Q. We have a number of employees expressing concern about pay disparities between themselves and their peers of equivalent abilities and performance levels, where length of service is equal. Can an organisation be held liable for these disparities, and how should we address this problem?
A. Generally speaking, it is for the employer and individual employees to agree a salary paid under a contract of employment. Therefore, an employer is free to pay different staff at different rates. The exception is where there is a difference in pay between members of the opposite sex employed in:
- like work
- work rated as equivalent
- work of equal value.
This is contrary to the Equal Pay Act 1970, and a tribunal could hold an employer liable.
Pursuing a claim
The employee must identify a comparator who is paid more for the same work. A female must choose a male comparator and vice-versa. An employee cannot bring an equal pay claim using a comparator of the same sex – pay discrepancies between members of the same sex are morally unfair at worst, but it is generally quite lawful.
Dealing with disparities
If an employer is faced with an equal pay claim, it is a defence to show that the difference in pay is due to a genuine material factor – for example, additional qualifications or experience.
To prevent claims, employers are encouraged to carry out regular pay reviews to monitor how their pay and benefit schemes operate, and the effect such schemes have on staff of a particular sex.
If pay inequalities are discovered as part of the review, the employer should take reasonable steps to remove them and/or to assure that those differences relate to something other than gender. It should also make sure that its pay system is as transparent as possible. If employees understand the basis for salaries and other benefits, and can see them applied in practice, they will be less likely to bring claims.
Sue Nickson, partner and international head of employment, Hammonds