The Spanish Supreme Court ruled in April 1999 that a collective agreement establishing a "dual pay scale" is lawful. This is the first time that a court has endorsed an agreement of this type. Signed by trade unions and management at Caja de Ahorros de Asturias, the deal in question introduced separate pay systems for workers in the Asturias region and outside it.
Download article in original language : ES9904119NES.DOC
The Spanish Supreme Court ruled in April 1999 that a collective agreement establishing a "dual pay scale" is lawful. This is the first time that a court has endorsed an agreement of this type. Signed by trade unions and management at Caja de Ahorros de Asturias, the deal in question introduced separate pay systems for workers in the Asturias region and outside it.
In September 1998, the management of the Caja de Ahorros de Asturias savings bank and the trade unions with a majority on the group workers' committee (UGT and USO), signed an agreement establishing a "dual pay scale" (doble escala salarial). A dual or two-tier pay scale refers to the recruitment of new workers on a lower rate of pay than the rest of the workforce performing the same work on the same job grade. The Caja de Ahorros de Asturias deal provides that workers recruited after the agreement has taken effect and working outside the Asturias region will be governed by a different pay system from that applying to the other employees. These new workers will have an objectives-based pay system. Thus, their basic wage will be lower and their pay will reach the level of employees in Asturias only if all the objectives specified by management are achieved. The management of Caja de Ahorros de Asturias proposed this system because it wishes to expand outside Asturias and must recruit numerous staff.
The agreement was challenged in the courts by the CC.OO trade union, which has minority representation on the group workers' committee, on the grounds that it clearly discriminates between employees depending on whether they work inside or outside Asturias. To the surprise of many observers, in a ruling issued at the beginning of April, the Supreme Court (Tribunal Supremo) found that there was no implication of discrimination in the agreement. The Court considered that "the difference in treatment does not affect the constitutional principle of equality if the existence of reasons or circumstances that determine such a difference is justified objectively and appropriately".
This is the first time that the courts have ruled in favour of a dual pay scale, and the judgment has therefore had a great impact on the public. Agreements on dual pay scales began to spread in the mid-1990s (ES9705209F), but they were surrounded in great legal uncertainty when companies wanted to put them into practice. Until now, the courts had always supported challenges to these agreements, but in the case of the Caja de Ahorros de Asturias, it seems that the Supreme Court was guided by the fact that the agreement establishes a dual pay system which is not strictly a dual pay scale. Although the existence of two different pay systems leads in practice to two different pay scales, in theory the agreement allows for equal pay if management objectives are met. This nuance will probably be borne in mind by companies that wish to introduce pay policies of this type in the future.
Eurofound recommends citing this publication in the following way.
Eurofound (1999), Supreme Court rules in favour of dual pay scale, article.
