SUMMARY: A failure to address gender pay gaps can create both financial, legal and reputational risk for employers. We answer some frequently asked questions about equal pay.
Do we have to pay men and women the same?
The law provides that men and women should be treated equally when doing “equal work”. This means men and women must be treated equally in relation to their terms and conditions of employment if they are employed to do:
- like work. This means work that is the same or broadly similar;
- work rated as equivalent under a job evaluation study; and
- work found to be of equal value in terms of effort, skill or decision making.
In order to establish if there is equal treatment or otherwise, there will need to be a comparison of the terms and conditions enjoyed by a member of the opposite sex working for the same employer, doing like work of equal value.
Employers should not forget that the equal pay law protects men too. Women who are pregnant or on maternity leave have special rights when it comes pay, benefits and bonuses.
Is there any way of defending an equal pay claim?
It is open to an employer to defend a claim if it can show the reason for the difference is due to a genuine factor and is not based on the sex of the employee. Common factors would include a difference in geographical location, experience or qualifications.
Is it just pay that we have to ensure is equal?
The equal pay law covers all aspects of pay and benefits including:
- basic pay;
- contractual benefits, i.e., company cars;
- holiday pay;
- hours of work;
- non-discretionary bonus payments;
- non-monetary benefits;
- pension benefits and access to pension schemes;
- performance related pay and benefits, overtime rates and allowances; and
- sick pay.
The following areas would not be covered by the equal pay law but could be challenged under the sex discrimination law:
- discretionary bonus payments;
- discretionary pay increases;
- promotion; and
- the terms of a job offer.
To avoid the risk of equal pay claims we are considering banning staff from talking about how much they get paid?
Whilst employers are able to impose some restrictions on their staff about discussions concerning pay, any ban on this type of discussion would be unenforceable, if the purpose of the discussion is to identify if there is unlawful pay discrimination. This means a gagging clause in a contract of employment will not be effective if its aim is to prevent this type of discussion.
Any disadvantage including dismissal suffered by the employee as a consequence of their disclosure about pay for the purpose referred to above will be unlawful victimisation.
Do we have to respond to a request from a member of staff asking for information about pay differences?
A person who thinks they may have an equal pay claim may submit questions to the employer to help them determine whether they have such a claim. An employer is not legally obliged to respond. Before making the decision not to respond, an employer needs to be aware that an employment tribunal can take into account any response, or lack of response as a contributing factor when considering the issue of discrimination.
An employer faced with a request for information will need to consider carefully the nature of any response it chooses to provide and any decision not to respond. In any event, if legal proceedings are commenced the employment tribunal may order the information to be provided.
Acas has provided guidance on the question and answer process – Asking and responding to questions of discrimination in the workplace.
Should we be aware of any additional legal requirements?
It is expected from October 2016 private and voluntary sector organisations with more the 250 employees will be required to publish information about the pay differences between men and women. The first reports will have to be published by April 2018.
These requirements do not apply to the public sector.
If we lost an equal pay claim, what are the sanctions?
Any claim by an employee can be brought during their employment or no later than six months after their employment has ended. Any individual wishing to issue a claim would have to contact Acas to consider conciliation.
A successful employee would be entitled to:
- a declaration that their rights have been breached;
- payment of any arrears (in the case of pay); or
- damages (in the case of a non-pay contractual term).
In most cases arrears of pay can go back up to six years before the date the claim was brought.
Any employer who loses any case in the employment tribunal can now be ordered to pay a financial penalty of between £100 and £5,000, which is payable to the government.
In some cases, a losing employer will be required to carry out an equal pay audit and publish its findings supported by a plan to avoid breaches occurring or continuing. The penalty for failing to carry out the audit is up to £5,000.
If you would like more information on good equal pay practices with a view to engaging with your workforce and to minimise the risk of claims, please contact:
+44 (0) 808 172 93 22
This update is for general guidance only and does not constitute definitive advice.