Equal pay: Robbing Peter to pay Paula?

Hardly a week goes by without the ongoing issue of equal pay hitting the headlines for one reason or another. Whether you live in the North or South makes no difference as the latest fiascos in Leeds and Brighton demonstrate. Refuse workers, otherwise known as ‘bin men’, have gone on strike, leaving the streets of the aforementioned cities strewn with trash, after councils failed to reach agreements with unions over equal pay disputes. The workers in Leeds initially faced a salary drop of £4,491 to bring their salaries in line with so called ‘dinner ladies’ but recently they rejected the council’s offer of an annual pay cut of just £231.

Emma Whiting, partner at Addleshaw Goddard law firm, warns that things can only get worse.

“Given recent headlines on the extent of the gender pay gap across the whole of UK industry, much work clearly needs to be done to remove this inequality. Any employer that has not already taken steps to identify whether potential gender pay disparity exists within their business should do so sooner rather than later. Doing nothing is not an option as it will only store up problems for the future.”

Carrying out an equal pay audit is one of the most basic and fundamental measures an employer can take to avoid claims, but there can be a risk that the audit might reveal a history of gender pay disparity, as in the case of Leeds City Council (see box below).

Substantial risk

Whiting explains: “The risk is substantial, as not only will employers be required to equalise pay for the future, but also disadvantaged employees can claim for up to six years’ back pay. And that’s not the end of the problem. Most pay reviews will also result in some employees having their pay reduced (because they have historically been overpaid), and that is unlikely to go down well with those staff.”

Employment legislation could also have an impact as the Equality Bill (see box opposite) contains a reserve power that requires large organisations to publish gender pay differences annually.

There are, however, a number of other immediate, short-term steps employers can take to try and avoid equal pay claims.

Emma Bartlett, partner at law firm Speechly Bircham, advises implementing diversity training for all employees who have responsibility for decision making in the areas of recruitment, terms of employment, training, pay reviews, promotion, appraisals, discipline, grievances and dismissals. She also recommends carrying out a frequent and fair appraisal system for all employees.

“Respond to grievances and queries regarding pay, discrimination or flexible working in a timely manner and with due consideration. Also, gain an understanding of the benefits of a workforce with a work-life balance and a diverse workforce, and take steps to facilitate both,” she says.

When it comes to comparing similar roles of “equal value” typically carried out by people of different genders (such as ‘bin men’ and ‘dinner ladies’), there are a few key issues to take into consideration.

Stephen Moir of the Public Sector People Manager’s Association (PPMA) and director of people and policy at Cambridgeshire County Council, says carrying out thorough job assessments is vital. “Equal value tends to be difficult to assess in a wholly objective manner. The best option is to apply a tried and tested job evaluation system.” Different roles can be assessed by a number of factors including skillset, responsibility and output.

There is, however, no objective standard or format for evaluating jobs, which can prove problematic, Whiting points out. “For example, is the work of a bin man more demanding than that of a dinner lady because it involves harder manual work and involves working outside, often in bad weather? How does that compare to the demands involved in working in a hot school kitchen and dealing with hungry children?”

Ambiguous

The Equality and Human Rights Commission (EHRC) provides guideline examples of jobs that have been proved to be of “equal value”, including a clerical assistant and a warehouse operative, and a nursing home sewing room assistant and a plumber. This helps shed some light, but it’s still an area of ambiguity.

The public sector also has a duty under the Equality Bill to eliminate discrimination and promote equality, Moir adds. And this applies to all functions carried out by the public authority. “As a part of this responsibility, third-party workers engaged in the sector, through agencies or on an interim basis, should not be treated less favourably than permanent staff,” he says.

“For those who provide services to the public sector, including procurement, there are usually contractual provisions to ensure that equality and diversity requirements are addressed.”

But what about the private sector? Men working in the UK’s financial sector earn around 40% more than their female colleagues, according to a recent report by the EHRC. A number of City firms have had to make record payouts to disgruntled female managers in recent years and this looks set to continue, according to Whiting.

“It is only a matter of time before private sector employers will be forced to defend multiple equal pay claims,” she says.

“This development is inevitable: equal pay issues are mostly exhausted in the public sector now, and the no-win-no-fee lawyers who have prosecuted most of these claims are likely to move their attention to the private sector. The Equality Bill and the work that the EHRC is doing on gender pay has put gender pay high up on the political and business agenda and raised awareness of the gender pay disparity across industry as a whole, but particularly in sectors such as financial services.”

In the case of the public sector, however, it’s likely that the taxpayers are really going to suffer, not just from piles of rubbish outside their door, but also in increased council tax.

The money to settle the disputes has got to come from somewhere, whether it’s through cutbacks to services, government-approved borrowing or capitalisation.

In the meantime, the issue of equal pay will undoubtedly continue to cause a stink, and it’s the taxpayer that’s going to suffer.

“The taxpayer, unfortunately, doesn’t have a lot of choice about footing the bill for equal pay settlements in the public sector, whether directly through taxation increases, or indirectly by cuts in services,” says Moir.

The Equality Bill

The Equality Bill contains a number of important proposals that will have a major impact on public bodies.

Emma Bartlett, partner at Speechly Bircham law firm, says: “From April 2011, public bodies with more than 150 employees will be required to publish annual details of their gender pay gap, minority employment rate and disability employment rate.

“There was pressure to extend this to large private bodies, but those proposals have not made it to this stage of the consultation process.”

The legislation will also increase the obligations on public sectors to ensure that any third parties employed on a contract basis (for example, private sector organisations) are fully compliant with diversity issues.

Another important change is that any employee bringing an equal pay claim will be able to rely on a hypothetical comparator rather than an actual one (which is currently a pre-condition).

“This means an employee can claim she would have been paid better if she were of the opposite sex. This crosses public and private sectors, but you can see how this will make a claim easier to bring as the employee does not need to specify her comparator, although not necessarily easier to determine,” Bartlett says.

Equal pay is an issue causing havoc in parts of the public sector, and no employer wants that. Georgina Fuller examines the equal pay pitfalls and how employers can best avoid them.

Case study: Leeds City Council

Leeds City Council faced one of the longest strikes in recent years after a pay and grading review revealed historical differences between two traditionally male and female jobs: bin men and dinner ladies.

Refuse workers went on strike on 7 September and talks between the council and GMB and Unison unions started a few weeks later.

Some 600 staff have since voted to carry on the strike after the council had its “best and final” offer of an annual pay cut of just £231 (compared with a proposed £4,491), rejected.

GMB has called on the council to follow other authorities by increasing women’s pay to achieve equality rather than slashing men’s salaries.

Leeds City Council leader Richard Brett said than the average loss would be less than £3,000 and that no salary would change until January 2011.

Pest control experts have warned that Leeds could face a rat epidemic caused by overflowing rubbish. The council has had to fork out for private firms to collect rubbish while the strike continues.

Almost one-third of England and Wales’ 325 local authorities have yet to implement equal pay audits.

Equal pay councils may have little choice but to fight claims

Equal pay for council workers: whose bill is it anyway?

Equality Bill will hit business, warn CIPD and EEF

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