Category Archives: equal pay claim

Consultation Launched On Gender Pay Gap Reporting

The government equalities office has just launched a consultation on gender pay gap reporting whichHR for lawyers 150x150 Consultation Launched On Gender Pay Gap Reporting will close on 6 September 2015.  The reason for this is that the government is committed to introducing regulations that will require companies to publish their gender pay gaps clearly identifying the differences between average pay for males and females.

Research has shown that the UK falls way behind in the league table of worldwide equal pay.  Iceland, Finland, Norway and Sweden are the top ranking countries for equality.  Four decades on from the Equal Pay Act working women in the UK continue to lose out.

The regulations will only apply to companies in the UK with at least 250 employees so small and medium sized businesses will not be affected.  Furthermore public authorities will not be included as they already have broad equality obligations compared to the private sector.

The regulations will be in place by March 2016 but will not take place immediately so that employers have time to prepare for implementation.

The Government appears to be considering the following options in terms of what will be reported:

1. Reporting one overall gender pay gap figure that captures the difference between the average earnings of men and women across the organisation as a percentage of men’s earnings.

2. Reporting separate gender pay gap figures for full-time and part-time employees.

3. Showing the difference in average earnings of men and women by grade or job type.

Highlighting pay differences could expose companies to equal pay claims.  There will therefore be the need to put pay decisions in context as there may be fair reasons for these.

A failure to comply with the rules could, ultimately, be treated as an offence, attracting a fine.

In anticipation of the regulations being implement employers should consider the following actions:

• Be proactive – doing nothing is not an option. Understanding your pay arrangements will help you manage and present information meaningfully and in context.

• Review all current pay practices across your organisation in order to understand the differentials which may exist.

• Consider gender pay gaps which exist on a departmental/geographical/functional level and compare these with the composition of your workforce.

• Analyse the rationale behind your current arrangements to identify potential risk areas.

• Consider implementing a job evaluation scheme which will help provide defence for pay gaps

A link to consultation paper can be found at https://www.gov.uk/government/consultations/closing-the-gender-pay-gap

Employers will ultimately have to address gender pay gap issues.

 

 

 

 

Why Bother About Equal Pay?

The recent high profile case where 170 women have been given the right to take an equal pay case against Birmingham City Council brings equal pay firmly in the spotlight.  The workers, mainly women who worked in traditionally-female roles, such as cooks, cleaners and care staff won the right to seek compensation in the civil courts for missed  bonuses.  The women were among workers who had been denied bonuses which had been given to staff in traditionally male-dominated jobs such as refuse collectors, street cleaners, road workers and grave diggers. For example, the annual salary of a female manual grade 2 worker was £11,127, while the equivalent male salary was £30,599. The men received a bonus of up to £15,000 per year. 

Usually such claims have to be made within six months leaving a job in an employment tribunal, but the Supreme court has over ruled that principle in this case.  These employees now have six years to raise a claim with the potential for a £2 million payout. They are likely to win and cost Birmingham City Council many millions of pounds.  This “landmark” judgement could have huge implications for potentially thousands of other workers including in the private sector.

This case is remarkable given the existence of over 40 years of equal pay legislation.  In 1970 the Equal Pay Act was brought in following a fight by women sewing machinists employed by Ford to stitch the car seating who were paid much less than their male equivalents who assembled the cars.  Whilst the men and women did different jobs, the value of their jobs was deemed to have the same demands in terms of effort, skill and decision-making ie work of equal value.  This and equal work underpins equal pay legislation.  Equal work can be the same or broadly similar (known as like work) or different but equivalent (known as work rated as equivalent).  However men on average are paid more than 10% more than women. 

Organisations that want to pre-empt claims being laid at their door need to start thinking how to head off such claims.  One way would be to undertake an equal pay audit.  The EHRC provides a toolkit which is a guide for employers carrying out an equal pay audit.  It is designed for businesses with over 50 employees. It helps carry out an equal pay audit related to gender, race, disability or working patterns.  Equal pay audits are recommended in the Code of Practice on Equal Pay.

Another alternative would be to undertake a job evaluation process across an organisation to identify areas of weakness to review and correct.  Job evaluation is the systematic evaluation of the worth of jobs in relation to other jobs in an organisation.  An analytical job evaluation scheme provides a good defence in an equal pay claim whereas a non-analytical scheme such as job ranking or job comparison would not provide the same defence as it is based on subjective opinion.  Therefore a factor comparison scheme such as NJC job evaluation or Hay would provide robust defence.