UK: Equal Pay - A Heavy Price To Pay For Inequality

Last Updated: 25 November 2011
Article by Boyes Turner

More than 4,000 female council workers have won the right to be paid the same as their male colleagues in a case which could lead to payouts worth up to £200m.

The Facts

Claims were brought by women employed in predominately "female" roles within the Council, including those employed as lollipop ladies, administrative roles and cleaners. They argued that they were engaged in work of equal value as their male counterparts but, unlike their male counterparts, they were excluded from a Council run bonus scheme which could have been worth up to 160% of their basic pay each year. The tribunal heard how a man doing the same pay-graded job as a woman within the Council could earn up to four times more than her. For example, it heard evidence that under a bonus scheme, male refuse collection staff sometimes received up to 160% of their basic pay. In one year a refuse collector took home £51k while women on the same pay grade received less than £12k.

The Decision

The Employment Tribunal agreed with the Claimants and has decided that the women should be given equal pay as their male counterparts. They should be compensated for the difference in earnings – such compensation can be backdated for 6 years. The Council could not argue that it had a genuine reason why the women were excluded from the bonus scheme; therefore, the Employment Tribunal could only conclude that the difference in pay was down to their sex.

Practice Points

Equal pay claims are on the rise year on year. The advent of the Equal Pay Questionnaire means that it is much easier for employees to find out if there are being paid more or less overall than their different sexed colleagues. In this case, 900 claims were brought but there are a further 4,000 test cases in the pipeline; however, this figure could rise by a further 20,000 which could bring the Council's compensation bill to £1bn. Equal pay claims therefore cost.

Equal pay between men and women for work of equal value is enshrined in European Law and is under UK law in the Equal Pay Act 1970. If a claim is successful an "equality clause" is inserted into the claimant's contract of employment, following which, the employee is entitled to equality of pay and other terms and conditions with someone of the opposite sex, in a comparable job. Claims can date back 6 years.

The Equal Pay Act provides three ways for a claimant to show that their work is equal to that of their comparator – if they are engaged on "like work", "work rated as equivalent" under a job evaluation scheme or "work of equal value". It is about comparing oneself to someone of the opposite sex within that organisation, although courts have allowed a wide discretion of who is the 'employer'.

When considering an equal pay claim, each term of the claimant's contract of employment is compared with that of her male comparator. The "equality clause" applies to all elements of contractual pay, including basic pay, overtime and bonus. It also includes allowances and fringe benefits such as sickness and holiday pay, redundancy payments, severance payments, pay scales, pension benefits and access to pension schemes. Other non-contractual benefits, such as travel concessions and discretionary bonuses may also be covered under EU law.

It is for the claimant to show that on the face of it she is doing the same work as a man but is paid less than him. Once this is established, it is then up to the employer to show there is a genuine difference between them, which is not their respective sexes. The reason put forward must be the actual reason, for example, one that existed at the time either was recruited – not something thought of for the purposes of litigation! Therefore, it is important to keep a record of salary decision making at the time a person is recruited. Examples used for the difference in pay have included:-

  • Market forces and skills shortages
  • Red circling (for example, following a TUPE transfer)
  • Employees having a different skills set, experience and qualifications
  • Geographical or regional differences

The reason must not be tainted by discrimination and must be justifiable. For example, the market forces defence has failed where the market discriminated against the claimant who was a female catering worker. The evidence in that case indicated that the market valued the work of catering workers at a lower rate because catering workers were on the whole women.

Be Prepared...

Employers should therefore be aware of what their staff are paid. Equality in pay may exist between employees doing the same role, but what about those engaged in work of equal value? It is important to carry out an equal pay audit across the workforce and ensure that inherent discriminatory practices do not exist.

The Equality Act 2010 whilst maintaining the current law on equal pay also includes new obligations for employers.

It will prevent secrecy clauses in contracts of employment which stop employees discussing their salaries. Also, where an employee has no direct comparator, she will be able to bring a claim under sex discrimination provisions in relation to contractual pay – this allows employees to use hypothetical comparators, thereby broadening the scope of claims.

It will also require employers with 250+ employees to publish information relating to the pay of employees and showing whether there are difference in pay between the sexes*, although this power is not expected under 2013.

* Please note the position regarding gender pay reporting for public sector employers is different.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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