Companies may pay women less than their male colleagues if their length of service is shorter because of taking time off to look after children, the European Court of Justice (ECJ) ruled.
In a keenly awaited ruling, the ECJ said employers did not have to justify on a case-by-case basis their pay structures based on the length of service, unless a worker provides evidence that raises serious doubts.
The court rejected a claim by British health inspector Bernadette Cadman, who had said her employer unjustifiably paid her male colleagues of the same grade more only because they had worked more years.
Ms Cadman had argued length of service often depended on domestic circumstances such as pregnancy and maternal leave and that employers must provide special justification for paying men more than women when they hold the same post.
"Recourse to the criterion of the length of service is appropriate to attain the legitimate objective of rewarding experience acquired which enables the worker to perform his duties better," the court said in its ruling.
"There is no need to show that an individual worker has acquired experience during the relevant period which has enabled him to perform his duties better," it added.
Ms Cadman sued Britain's Health and Safety Executive in 2001 when she discovered she was earning up to £9,000 (€13,000) a year less than male workers in the same post.
Britain's Employment Tribunal initially ruled in her favour, but an appeals court had doubts and referred the case to the ECJ which interprets pan-EU legislation.