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There is a 17% gap between men and women’s pay for full time work in the UK with a woman earning on average 83p for every £1 a man earns. For part time workers, there is a 38% gap with women earning on average 62p per hour for every £1 a man earns.
The Equal Pay Act 1970, has been in force for over 26 years,
but has proved cumbersome and often ineffective in eliminating
this pay gap. Nonetheless, the Act has been used successfully
in many cases, and can be a weapon for trade unions to use
when negotiating on pay.
Equal pay legislation only provides for equal pay between
men and women where the difference in pay is due to sex
discrimination. It does not outlaw all pay practices which
are unfair or all differences in pay.
Closing the pay gap cannot be done by relying on the law alone. Equal pay must be a fundamental part of the collective bargaining process and be at the forefront of union pay and negotiating agendas.
This booklet deals with equal pay claims under the Equal
Pay Act. There may be other laws and rights relevant to
equal pay at work such as the other anti discrimination laws
and regulations including laws against age discrimination
and for the protection of part time workers. This leaflet does
not deal with those laws and rights.
The right to equal pay for work of equal value is set out in Article 141 of the EU Treaty, which states: “Each Member State shall ensure that the principle of equal pay for male and female workers for work of equal value is applied.”
In the UK, the right to equal pay is set out in the Equal Pay Act 1970. The effect of a successful claim for equal pay is that an “equality clause” is inserted into the Claimant’s contract of employment, meaning that the worker is entitled to equality of pay and other terms and conditions with someone of the opposite sex in a comparable job.
There are codes of practice published by the European Commission and the Equal Opportunities Commission which although are not legally binding, may be used in evidence in equal pay claims.
The equal pay act requires a four stage approach:
• Selecting an appropriate comparator of the opposite sex
• Proving that the comparator is employed to carry out equal work
to that of the Claimant
• Comparing the Claimant’s and the comparator’s terms and
conditions of employment
• Assessing whether the employer can explain any discrepancy in
pay (“the genuine material factor defence”)
Planning is essential. It is important to analyse each stage of the procedure from the outset. The selection of a particular comparator, for example, will often impact on the employer’s ability to explain or justify any difference in pay.
A Claimant must name one or more comparator of the opposite sex. Under the Equal Pay Act the comparator must be employed “in the same employment” as the Claimant. This means that the comparator must either work at the same establishment as the Claimant or at one where “common terms and conditions apply”. In either case, the Claimant and the comparator must be employed by the same employer or by associated employers. A Claimant can use a comparator in a different employer if the inequality in pay comes from a single source such as a statutory instrument or other piece of legislation that is binding on both employers.
Common terms and conditions apply at both workplaces where, for example, the same collective agreements apply. It is not necessary for the terms and conditions to be identical at the two establishments.
The Claimant and the comparator do not need to be employed by the employer at the same time as each other for the purpose of the comparison but the bigger the time gap the more likely it will be that the employer can justify the difference in pay.
The Equal Pay Act provides three ways for a Claimant to show that their work is of equal value to that of the comparator. These are where the Claimant and the comparator carry out work which is:
• “Like work”
• “Work related as equivalent” under a job evaluation scheme
• “Work of equal value”
These claims are the simplest. The Claimant’s work must be the same as, or broadly similar to that of the comparator.
Significant differences might include, for example, different duties, the time when the work is carried out, greater responsibility and greater physical effort.
But employment tribunals will analyse closely the frequency of additional duties, and whether or not extra duties included in a comparator’s job description are actually performed.
These claims depend upon the Claimant’s and the comparator’s jobs being rated the same under a job evaluation scheme carried out by the employer. This will measure the demands made on the two workers under headings such as effort, skill and decision making.
The job evaluation scheme must itself be free from discrimination.
Such comparisons are the most difficult. In the absence of a job evaluation scheme, the tribunal has to make an objective assessment as to whether the Claimant’s and the comparator’s jobs are of equal value.
Normally the tribunal will refer the assessment to an ACAS (Advisory, Conciliation and Arbitration Service) appointed independent expert for a report on the value of the jobs. The independent expert will carry out an exercise which is similar to a proper job evaluation carried out by an employer but they will only look at the job of the Claimant and the comparator.
It is not possible to claim that two jobs are of equal value where they have been properly rated into different grades under a non discriminatory job evaluation scheme.
