Two unusual equal pay cases have been in the news recently. One was brought against a private sector employer and in the other, the claimants were men.
As public sector employers prepare to sell off major assets in order to fund equal pay liabilities, equal pay related issues are becoming an increasing concern for the private sector. This month alone there are press reports concerning significant claims against a Welsh university and a major supermarket. As a reminder that equal pay is not always about disadvantaged female employees, a group of 23 male employees is reported to be preparing to share a £500,000 pay-out after the University of Wales Trinity St David conceded that their equal pay claims were well founded. Asda is noted to be resisting claims by 400 store employees seeking the higher pay of distribution centre workers in the latest high profile claim involving significant numbers of claimants.
Gender pay gap increases
The renewed focus on equal pay claims follows confirmation by the Office of National Statistics in the latest Annual Survey of Hours and Earnings that the gender pay gap has increased during the course of the last year, reversing the downward trend of the last five years. According to the ONS, female employees are paid on average 19.7% less than their male counterparts. The statistics do little to suggest that large private sector employers are any less likely to face equal pay challenges than their public sector equivalents. The latest reports of claims are therefore a timely reminder for employers to review their potential equal pay related risk.
Equal pay claims are costly to defend, particularly if they involve the employment tribunal equal value procedure, which is designed to facilitate a consideration of whether male and female employees engaged in completely different jobs should be regarded as undertaking work of equal value. As the public sector experience illustrates, cases involving large numbers of claimants can also involve eye watering amounts of compensation, with each successful claimant entitled to up to six years’ back pay with interest and consequential adjustment to their pension entitlement and tax liability. The maintenance of the higher rate of pay for the successful claimants in future can also significantly increase the employer’s wage bill. Birmingham City Council’s equal pay bill reportedly topped £1 billion and was presumably a significant factor in its decision to sell the NEC.
The merits of a claim
Part of the reason why such claims are costly to defend lies in the range and complexity of the legal issues that can arise in the handling of such claims. Such are the amounts often at stake that it is essential that employers ensure that careful consideration is given to the merits of claims at an early stage. Particular considerations include:
- the extent to which claimants are entitled to compare their terms and conditions of employment to those of other employees of the opposite sex
- the circumstances in which different jobs within an organisation may be found to be of equal value
- whether there is inequality in pay and the extent of any such inequality
- the scope for any differences in pay to be explained by non- gender related considerations
- when an employer is required to justify its explanation for the difference in pay
- what is required in order for the employer to be able to justify the approach it has adopted to the remuneration of its employees
An early assessment of the above can ensure the preservation of important evidence and may well determine the order in which particular aspects of the case are addressed, potentially resulting in an earlier resolution of the case and considerable cost saving.