Gender equality and pay

This post was written by Thomas McLaughlin and Laura E. Philips.

This summer, 30 female managers, backed by the Transport Salaried Staff Association, launched an equal pay claim against Network Rail. The managers allege that they are being paid between £3,000 and £4,000 less a year than male colleagues doing the same job. The TSSA claims that if these 30 claimants are successful, 3,000 female employees of Network Rail could be eligible for pay rises, costing Network Rail in excess of £10 million per year.

This claim highlights that the gender pay gap, although narrowing, is still very much present in 2014. This is particularly evident looking at recent figures released by the House of Commons Library which show that in 1997 the pay gap between men and women was 27.5 per cent, over the following years it narrowed steadily, but in 2013 it rose slightly from 19.6 per cent to 19.7 per cent.

Legislating for Change – Equality Act 2010

Publication of Pay Information

Some commentators argue that Section 78 of the Equality Act 2010 could be part of the solution.

Section 78 (which is not yet in force) enables the government to issue regulations requiring employers who have 250 or more employees to publish information about the difference in pay between female and male employees.

If the section is brought into force, the regulations made under it will be able to specify what information is to be supplied about the employer and employee, as well as the form and timing of any publication. Additionally, an employer may be required to publish this information annually (but no more frequently). If an employer does not comply with the publication requirements, they could face civil enforcement procedures or be liable for a criminal offence, punishable by a fine of up to £5,000.

The Explanatory Note to Section 78 says the government wants large private and voluntary sector employers to voluntarily publish information about the difference between pay for men and women as opposed to being required to provide information by regulation. In order to facilitate this, and to encourage employers to improve gender equality by means of greater transparency, the government developed 'Think, Act, Report' which provides employers with a framework to help identify issues in relation to pay, to address inequalities and to share their findings with other companies.

In order to allow time for voluntary participation to gain momentum, the government decided that it would not create regulations under this section before April 2013, and then only if sufficient progress on voluntary reporting had not been made.

However, despite the current voluntary reporting scheme in place, Section 78 continues to gain increasing media interest due to the on-going gender pay gap issue. For example, Grazia is petitioning for Section 78 of the Equality Act 2010 to be enacted as it feels that the gap is still not being addressed effectively. The petition is being championed by Grazia’s editor-in-chief Jane Bruton, who states that the fact that women essentially earn 80p for every pound that men receive is an issue that needs to be redressed, and swiftly.

Equal Pay Audit

Alongside this, the Equality Act 2010 (Equal Pay Audits) Regulations 2014 came into force on 1 October 2014. These regulations state that employers who lose a claim for equal pay or sex discrimination in relation to pay will be required to carry out an equal pay audit, unless a specific exemption applies (for example, the disadvantages of an audit would outweigh its benefits, or the employer is a “new business”).

The Employment Tribunal will decide the scope of the audit (which may include the entire workforce) and the minimum requirements for an audit will be as follows:

  • The audit must include information relating to the pay of the affected individuals.
  • The audit should identify any differences in pay and the reasons for those differences, including the reasons for any potential equal pay breach that is identified.
  • The audit should include the employer’s plan to prevent equal pay breaches occurring or continuing.

Employers will be required to publish the audit on their website within 28 days of completion and notify employees (other than in exceptional circumstances). The audit must then remain on the website for a minimum of three years after initial publication. Evidence of publication must be provided to the Employment Tribunal within 28 days; a failure to do so may be considered contempt of court.

If the Employment Tribunal finds that an employer has failed to meet the requirements of the audit, or the employer fails to provide evidence of the audit, the Employment Tribunal may fine the employer up to £5000.

Practical Points for Employers

  • The Equality Act 2010 has put the spotlight on the gender pay gap, and therefore employers must not ignore equal pay issues.
  • If it is not existing practice, it is advisable to conduct a voluntary audit of current remuneration practices and identify any potential issues before they arise.
  • Voluntary audits need not be published or distributed to employees, and are considered good business practice. Note, however, that they may be disclosable in any subsequent litgiation.
  • Employers should be aware that being ordered to carry out an audit may have adverse consequences in addition to the administrative cost, such as further equal pay claims due to increased employee awareness.
  • Employers may also wish to join the voluntary publication of information scheme to demonstrate their transparency and align themselves with best practice in the market.

UK Agency Workers - understanding the new regulations

This post was written by Thomas Ince and Carl de Cicco.

The Agency Workers Regulations 2010 (“AWR”) are due to come into force on 1 October 2011. The AWR put in place the requirements of the controversial EU Temporary Agency Workers’ Directive, which has to be implemented by 5th December this year. Last week, rumours circulated in the media that there may be a last minute “watering down” of the AWR by the present government. This seems unlikely, particularly because the AWR has already been scrutinised carefully by the new coalition government after they came into power. The Conservatives were unhappy about the proposed 12 week qualifying period which was not set out in the EU Directive. However, having conducted a review, nothing was changed because the AWR was based on an agreement between the CBI and the TUC made prior to the election and could not be changed. We will, of course, update you on any last minute changes to the AWR, but in the meantime we have prepared below a short summary of the basic elements of the AWR.

The AWR will apply to the relationships between agency workers, agencies and hirers. They offer protection to agency workers, providing them with equal access to facilities and amenities at work, the right to receive information about new positions within the hirer. After working for a qualifying period of twelve weeks, agency workers would also have the right to basic working and employment conditions that are equal to those enjoyed by workers recruited directly by the hirer. In May 2011 the government published guidance (the “Guidance”) to help hirers and agencies understand the implications of the AWR and their responsibilities under them.

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Liability for equal pay claims on TUPE transfer

 

The case of Sodexo Ltd v (1) Gutridge and others (2) North Tees and Hartlepool NHS Foundation Trust considers a transferee’s liability for equal pay claims made by transferred employees following a TUPE transfer. In this case, the Employment Appeal Tribunal (EAT) holds that following a TUPE transfer, claims for equal pay relating to discrimination in pay by the transferor must be made (against the transferee) within 6 months of the transfer. Claims for equal pay arising as a result of discrimination in pay by the transferee can, however, be brought within 6 months from the end of employment with the transferee. Significantly for transferees, where the transferring employees are in receipt of unequal pay at the time of the transfer, as compared to chosen pre-transfer comparators, they will remain entitled to the same pay as the comparator, even if the comparator is not transferred to the transferee.

In practice this means that after a TUPE transfer, transferees are at a continuing risk of significant claims of up to 6 years arrears of pay, even though they are ignorant of the fact that they are paying their employees less than they should because the persons with whom the employees are comparing their pay (the comparators) are not employed by the transferee. 

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Government publishes White Paper on Equality Bill

The Government has published its White Paper, Framework for a Fairer Future – The Equality Bill, setting out its proposals for a Bill to be published in the next Parliamentary session.

Many of the White Paper’s proposals fall outside the employment law field. The main issues which will affect employment law are set out below.

Click to view the White Paper

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Equal Pay - the relationship between grievances and Employment Tribunal claims

The Scottish Court of Session in the case of Cannop & Others –v- The Highland Council has confirmed that where the employee’s Employment Tribunal claim follows on from a grievance previously communicated, there does need to be a necessary relationship between the grievance and the complaint pleaded in the ET1 Tribunal claim form, so that the grievance underlying the ET1 is essentially the same as the grievance earlier communicated. In respect equal pay claims, the Court declined to comment on the Employment Appeal Tribunal’s decision that the relevant grievance must refer to the comparators which are subsequently cited in the ET1.

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