Cutting pay to achieve equality

Q I’m putting in place equal pay arrangements and we have a few obvious gaps to address, but on a tight budget. Can we, in the name of equality, reduce the salaries of some male employees to match the women at the same level – rather than raising their pay – and if so, how should we go about it?

A It is possible to reduce an employee of a particular sex’s salary for equality purposes and there are two main methods that employers undertake on a wide scale.

One method is to dismiss the male employee and re-employ him on different terms and conditions. In practice, the only term that differs from the previous contract is lower remuneration and/or a reduction or cessation of benefits. This provides immediate equal pay for those employees on the same level. However, it could see the male employee present an unfair dismissal claim to an employment tribunal. Your effort to reduce equal pay issues in the current equal pay climate can provide you with a good defence, yet when dismissing an employee it is still imperative to use correct disciplinary and dismissal procedure.

The other and most popular method is to soften the blow for male employees and protect their pay for a set period, allowing the male employee to adjust to the new, lower salary. Only after the protected period will male and female employees at the same level receive equal pay.

Alternatively, you can seek the express written agreement of the male employee to reduce his salary, explaining your reasons for doing so. Many employers don’t consider this option due to the perceived negative response, but it is a choice worth exploring.

Regardless of the method you choose, female employees at the same level may still present equal pay claims for up to six years’ back pay compensation based upon the lowered male salaries, or present a sex discrimination claim if you favour a male pay protection arrangement. You would have to justify the arrangement to the satisfaction of a tribunal. Recent guidance from the Court of Appeal suggests the tribunal should consider each pay protection arrangement on its facts and look at the employer’s knowledge of the potential pay inequality prior to implementing pay protection.

Whichever method you choose, equal pay law is complex and professional advice should be sought prior to instigating any action.

Christopher Baker, solicitor, EAD Solicitors

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