As the tide of claims continues to rise, how should employers go about resolving the issue?
There are currently 17,000 equal pay claims in the system, and the national news is full of high-profile cases, such as dinner ladies winning their equal pay fight, and headlines such as ‘£5bn bill to rectify equal pay claims’. With legislation having been in place in this area for some 30 years, what has sparked this sudden flood of claims?
This problem has been on the horizon since 1997, when a national agreement between local government employers and the unions was put in place to introduce new pay and grading arrangements. And a second agreement attempted to provide a further push for employers to take action in 2004. So if the public sector knew what it had to do, why is there such a problem now?
We should remember that the task was enormous and fraught with financial and ethical dilemmas. Employers and trade unions both understood the difficulties this issue would create, and have been endeavouring to make progress. The current situation has been brought about by the proactive approach taken by contingency fee lawyers in gathering in claims from public sector employees. As a result, the trade unions have mobilised into action, which has sparked a high volume of claims.
This is a significant issue for both public and private sector employers. Private sector employers ignore these developments at their peril if they assume it is of no concern to them. If pay inequality is not addressed it can result in time-consuming and costly court action. With the increased publicity and active trade union support, it is only a matter of time before the proactive approach spreads to all employers.
The consequences are significant, hence the interest of the ‘no-win, no-fee’ solicitors. If an employee’s claim is upheld, the employer might have to pay up to six years’ back-pay by way of damages, as well as having to face up to any future liability, so it’s important that businesses have robust pay and reward policies in place. Unfortunately, there is a fear among some businesses of taking steps to address equal pay it is seen as uncovering an issue that is best left alone.
There have been calls from business for government intervention, with suggestions that employers should be protected by a moratorium following an equal pay audit to prevent a claims rush.
In an ideal world, this could be just the incentive employers need. But much as the government might wish to help employers in this way, it simply cannot, as this would involve removing EU legislation that has been put in place to protect employees. The government would also be left exposed to legal challenges from those who questioned losing their rights.
The pressure to address inequality in the workplace is here to stay, and it’s important that businesses view such change as an opportunity. Women make up 50% of the workforce. Those employers that have already adopted best practice are reaping the benefits of drawing on the skills of the full workforce, retaining staff and making themselves an attractive proposition in the labour market.
So, with thousands of equal pay claims in the pipeline, what is the best way forward for all of the parties involved?
First, employers need to commit to addressing equal pay, and there is support out there for businesses. For instance, Eversheds recently joined forces with research organisation IDS and Opportunity Now to run the Equal Pay forum, which aims to support employers to comply with equal pay legislation.
Second, litigation is not the answer. In fact, many of the equal pay cases have muddied the waters with decisions being over-turned on appeal in numerous instances, leading to greater uncertainty.
Most importantly, there must be willingness on behalf of all parties to increase dialogue – the best way to resolve this issue. The unions have an essential role to play here in helping to get this message across to staff, but, equally, employers have to show they are taking the issue seriously.
A recent Equal Opportunities Commission report, Completing the Revolution, claims that it will take 25 years to close the part-time pay gap, and 20 years to close the full-time pay gap. But if all those involved fail to come together to take action, it could take even longer.
Employment law partner,