Equal Pay Legislation has been around for 40 years and yet there still appears to be a significant gender pay gap. When taking into account the average hourly earnings of full and part-time workers, women earn nearly 20% less than men. Commentators ascribe many reasons for this gap including the preponderance of women in part-time work, the sectors which are predominantly populated by women such as healthcare and cleaning being less valued and therefore less well paid and the lack of women in management positions.
In recent news it appears that male bonuses are double those of their female counterparts. Statistics compiled by the Chartered Management Institute reveal that, of 43,000 managers questioned, male managers already earn 25% more than female managers and also receive significantly more in discretionary bonuses. (Women receive on average £36,270 whilst men receive £63,700)
Legislation aims to prevent discrimination in pay and the workplace in general and applies to all employers regardless of size.
Equal Pay Legislation
In an attempt to narrow the gender pay gap and remove discriminatory practices in the workplace the government has created several pieces of legislation which afford protection to women, or indeed men, who are less well remunerated on the basis of their gender.
Equal Pay Act 1970
The Equal Pay Act inserts an ‘equality clause’ into every employment contract; effectively modifying the terms of the contract so that it is not less favourable than that of a person of the opposite sex. It applies to all employees regardless of whether they work full-time or part-time.
‘Pay’ under the Equal Pay Act includes all contractual entitlements. This means the following are covered
- contractual bonuses
- sick pay
- membership of sporting or social clubs
- pensions schemes
- shift payments
If terms are found to be less favourable, the employee may be able to bring a claim under the Act.
There are three possible bases of claim.
The basis of the claim is that a person is paid less than an employee of the opposite sex for doing the same job. This requires that her work is of the same or broadly similar nature and the differences (if any) between the things she does and the things they do are not of practical importance[…]regard shall be had to the frequency or otherwise with which any such differences occur in practice as well as to the nature and extent of the differences.
For example, a female cook was employed to cook lunches but male cooks cooked breakfast and evening meals. The difference in terms of their work was considered immaterial.
The basis of the claim is that the person is paid less than an employee of the same sex for doing a job rated as an equivalent job. Work is considered equivalent if the employer’s own job evaluation gives an equal value to their work in terms of the demands made upon then and the effort and skill which would be required to carry it out. This means that jobs which are seen as very different might be considered equivalent for the purposes of the Act.
Equal Value Work
The basis of this claim is that a person is paid less for doing a job of equal worth when the nature of the work performed, the training or skills necessary to do the role and the conditions of work and decision-making required in the job are considered. This usually operates where no job evaluation has been carried out.
In order to bring a claim under the Equal Pay Act there must be a comparator of the opposite sex. In other words, a woman seeking to bring an unequal pay claim must show that a man is receiving greater contractual remuneration than her. A comparator could, of course, be a predecessor in the same job as the claimant. Under the Equal Pay Act the comparator must be employed by the same company or group whereas under European Law the comparator need only be in the same establishment or service.
A person can select more than one comparator and it is advisable to do so if there is more than one available.
Defences Available to Employers
A woman doing equal work with a man in the same employment is entitled to equality in pay and other contractual terms, unless the employer can show that there is a material reason for the difference which does not discriminate on the basis of her sex.
An employer could bring the defence that the claimant and her comparator are not doing equal work or that the difference in pay is not related to the sex of the employee. For example, the comparator has a greater level of experience or academic qualifications not held by the claimant.
The Material Factor Defence
If a claimant can show that she is doing work equal to her better remunerated comparator then the claim will succeed unless the employer can prove that the difference is due to a material factor which does not itself discriminate against her either directly or indirectly because of her sex. The factor identified must not be a sham or pretence to justify discriminatory pay and it must be material (significant and relevant) For example, it would not be a sufficient defence for an employer to rely on a qualification held by a male colleague that was not relevant to the work that he did.
Article 157 formerly Article 141 of the Lisbon EC Treaty
Claims may also be brought under European Law, or more specifically Article 157 of the Lisbon treaty.
The Article can be found at http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-the-functioning-of-the-european-union-and-comments/part-3-union-policies-and-internal-actions/title-x-social-policy/424-article-157.html
Article 157 states that
(1) Each member state shall ensure that the principle of equal pay for male and female workers for equal work is applied.
(2) For the purposes of this article, ‘pay’ means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer.
Equal pay without discrimination based on sex means:
(a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement;
(b) that pay for work at time rates shall be the same for the same job.
Pay, therefore, under European Law covers any benefit, contractual or otherwise, received as part of the employment relationship. Its broader definition may provide a remedy where UK legislation does not. This legislation is considered particularly useful where the benefit is non-contractual such as the payment of a discretionary bonus for example.
Equality Act 2010 (LINK?)
This Act provides that a person must not be discriminated, either directly or indirectly, on the grounds of their gender. It can be used where an Equal Pay Claim cannot be made; for example, where the pay difference is brought about through a discretionary bonus rather than a contractual term.
The Equal Pay Code which should be read in conjunction with the Equality Act does not itself create legal obligations but explains the legal obligations under the Act. Tribunals are obliged to take it into account where it is relevant to the proceedings.
General Equality Duty
In addition to the legislation mentioned above, public sector employers and those in the private or voluntary sector that exercise public functions have a gender equality duty in respect of those functions.