A fair deal for the fairer sex?

When it comes to pay, women have been the victims of discrimination as long
as there have been jobs. But will the Government’s initiatives to close the pay
gap bear any fruit? Nigel Youngman investigates

The Government chose International Women’s Day last month to launch its
latest package of voluntary measures aimed at eradicating inequalities in pay
between the sexes. Minister for women Barbara Roche introduced the Castle
Award, a new kitemark that will be bestowed on employers doing
"excellent" work in tackling equal pay issues. The idea is women job
seekers will be able to search out employers offering the best chances of a
fair deal.

Roche also announced the Government would spend an extra £270,000 to
identify and spread best practice in advancing women in the workplace.

"The pay gap is getting narrower year on year," Roche said,
"but this is not solely a matter for Government. What is also needed is a
cultural change among employers so they properly value women’s contribution to
their organisation’s success."

However, there are many who doubt the voluntary approach can succeed where
30 years of legislation has failed. Though the principle of equal pay has long
been in established in both UK and EU law, through the Equal Pay Act (1970),
the Sex Discrimination Act (1975) and Article 141 of the Treaty of Amsterdam,
there is still a wide disparity in pay between the sexes.

In 2001 the Equal Opportunities Commission’s independent Equal Pay Taskforce
found that women working full-time still earn only 82 per cent of the male
wage. For part-time women workers the gap was even bigger, with women taking
home only 60 pence for every £1 earned by male full-time workers. Another EOC
report, issued in January 2002, revealed that although women now account for
almost a third of managers in Britain, they still earn 24 per cent less per
hour than male managers.

Figures on pay also published in January by the Office for National
Statistics show women working full-time in 2001 earned 18.5 per cent less per
hour than men working full-time, compared with 18.9 per cent in 2000. Julie
Mellor, chairwoman of the EOC, said of these statistics: "The new figures
on pay reveal the shameful truth that Britain is still failing to make any
significant progress towards closing the gender pay gapÉ routine pay reviews to
check that pay systems don’t short-change women are an essential part of the
culture change needed."

Why is there a disparity in pay?

The EOC Equal Pay Taskforce found that three main factors contribute to the
gender pay gap:

– occupational segregation between men and women,

– the unequal impact of women’s family responsibilities

– discrimination in pay which is estimated to account for 25 to 50 per cent
of the pay gap.

In April 2001 Denise Kingsmill was appointed by the Government to carry out
an independent review of women’s employment and pay. Kingsmill’s recommendation
for a legal obligation on all public sector employers to undertake pay audits
was rejected by the Government, which opted instead for a voluntary approach,
plus an undertaking to monitor progress and implement legislation if the
voluntary system fails to work.

Kingsmill proposed that companies should be carrying out pay reviews as soon
as 2003 as part of new requirements on company reporting. In the meantime, the
Government will work with organisations such as the CIPD and EOC to encourage
the development and promotion of best practice.

So, after all that debate can employers forget about equal pay audits for
the time being?

The strict legal answer is yes. But there are several crucial reasons why
employers need to be pro-active in assessing their potential vulnerability on
equal pay issues.

One of Kingsmill’s recommendations that did get taken up by the Government
was that employees should have the right to be told whether they are receiving
the same pay as a named colleague. This has led to Government including in the
new Employment Bill a statutory equal pay questionnaire that will form the
first stage in an equal pay claim. The Government considers that this will make
it easier for an individual to request key information from their employer when
deciding whether to bring an equal pay claim.

What will the questionnaire look like?

The exact form of the equal pay questionnaire has yet to be decided.
However, the current EOC guidance on taking an equal value claim gives some
clues to the information that employers may be asked to provide. How would your
organisation cope with a request for the following?

– Details of the duties of Mrs Bloggs and the post or posts with which Mrs
Bloggs is seeking comparison

– Details of basic pay and benefits for each of those posts

– The method for determining the values of those posts

– Details of how individual pay is determined

– Details of how pay is reviewed annually and how pay rises are awarded

– Details of how the relative value between Mrs Bloggs and others is

– Explanation as to what elements of a comparator’s job are more onerous
than Mrs Bloggs’

– Starting salaries for each comparator post

– Reasons for any differences

– Information about the employer’s equal opportunity policy

– Steps the company has taken to implement the EOC Code of Practice

– Questions about assessing market forces.

And the question to make your heart sink:

– ‘Please provide a breakdown by sex, length of service, part time, full
time, job title and salary for all staff employed as [job title]’.

