Discrimination cases make press headlines. Over recent years organisations have grappled with “topical” discrimination issues such as “glass ceilings” to promotion and, more recently, flexible working. But you should be careful not to forget a fundamental question – what if female employees are being paid less than their male colleagues?
The equal pay claim is one of the least understood sex discrimination claims, but is becoming increasingly popular. DTI statistics show a gender pay gap of 18% for full-time workers and 40% for part-time workers. Organisations, particularly in the City where the statistics show even wider pay discrepancies, should not be complacent. City institutions often operate in an environment which has traditionally been male dominated, and where pay/bonus structures are often opaque.
The Equal Pay Act 1970 outlawed pay discrimination. It implies an “equality clause” into every contract of employment at an establishment in Great Britain. It stipulates that a woman (or man) is contractually entitled to equal pay with every man (or woman) in the same employment who is doing like work, work rated as equivalent, or work of equal value, unless the difference in pay is genuinely explained by something other than sex.
A claimant must therefore choose one or more comparators. In practice, the comparative assessment can prove complex (what is a job of equal value?), and an independent expert is frequently instructed.
An employer can defeat an equal pay claim by showing that the difference in pay is explained by something other than sex – a genuine material factor not coloured by sex discrimination.
Equal pay cases are usually onerous for employers. This year the Government launched a consultation process with the aim of speeding up the time it takes to resolve them. The new Equal Pay Act 1970 (Amendment) Regulations and Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2004 came into force on 1 October 2004. As yet it is too early to determine whether in practice the new Regulations will have their desired effect. Notoriously long and involved, claims force employers to look into their pay practices and reveal sensitive information. Claimants can serve equal pay questionnaires, involving employers in a difficult balancing act: on the one hand responding to the questionnaire (and thereby reducing the possibility of adverse inferences being drawn by the Tribunal) and on the other hand, respecting their duty of confidentiality to other employees. The financial impact of the claim can be substantial. Remedies include not only equalising contractual terms for the future but awarding compensation of arrears of pay for up to six years before the date proceedings were instituted.
So what can you do? Steps to reduce exposure include:
• having transparent pay structures and grading systems;
• well documenting appraisals so employees are aware of their performance and you have evidence to support this;
• familiarising yourself with the EOC Code of Practice on Equal Pay (see further: www.eoc.org.uk). While the Code is not binding a Tribunal may take into account an employer’s failure to act on its provisions. However beware. The Code recommends that employers carry out equal pay reviews. Although a Tribunal may look favourably on an employer who has taken this step, it should only be done if you are dedicated to tackling any problem. Otherwise by taking this step you may just create evidence which may be used against you by future claimants.