The “equality clause” applies to all elements of contractual pay, including:
• Basic pay
• Overtime
• Bonuses
• Allowances and fringe benefits
• Sick pay
• Holiday pay
• Redundancy payments
• Severance payments
• Pay progression
• Pension benefits
• Access to pension schemes
Under European law, non-contractual benefits, such as travel concessions and discretionary bonuses may also be covered.
Each separate term of the Claimant’s and the comparator’s contract
can be compared separately. But not all terms about pay are separate
terms. Sometimes, basic pay and bonus paid for basic hours of work,
will be lumped together as one term. Similarly, the hourly rate, will
usually be the correct basis for comparison. But this does not mean
that an employer can say that he or she, pays two people the same,
because although one gets a lower basic rate they get more holiday.
Holiday pay is not the same as pay for basic hours worked. It is a common sense approach.
If the Claimant can show that their work is of equal value to that of their comparator, and that an element of pay is less favourable, then the onus shifts to the employer to prove that the variation is“ genuinely due to a material difference which is not the difference of sex.”
Two thresholds apply and it is here that the make-up of the Claimant and the comparator groups becomes all important.
Where there is no evidence of sex discrimination in the pay systems, any attempt to explain the pay difference will be accepted as a justification. In other words there is no evidence of direct sex discrimination and no evidence of indirect sex discrimination then the employer’s explanation for the pay difference will be accepted provided it is genuine and relevant. If the explanation is accepted there is no right to equal pay. Evidence of indirect sex discrimination includes evidence that disproportionately more women than men are in the lower paid group and disproportionately more men than women are in the higher paid group. It also includes lack of transparency in the pay systems.
However, where there is evidence of sex discrimination in the pay systems the employer will have to meet the higher test of “objective justification” of the difference in pay. This involves showing that the difference in pay:
• Corresponds to a “real need”
• Is necessary and appropriate to that need
• Is proportionate to that need
In both cases, the requirement of “genuineness” means that the
reason put forward for the difference in pay, must be the actual
reason, although it can be a reason given with hindsight. In other
words the employer does not have to have thought of it at the time,
provided it really does explain the difference.
For example, a reason for a difference in pay might be that the higher rate is needed to increase productivity. This will not be a genuine reason for the difference in pay if the comparator group get the higher rate for a prolonged period of time regardless of whether the comparators achieve any increase in productivity or meet targets set.
The reason must also be “significant and relevant”.
Examples of genuine material factor defences that employers have used to defeat equal pay claims include:
• Market forces and skills shortages
• Red circling
• Geographical differences
• Different skills, qualifications and experience
The genuine material factor defence will fail, however, where the reason itself is ’tainted with discrimination’.
For example, the House of Lords refused to accept an employer’s
material factor defence based on market forces, where the market
itself discriminated against the Claimant female catering workers.
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.
The procedures and remedies available in equal pay claims are slightly different to those that apply with the other discrimination laws.
A tribunal application must be lodged within six months (6 months less one day) of the termination of the contract, about which the complaint is made in most cases. This may or may not coincide with termination of employment. For example, a worker may be given new contractual terms during the course of their employment in which case the six month time limit will run from the date of the termination of their old terms.
Under the statutory grievance procedure, a grievance must be lodged with the employer, and 28 days allowed to enable the employer to respond, before a tribunal claim can be submitted. The time limit for submitting the originating application will be extended by 3 months to allow the grievance procedure to take place.
A questionnaire procedure is available under the Equal Pay Act to allow a potential Claimant who considers that they might have been underpaid, to ask questions of their employer. The questionnaire can include questions about the identity and pay of possible comparators, and may ask for explanations of any pay differences. If an employer fails to answer a questionnaire within eight weeks, a tribunal may use this fact to draw inferences of discrimination.
If a Claimant is successful, they will be entitled to:
• an equality clause in their contract of employment, that will
secure the same pay as their comparator into the future
• Back pay from the date of lodging the tribunal application to the
date of the equality clause affecting the contract up to a maximum
of six years (five years in Scotland) running from the date that
the tribunal application is lodged (except in pension cases)
• Interest on back pay
Compensation for injury to feelings cannot be recovered.
The code of practice for the elimination of disability discrimination does not impose legal obligations but can be put in evidence before tribunals and must be taken into account. Its main impact is likely to be through the many helpful examples given, as to what amounts to unlawful discrimination.
A copy of the Code of Practice can be obtained from the Disability Rights Commission website at www.drc-gb.org.