In short, the new provisions may allow disgruntled employees or a recognised
trade union acting on behalf of workers to go on a fishing expedition for
information about pay and benefits. Combined with recent changes to the law on
sex discrimination, this is set to provide an environment in which it will
become virtually impossible for employers to avoid equal pay reviews. The key
to this is the Sex Discrimination (Indirect Discrimination and Burden of Proof)
Regulations 2001, which came into force in October. They are significant in two

First, they have widened the scope of indirect discrimination to include not
just terms and conditions of employment but also ‘provisions, criteria and
practices’. This potentially catches all aspects of the way an employer runs
its business – practice, policy and culture.

Second, they have shifted the burden of proof from complainant to employer,
once there is enough evidence to suggest discrimination. This effectively means
that once an employee can demonstrate as a matter of fact that they are being
paid less than a comparator of the same sex, it will then be for the employer
to prove that there is a non-discriminatory reason for this difference in pay.
Where there is no clear justification, the tribunal will probably find against
the employer. Without evidence that it has audited its own pay systems, there
will be little chance of a credible defence.

Any hope of sitting tight and avoiding this particular spotlight is likely
to prove futile. A number of organisations including the CIPD, the EOC and the
TUC have pledged to champion the issue of equal pay. The EOC has set a target
of 50 per cent of large employers (those with more than 500 workers) to have
carried out a pay review by the end of 2003, and a quarter of the remaining
employers by the end of 2005. If the targets are not met, it will renew
pressure for legislation. New super union Amicus aims to ask every UK company
in its sectors to commit to equal pay audits, and by the end of 2002 it will
produce a list of refuseniks.

The TUC plans to train 500 equal pay reps to tackle the pay gap between men
and women.

A convincing argument

Assuming you are now convinced that your organisation should address the
issue of equal pay, where do you begin?

A good starting point is to look at the EOC Code of Practice on Equal Pay,
and think how your organisation shapes up against those standards. The EOC view
is that for an equal pay policy to be effective there needs to be:

– commitment by senior management.

– recognition by all staff involved in decisions about pay that they share
responsibility for the proper implementation of the policy.

– effective training in identifying sex discrimination.

– reviews of the payment system and periodic monitoring to ensure

– provision of information given to employees about the review and any plan
of action drawn up as a result.

The first action for employers has to be an audit of the current pay system
or practices. This may seem a daunting prospect, in terms of the work involved
and fears of what the audit might reveal, but a sensible way of starting the
process is either to spot check a number of jobs across the organisation or to
undertake a pilot study in one sector of the business. Employers would be well
advised to undertake a sample exercise "behind closed doors" before
going public with a more extensive study. Take a look at the equal pay
questionnaire recommended by the EOC, and think how you would deal with it if
it landed on your desk.

The audit should include a thorough analysis of the pay system by producing
a breakdown of employees in the sample group by sex, job title, grade and
whether full or part-time. Each element of the pay system (including, for
example, basic pay, performance pay, occupational pension, company car and any
premium payments) needs to be examined, to identify disparities.

If disparities exist, the reasons for those disparities need to be explored.
The audit may reveal, for example, that practices and procedures in relation to
recruitment, selection and access to training have contributed to
discrimination in pay.

If the reasons cannot be justified, then rules, policies and practices need
to be reviewed and possibly changed to eliminate any discriminatory practice.
Where the review shows that some employees are not receiving equal pay for
equal work and the reasons are not justifiable, then employers need a plan for
redressing the balance.

The EOC recommends that any changes to rules or practices should be made in
consultation with employees, trades unions or staff representatives.

The equal pay policy should provide for a system of regular monitoring to
allow checks of pay practices. This is best done by regularly analysing
statistics by gender across the organisation.

Finally, the employer should design and publish its equal pay policy in
consultation with employees or employee representatives.

The equal pay issue is not going to go away, and it is better to deal with
it on your own terms, rather than wait for somebody else to do it.

Nigel Youngman is Director HR Consultancy at Eversheds

Key points

The Equal Pay Act (1970), the Sex Discrimination
Act (1975) and Article 141 of the Treaty of Amsterdam establish the principle
of equal pay within both UK and EU law. Despite the legislation there is still
a disparity in pay between the sexes.

There is no legal requirement to undertake equal pay audits,
but the Employment Bill has introduced a new statutory equal pay questionnaire
as a first stage in an equal pay claim. This will make it easier for an
individual to request key information from their employer when deciding whether
to bring an equal pay claim.

Action for employers

– Assess your organisation’s current practice against The EOC
Code of Practice on Equal Pay

– Audit your current pay system or practices. Undertake a
sample exercise to assess the scale of the problem.

– Consider how your organisation would deal with an equal pay

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