Private sector warned of huge equal pay timebomb

Private sector employers have been warned they could face an equal pay nightmare on the same scale as that currently overwhelming local authorities, after a survey revealed a lack of data about salary levels.

Less than half of private firms have carried out an equal pay review, or intend to do so this year, according to a survey of 603 organisations by the Chartered Institute of Personnel and Development (CIPD).

Stephen Moir, president of the Public Sector People Managers’ Association, said private companies were putting themselves at risk of a bombardment of expensive claims if lawyers got their teeth into the issue.

Councils are currently struggling with a combined bill of up to £5bn as no-win no-fee lawyers lead a surge of cases from female council workers claiming for years of lost earnings.

“There is no reason why this could not happen in the private sector,” Moir told Personnel Today.

“If someone finds evidence that they have been underpaid, then it could snowball. This could be a sleeping giant of a problem for the private sector.”

The employers with the worst record for carrying out audits were in the manufacturing sector, according to the CIPD survey.

Just 44% of manufacturing and production firms said they had already conducted an equal pay review or intended to do so in 2008.

But manufacturing employers’ group the EEF said that a job evaluation scheme for a company of just 300 employees could cost anywhere between £15,000 and £50,000.

Peter Schofield, EEF employment and legal director, said: “These are substantial costs.

“Even when the jobs are evaluated, the employer still has to decide whether there are valid non-discriminatory reasons for any pay differences. The business case for equal pay audits is not all one-way,” he added.

Under the terms of the Equal Pay Act 1970, all employers have a responsibility to ensure equal terms of employment for work of equal value.

Who is taking action on equal pay?

How many organisations have conducted an equal pay review or intend to do so this year?

Manufacturing and production 44%
Private services sector 48%
Voluntary sector 56%
Public sector 82%

Source: CIPD

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