In on the act: Equal pay – past, present and future

Employers must start adapting their policies on equal pay now to ensure they
are ready for the measures that will be introduced in next year’s Employment
Act. Sarah Lamont, partner in the employment department at Bevan Ashford,
weighs up the issues.

Legal issues

It is more than 26 years since the Equal Pay Act 1970 (EqPA) came into
force.

It has always been viewed as being overly complex and has not had a
consistently high priority on many HR agendas.

However, in the light of the fact that recent figures show that women
continue to suffer significant pay differentials and in response to pressure
from a number of influential interest groups, the Government is introducing new
measures aimed at addressing this inequality.

How does the EqPA work?

In essence, the basic provisions of the EqPA are relatively easy to
understand.

It provides for equal pay between women and men in the same employment by
giving a woman (or a man) the right to equality in the terms of her contract
where she is employed on

– like work to that of a male comparator; or

– work that has been rated as equivalent to that of a male comparator under
a job evaluation scheme; or

– work of equal value to that of a male comparator.

How can a claim be brought?

Claims can be brought to the Employment Tribunal by employees, but the
definition of ’employees’ is wide enough to include most working relationships
except the genuinely self-employed.

The claimant must identify a comparator of the opposite sex, employed by the
same employer or an associated employer.

She could compare herself to a predecessor or successor in her job and in
the recent case of Kells v Pilkington1, the Employment Appeals Tribunal held
that an employee could make a comparison to her predecessor even though he had
been employed more than six years previously.

Once a suitable comparator has been identified she is entitled to parity on
a term-by-term basis – an employer cannot argue that her package, as a whole,
is as favourable as her male comparator.

Defence

The employer can, however, defend a claim by showing that any difference in
pay was genuinely due to a material difference between the man’s and woman’s
jobs and that the difference was not related to sex. This could include:

– market forces, such as factors relating to a shortage of the skills that
the comparator has and the claimant does not

– geographical differences

– the need to retain particular skills

– ring-fencing of salaries after merger or demotion

Comparators

Recent cases have examined the central issue of who a claimant might
name as the correct comparator.

In South Ayrshire County Council2, the Court of Session confirmed that a
comparison can be made between different employers if the employees are paid by
reference to the same national pay scale.

However, the European Court of Justice (ECJ) has just rejected a similar
argument in relation to a comparison made between contracted-out female
cleaners in the private sector, formerly employed by North Yorkshire County
Council, and suitable male comparators still employed by the council (Lawrence
v Regent Office Care3). As any difference in pay could not be traced to a
single source the claim failed.

Questionnaires

A significant recent development is the introduction of a new procedure, in
the Employment Act 2002, allowing an employee, who believes she may suffer pay
inequality, to ask her employer for information that will help her decide if
she has a claim.

She could ask for the pay rates of other employees and the reasons why those
jobs are paid in the way they are.

Questions and answers will be admissible in evidence in a claim to the
tribunal, as with discrimination questionnaires.

Equal Pay Audits

The Government’s Equal Pay Task Force recommended at the end of last year
that all employers should be encouraged to conduct Equal Pay Audits.

As yet this is not compulsory, but there is pressure to make it so.

All employers would be required to review a number of matters such as the
extent to which pay and promotion structures reward long service in ways that
unreasonably disadvantage those with career break or who work part time.

The Equal Opportunities Commission recently introduced an Equal Pay Tool Kit
to assist employers in performing pay reviews. It is available at
www.eoc.org.uk

Castle Awards

To encourage the adoption of best practice in relation to equal pay audits,
which the Government sees as the way forward, a new ‘mark of excellence’ known
as the Castle Award, was unveiled in March 2002.

This is intended to allow women job seekers to identify employers who are tackling
equal pay issues within their organisation.

Key points

– the Government is introducing new
measures to address this

– comparisons might be made between different employers

– employees will be able to issue equal pay questionnaires to
their employers

– employers are strongly encouraged to introduce pay
reviews/audits

References

1 IDS Brief 717 October 2002

2 [2002] IRLR

3 ECJ 17 September 2002

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