Equal Pay claims: How to handle them 40 years on

The Equal Pay Act is very different from other kinds of discrimination legislation. It only covers actual contract terms – although, following European case law, ‘pay’ includes every kind of contractual benefit such as cars, pensions, redundancy pay, etc.

The Act operates by inserting an equality clause into the contracts of men and women so that each contract term can be compared separately. Originally, it only applied to:

  • people doing like work and/or
  • people doing work rated as equivalent (in a job evaluation scheme).

The Act was amended to include the new and very different category: people doing work of ‘equal value’. This means people doing completely different jobs can be compared, if the complainant can show the jobs being compared are of equal value. There are many different systems for job evaluation, some of which have themselves been challenged as producing biased results.

Identify a comparator

The prospective claimant in an equal pay claim has to identify an actual appropriate comparator. This can be a current colleague or someone who has worked for the employer within the past six months (including in the same job). The complainant must identify whether they are claiming like work, equivalent work or equal work.

If they succeed, they are entitled to equalisation of their contract going forward and also up to two years’ back pay.

The two original categories are both largely factual issues that can be resolved relatively easily by a tribunal. There is no special procedure for dealing with these claims, and they are in the minority.

Equal value is more conceptually interesting and usually causes more issues. This is because it has been introduced to deal with comparisons between jobs that are unlike each other – for example, cooks comparing themselves with shipbuilders and speech therapists comparing themselves with pharmacists. There is no limit on the types of jobs that can be compared.

Broadly speaking, it is for the individual to identify the correct comparator and show on a balance of probabilities that the work is of equal value. To assist them, they are entitled to serve a statutory questionnaire – available for all cases – and to ask the employer for information, such as exact details of remuneration of named colleagues, In addition, they are entitled to ask for documents, eg, benchmarking or pay systems.

The questionnaire is often served before a claim has been launched and the employer has eight weeks to respond. Failure to respond within the set timescale without reasonable excuse or the production of a response that is manifestly unsatisfactory or misleading adds to the risk that a subsequent tribunal will, as a consequence, draw adverse inferences.

Currently, however, an aggrieved individual cannot launch a claim and take the employer by surprise. Before going to tribunal, they must bring a written grievance about their pay to the employer, thus giving the employer the opportunity to understand what the complaint is about, investigate and potentially resolve the issue.

This requirement sets an absolute bar to tribunal proceedings at the moment. From April 2009, the procedural rules are being amended and, in future, though an employee may be penalised for not going through an internal grievance process, it will no longer be a bar.

Two cherry bites

An employer facing an allegation of gender-based pay inequality will have to decide early on whether or not it accepts the factual basis of the claim. The employer has two bites at the cherry. First, it can argue that the jobs are not alike, or equal or equivalent. If this succeeds, then the claim fails altogether. This law is not about fair pay merely gender pay equality.

Even if the employer accepts that the roles are properly comparable, it has a potential defence for pay inequality.

To simplify a complicated provision, broadly speaking, if the employer can show that the difference in the contract term is a ‘genuine material factor’ that is not the difference of sex (a GMF), it will be able to defeat an equal pay claim.

Each case depends on its own facts because what is or is not material will depend on the circumstances of the individual case. Two frequently relied upon GMFs are seniority and market factors. Other GMFs include unsocial working, geographical or regional factors, and historical reasons.

The principles are simple but the law has been complex and difficult to apply. For ordinary employers, especially in the private sector, equal pay has usually not been centre stage. But things are changing. The stubborn pay gap (almost 20%) and massive pubic sector litigation1 is keeping this issue close to centre stage. As the government moves towards finalising its Equality Bill there will undoubtedly be provisions that will push pay equality further into the limelight.

Sue Ashtiany, head of employment, Nabarro

1. Many of the multiple local authority claims are based on equivalent work claims and the two-year back pay issues, but they are in a special category, falling out of a massive job evaluation scheme undertaken in the early 2000s.

Transferee employer responsible for equal pay claims

One third of UK women face pay discrimination

Equal pay legal background

The Equal Pay Act is the oldest UK anti-discrimination law. It was passed in 1970 by the outgoing Labour government and guided through by Barbara Castle, a great champion of women’s rights and pay equality.

At that time, differential rates of pay for men and women were quite common, especially in industry, and the gender pay gap was about 30%. When the Act was passed the government gave employers five years to get to grips with the principles of equal pay and to eliminate pay inequality.

It came into force, together with the Sex Discrimination Act, in 1975. By then the UK was a member of the European Community and, therefore, subject to Europe’s equal pay regulations.

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