presumption of discrimination, but if employers can present an acceptable reason for the differences in pay, the practice is not considered to be in violation of the prohibition of discrimination. The next few chapters give a brief description of the kinds of reasons that are generally acceptable, followed by a few specific examples.

What kinds of reasons are generally acceptable?

The acceptability of reasons presented in justification of differences in pay is always assessed on the basis of factual merit. Differences in pay cannot be deemed acceptable just because employers comply with collective agreements or administrative provisions. Whenever these kinds of provisions are in conflict with the Finnish Equality Act, the provisions of the Finnish Equality Act take precedence.

Acceptable reasons must comply with the principle of proportionality. This means that all practices must have an acceptable objective and the means chosen must be appropriate and necessary for achieving the objective. Acceptable reasons can be given to explain differences in pay either wholly or partially.

According to the preparatory documents relating to the Finnish Equality Act, acceptable reasons for differences in pay include a person’s education, professional skills, ability to work on his/her own initiative, and suitability for a more demanding role. Competition arising from a shortage of skilled labour can also be a reason. Differences in pay cannot be justified by stereotyping men and women as employees.

Education and work experience

Differences in pay can be justified by education if the education of the better-paid employee improves his/her ability to perform the work or makes him/her more valuable to the employer than others.

Work experience can also be an acceptable reason, as it may increase employees’ ability to do their work. Staying with the same employer is generally considered to generate the kind of work experience that increases employees’ ability to do their work. Length of service can therefore in most cases be used as grounds for remuneration without employers having to expressly justify their reasons. This is not always the case, however. Employers may be called to justify using the length of service as grounds for remuneration if an employee presents reasons for questioning the significance of the length of service to an employee’s ability to perform his/her work. (For more information, see Cadman, C-17/05.)

Factors such as education and work experience can also compensate for each other in remuneration. One court found that an employee’s long employment history and personal characteristics went some way to compensate for the lack of education in comparison with a better-paid employee. The employer was therefore found not to have an acceptable reason for the whole extent of the difference in pay, only some of it. (Turku Court of Appeal, S 01/1471, on 28.2.2003).

Personal performance

It is common for employers to include a personal element in employees’ remuneration, which is awarded on the basis of individuals’ personal characteristics and their ability to do their work. These can constitute acceptable reasons for differences in pay. However, if such factors are used to justify differences in pay, employers must explain their assessment criteria, and demonstrate that the criteria are non-discriminatory and that any alleged differences in performance are real.

Availability of labour (market situation)

Competition arising from the poor availability or shortage of labour can be accepted as a reason for paying one employee more than another employed in a role of equal value. If additional elements are included in remuneration on these grounds, these must be based on the facts of each individual case, not on general assumptions. In the event of a legal dispute, employers must be able to demonstrate the poor availability of labour.

According to the European Court of Justice, the evidence presented by employers should be approached as follows: If a national court is able to ascertain the exact extent of the difference in pay that is attributable to the market situation, the employer’s reasons can be deemed objectively justified to the same extent. If it is not possible to determine the effect of the market situation accurately, the court must assess whether the market situation can be considered a sufficiently strong factor in remuneration to objectively justify some or all of the differences in pay.