Shortly before the 4 April I was telephoned by a client whose HR team had presented their draft gender pay gap report to the CEO for information/approval. That had caused consternation because it demonstrated a largish gender pay gap. The immediate response was that this meant the business was about to publish information that would leave it open to claims by employees in relation to equal pay. The CEO’s fears were understandable, however, those employing more than 250 have no choice but to publish a report and gender pay gap reporting is not about equal pay...is it?
Equal pay claims are, complex, time consuming and potentially destructive, one only has to look at the outcome of the equal pay litigation in Birmingham to understand the potential consequences of successful claims. Historically, the private sector has not been overly troubled by equal pay litigation, with much of the burden of that litigation being borne by the public sector, schools, hospitals and local authorities. However equal pay claims are increasingly being seen in the private sector. There are reports of claims against the major supermarket chains worth up to £4 billion.
Equal pay claims
In a recent edition of the Evening Standard, I read a two-page advertorial advising employees how they could use the information contained in their employer’s Gender Pay Gap Report to help them pursue an equal pay claim. Many of the equal pay claims are run on the basis that the advisers are paid a percentage of the damages so, in some ways, at no cost to the employee.
The problem for employers is that equal pay is extremely complex, involving three potential claims
(a) Like work; (b) Work rated as equivalent; and (c) Work of equal value.
What should employers be doing to protect themselves?
- Having written the gender pay report and narrative they will need to take the steps that they have set out. Many of the reports this year were issued close to the deadline. It is not clear whether that was because everything was done at the last minute or because the reports were held back. We have now passed the second trigger date and there are just under 12 months to the next report, that report will need to address measures that were taken last year and future steps to narrow the gap. If measures are not taken over a period of time, that could be evidence that is used against an employer to demonstrate that it has a discriminatory mind set.
- Consider what the factors are behind the business’ gender pay gap and how that can be addressed. More importantly - address it.
- Consider what factors are taken into account in fixing pay or bonus levels. Consider whether they are relevant or potentially open to challenge.
- If employees are asking questions then be prepared to answer them, but be sure that there is one source for that information. Ideally, ensure that pay queries are handled centrally. Dissuade managers from giving ill-thought through, off-the-cuff answers, which will be used against the business later.
- Employers should review their workforce to assess whether they consider there is a risk. That may necessitate some form of external input as the business may struggle to identify where the risks lie. Equal pay audits, if undertaken rigorously, may help in determining whether there is an issue that needs to be addressed but, given the need for secrecy, may not produce an entirely accurate picture.
- Another means of protecting the business is a job evaluation study. If a robust scheme is put in place then two different jobs can only be compared if they have been rated as equivalent in a job evaluation study. Again that requires the study to be robust.
Whatever steps an employer decides to take to head off a potential equal pay threat it needs to ensure that any report that is produced is protected by privilege. The need for secrecy and not putting the workforce at large on notice create problems of accuracy and consistency. If the report is not protected by privilege, and a claim is pursued then the report will be discloseable and will highlight the business’ areas of weakness / risk.