In the UK, equal pay between men and women for equal work is provided for by the Equality Act 2010. There are a number of statutory requirements to be satisfied in order to successfully defend claims for unjustifiable differences in pay for certain roles.
It is highly advisable to conduct ongoing gender-neutral evaluation of jobs and pay structure in order to meet the requirements of the Equality Act.
Definition of equal pay
The term equal pay goes beyond basic remuneration, and covers bonuses, overtime, redundancy pay, pension schemes, company benefits and sick pay.
Definition of equal work
For the purpose of the Equality Act, “equal work” is determined by three methods:
- Like work – refers to work that is the same or similar to that performed by someone of the opposite sex in either the same place of employment or one operating under the same terms and conditions.
- Equivalence as determined by a Fair Job Evaluation Scheme – the Fair Evaluation Scheme is a means of determining the relative value of a position, taking into account the skills, training and level of decision making required. These schemes are discussed further below.
- Work of equal value – neither of the above two categories apply, but the position is of an overall equal value in terms of skills, training and level of decision making.
Justification for differences
It is possible for an employer to justify differences in pay or other benefits, if they can show there are practical differences or factors warranting higher or lower levels of importance being attached to that position. Common examples are where strength and physical labour are required. A higher volume of workload alone cannot serve as justification.
If there is no comparator in the same place of employment, it is possible to base a discrimination claim on a hypothetical comparator, if there is reason to believe someone of the opposite sex would receive better pay.
Disclosure and data protection
The Equality Act permits a claimant to seek information on pay packages to fellow employees, even where confidentiality clauses exist in their employment contracts. This is subject to limitations however, and in most cases an order has to be granted by the employment tribunal for information disclosure. In any event, where the handling of personal data is concerned, the core principles of the Data Protection Act 1998 must be adhered to, including fair and unlawful processing, accuracy and secure handling.
What individuals do the equal pay provisions apply to?
The provisions of the Equality Act apply to:
(3) self-employed individuals performing contractual obligations personally.
The Equality Act applies to both men and women. Although less frequent, there are occasions where a man might be paid less favourably.
Gender pay gap reporting and large entities
In 2017, two regulatory frameworks were enacted pursuant to the Equality Act, with one applying to the public sector and the other private. The regulations apply to private and public employers who hold 250 or more employees, and require such employers to publish data on gender pay gaps as they apply to the individuals covered by the Equality Act.
There are some differences between the regulations for private and public entities. The annual “snapshot” period for gathering data is 31 March for the public sector, and 5 April for the private sector.
Types of data to be published
Entities captured by the regulations must report on differences between the mean and median hourly wage gap and bonuses between male and female employees. They are also required to report on the proportion of male and female employees occupying lower to upper pay bands.
Failure to comply with the reporting requirements may result in sanction by the Equality and Human Rights Commission.
Job Evaluation Schemes
It is advisable to have a grasp of the relative value of positions operated. Job Evaluation Schemes are a method of internally accounting for and justifying why a position occupies a certain pay grade. The Equality Act does not mandate such evaluations, but they are a common means of satisfying the requirements of the Act. The Equality and Human Rights Commission provides a range of elements to be considered, including responsibility for others, specialist knowledge and training, physical requirements and decision making.
An evaluation should be carried out by a panel of three or more persons, which should represent the gender, ethnic and age breakdown of the workforce. The panel should possess satisfactory knowledge of the entity’s job and pay structure. It is paramount to conduct ongoing monitoring of a Scheme implemented, including the continued updating of job descriptors and provision of justification for any differential treatment.
The employment tribunal is empowered with ordering remedial measures such as increasing salary, awarding back pay, instating benefits on parity with other male employees and amending contractual terms and conditions. Where back pay is considered appropriate, this can be done to a period of up to six years prior to the date of filing a claim before the employment tribunal.
Time limits for bringing a claim
Claims on equal pay grounds must be made before the employment tribunal within six months from the end of the claimant’s tenure. This prescription period can be tolled in the event that the claimant is incapacitated, or the employer has intentionally concealed pay disparities.
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There are a number of ongoing evaluative, monitoring and reporting requirements created by the Equality Act 2010 that must be adhered to by employers. Failure to do so may result in sanction by the Equality and Human Rights Commission, or a claim being brought by an employee before the employment tribunal.
At Lewis Nedas, our Employment Law Solicitors have over 25 years’ experience advising and representing national and international companies. Our Employment Lawyers have been appointed to the Office Essential Network, which is a specialist organisation aimed at assisting young start-up businesses requiring advice on employment issues, including equal pay legislation and regulations.