Equal pay - the next big thing in employment law

Citation

Paget, P. (2008), "Equal pay - the next big thing in employment law", Strategic Direction, Vol. 24 No. 9. https://doi.org/10.1108/sd.2008.05624iab.002

Equal pay - the next big thing in employment law

Article Type: Corporate law outlook From: Strategic Direction, Volume 24, Issue 9

There is often much speculation about what the latest and most challenging problem is going to be for employers. Is this, as some predict, a time for more discrimination legislation of one type or another? Will it be about agency workers and just whose employees they are or simply a case of learning new rules once the fiasco of the 2004 Dispute Resolution Regulations are swept away?

We think it may be far more costly than any of those things should we see a rise in Equal pay claims aimed at the private sector. Employers need to be aware and prepare to get their house in order. What is meant by equal pay? Put very simply, there are those who may think that there is no harm in paying, say, a canteen assistant, a very different wage to an office cleaner, by way of example.

However, if following an expert analysis those two jobs are deemed to be of equal value then a Tribunal can rule that they should carry the same rate of pay. What is more, the claim can be backdated to such a degree that a relatively small difference in pay can be multiplied over many months to produce a very significant award.

Such claims depend upon a difference in sex between the comparators and in an application claiming equal pay a worker will need to compare their pay to someone of the opposite sex. Claims to the Employment Tribunal can be made up to six months after leaving the employment to which the claim relates and arrears of remuneration including sick pay, holiday pay, bonuses and overtime can be extended back over a period of up to six years.

So why is this such a problem and why is it seen as the next big thing? Over the last few years many Local Authorities across the country have been facing a deluge of claims for equal pay. In some cases they have had to remortgage council properties in order to fund defenses. Another example is the whole NHS equal pay deal, which could be ruled discriminatory.

Additionally, until 2004 claims could go back just two years but following an EU directive in 2004, Local Authorities were required to compensate female employees by awarding them six years of back pay rather than the two that had previously been agreed with the Government in 1997.

The Unions, to their credit, had previously struck deals with the public sector employers but no win no fee solicitors have jumped on the bandwagon. One northeastern solicitor is thought to have brought some 30,000 equal pay cases and it is a threat of that sort of mass litigation, which should now have the private sector quaking in its collective boots.

The private sector has benefited to a large extent by the relative secrecy it enjoys in terms of pay rates. The public sector is far more open and in many respects it was a relatively easy target. More than that perhaps, it was a target that had a gilt-edged backing that could actually pay the claims in successful cases. Equal pay claims are complex and involve expert evidence. It would not be unusual for the defense of such cases to run in to tens of thousands of pounds.

So what should employers do if they are concerned about the impact of possible claims? First, they need to look at their pay structures, not just as they are now but more importantly as they have been over the last six years. If they detect the possibility of discrimination then first of all they need to try and eliminate it but in fairly short order behind that step they need to be thinking about making provisions in their accounts. Inevitably the safest step they can take is to work quickly towards a non-discriminatory pay scheme. Employees do not, as a general rule, like the idea of taking their employer to Tribunal while still employed but if the potential gains are big enough, then why not?

Typically this has not stopped employees in the public sector but for how long that will remain a public sector phenomenon is anyone’s guess. The private sector needs to tidy up its act in many respects and the sooner it takes steps to address this threat the better.

If you have any questions about “Equal Pay - The next big thing in employment law” - or would like more information about employment law - please contact Philip Paget or another member of the Gordons employment law team on 0845 273 3080.

Philip PagetPhilip Paget is Partner and Head of Employment Law at Leeds and Bradford- based law firm Gordons.

Acknowledgements

Issued on behalf of Gordons LLP by fuse8 Public Relations. For further information please contact Rob Smith (Tel: 0113 260 4600; Mobile: 07840 677534; E-mail: rob.smith@fuse8.com) or Frances Longley (Tel: 0113 284 0674; Mobile: 07534 225184; E-mail: frances.longley@fuse8.com)