Legal opinion: Tackle equal pay before floodgates open

Equal pay is a key issue for 2008, and is no longer restricted to the public sector. The recent rise in claims has been so significant, that the chairman of the Equality Human Rights Commission and Unison are calling for radical change in the law to inject some pace into equality legislation. Despite its introduction 30 years ago, there are still few signs of pay equality.

Claims rose from 6,607 in 2004-05 to 44,013 in 2006-07, making equal pay the second most popular claim after unfair dismissal. An even greater increase of 150,000 claims is predicted for 2007-08, and unfair dismissal claims will be dwarfed now employees know how to bring equal pay claims.

In the City, such claims occur as a result of low or zero bonus awards, which may have been preceded by bullying and harassment as business pressures have tightened the visible lack of senior female bankers/executives and an unwillingness to leave the stereotypical, male, working environment behind (eg, the long-hours culture). And whether company or sector driven, one claim is normally the tip of the iceberg.

Causes

Causes of unequal pay that might support a genuine material factor defence – such as performance-related pay or historical reasons – will be limited by time. If tainted by sex discrimination, they will not succeed, and employers will be forced to rely on a second defence of objective justification.

Objective justification is a much harder defence. Where a material factor defence need not be fair, objective justification must be both “appropriate and necessary”. The opportunity to rely on a genuine defence will disappear if there is a suggestion that the reason is tainted by sex.

There is tension in current case law as to when objective justification is required. An anticipated decision from the Court of Appeal in two consolidated appeals, Surtees and Bainbridge, will hopefully clarify the situation. Employers will not want an outcome that supports staff relying on statistics to show indirect discrimination generally simply a decision that if the pay disparity is for a non gender-related reason, objective justification is not required. The decision is expected imminently. One adverse finding, however, could open the floodgates.

Costly claims

Equal pay claims can be expensive to defend. Legal fees are higher than average, as the claims are complex, and are generally unrecoverable. A pre-action questionnaire procedure may also be served. If the comparator is not an employee of opposite gender doing the ‘same job’, an analysis of the “appropriate comparator” can be difficult to find. Claimants can be awarded up to six years’ difference in unequal pay. The commercial consequences speak for themselves.

Recommendations

  • Avoid perpetuating the pay gap by training managers who take decisions regarding recruitment, pay or promotion on diversity issues.
  • Respond quickly to resolve queries or grievances regarding pay to avoid inferences of sex discrimination as well as breaching the statutory dispute resolution procedures.
  • Consider equal pay audits.
  • Reward systems should ensure that appraisals are fair out so that performance is rated on an objective basis.
  • Adopting a positive attitude to flexible working will help lower resentment and negative perceptions of ‘part-timers’, encouraging flexible working in most levels and both genders without detriment to pay.

It used to be the case that you could be an employment lawyer without ‘doing’ equal pay. But that’s no longer the case for lawyers, and probably for HR, too.




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