Could this trigger mass private sector equal pay claims?

Government plans to make UK employers with more than 250 employees publish gender pay data were announced this week. This is perhaps unsurprising, due to the fact that the voluntary approach to gender pay reporting which had previously been adopted has not worked.

What will employers have to publish?

The detail is not yet available but it is likely that organisations will have to publish:

  • starting salaries for men and women
  • differences between average basic pay and total average earnings broken down by job, grade and gender
  • details of other components of pay (eg bonus or commission) broken down by gender.

Failure to publish the relevant statistics is expected to be a criminal offence, attracting a fine of up to £5,000. The bigger financial risk to business is that published data could also trigger equal pay claims.

The pay gap

According to the Office for National Statistics women working full time in the UK earn, on average, 9.4% less than men in comparable jobs. The disparity rises to over 15% for managers, directors and senior officials reaching 25% in skilled trade occupations. When part-time employees are included the difference is 19.1% across the whole workforce.

According to the European Commission at least part of the gender pay gap is attributable to systemic inequalities in the economy and society as a whole so it is likely that many employers will find that there is a gender pay gap in some sections of their workforce. The enforced publication of gender pay figures is therefore likely to be bad news for many employers as a spotlight on pay disparity is likely to present the potential for significant equal pay claims.

Legal and financial risks

Under the Equality Act 2010 workers can bring claims for equal pay if they are engaged in like work, work-related as equivalent (under a job evaluation scheme) or work of equal value in comparison to co-workers of the other gender. If a worker can establish this, then the burden of proof shifts to the employer to justify any difference in pay.

The public sector has faced mass claims from female workers who have compared themselves with males working in roles which, on the face of it, are quite different but, when analysed objectively, are of the same value in terms of the demands and skills required. Successful claims can result in up to six years' back pay as well as pay equality going forward.

The private sector may now face similar mass actions. 1,000 female staff working in ASDA supermarkets have brought claims that their work as supermarket colleagues is of equal value with distribution centre workers who are mostly male and who they say are paid more. 30 female managers at Network Rail say they have been paid £3,000 to £4,000 less than male comparators. Their union, TSS, points to 3,000 female employees who may benefit if the initial 30 are successful and a total annual wage bill increase of £10 million

Managing the risks

The relevant legislation, which was approved by the House of Lords on 11 March 2015, requires the Secretary of State to publish regulations under s. 78 Equality Act 2010 within 12 months to require organisations with more than 250 employees to publish gender pay data.

We would expect a further period of grace before organisations are actually required to publish data. This means there is time for employers to get to grips with any existing pay issues. However, care needs to be taken as to how any potential problems are identified and progressed to avoid the risk of inadvertently raising gender and pay as an issue amongst the workforce and creating documents which could be disclosable in due course.

Burges Salmon provides a pay audit service which is confidential and legally privileged and can advise you on the data you need to gather, how to evaluate it and whether differences in pay are legally justifiable. We can then help you plan for and execute change.